PRINCIPAL OFFICER

Explanation

As explained earlier, person includes an individual, an association of persons, company, etc. These persons are required by law to submit their return of total income, providing other details or documents if needed. In case of a company or an association of persons, it is very difficult to contact with every shareholder or every member or owner by the tax department regarding the tax requirements. For this purpose, a few responsible persons connected with the management are treated as principal officer.

The Commissioner of Income Tax may also serve upon a notice to any person connected with the management and administration of a company or an association of persons to treat him as a principal officer and such person will become the principal officer for the purpose of Income Tax Ordinance, 2001.

PROFIT ON DEBT

Profit on a debt means:

(a) Any profit, yield, interest, discount, premium or other amount payable on a debt. However, it does not include the return of capital.

(b) Any fee or charge incorporated in respect of credit facility will also be

treated as profit on debt even if it has not been utilized.

REAL ESTATE INVESTMENT TRUST SCHEME

Real Estate Investment Trust (REIT) Scheme means a REIT Scheme as defined under the Real Estate Investment Trust Regulations, 2008.

Explanation

Finance Act, 2006, has introduced this scheme. It has been amended in 2008. The purpose is to encourage investment in construction sector enabling investors of average income group to invest in real estate.

REAL ESTATE INVESTMENT TRUST MANAGEMENT COMPANY

It means a company licensed by the Security and Exchange Commission of Pakistan under the Real Estate Investment Trust Rules, 2006. These companies are formed for the management of Real Estate Investment Trusts formed REIT scheme

PUBLIC COMPANY

Under income tax law a public company means

(a) A company in which at least fifty percent of the shares are held by the Federal Government or Provincial Government

(b) A company in which at least fifty per cent of the shares are held by a Foreign Government.

(c) A foreign company owned by a Foreign Government.

(d) A company whose shares were traded on a registered stock exchange in Pakistan at any time

PRIVATE COMPANY

Private company means a company which is not a public company

RESIDENT AND NON-RESIDENT PERSONS

It must be noted that:

1. To be a resident or non-resident as used above has nothing to do with a dwelling place or nationality, rather it is a term purely designed for tax purposes.

2. The status of resident or non-resident is always associated with a particular income year because it may change from year to year.

3. A person’s status is determined with reference to the period of his stay (purpose of stay is immaterial) in Pakistan in the tax year.

For the purpose of income tax, all the persons are grouped under two categories:

(a) Residents

(b) Non-Residents

1. Resident Individual An individual will be a resident in Pakistan in any tax year if he fulfils any one of the following two conditions:

1. He is in Pakistan for a period or periods amounting, in all, to 183 days or more.

2. He is an employee or official of the Federal Government or a

Provincial Government posted abroad in the tax year.

Explanation

An individual will become a resident of Pakistan in a tax year if his stay

in Pakistan in that year is 183 days or more. It is not necessary that the stay should be continuous. Moreover, as already mentioned, purpose of stay is also immaterial. It is also not necessary that the stay should be at one place only. Mere physical presence for the period is sufficient.

Fulfilment of any one of the requirements given in clause (1) or (2) is sufficient. The purpose or nature of stay, the place of stay, the frequency of visits, Dfa Ho the circumstances of visits etc. have no bearing on the determination of residential status. In case of (2) above a visit to Pakistan is not necessary.