On Friday, 3 May 2024, Pakistan enacted the Tax Laws (Amendment) Act, 2024 (the Amendment Act).
This law substantially modifies the tax appeals procedures for sales tax, federal income tax, and federal excise laws.
These reforms aim to streamline the appeals process, promote the use of Alternative Dispute Resolution (ADR) forums, and streamline the rules and timelines for settling tax disputes.
Changes include:
- New monetary thresholds for appeals have been introduced: PKR 20 million for income tax, PKR 10 million for sales tax, and PKR 5 million for federal excise law. Tax appeals falling under these thresholds will be directed to the Commissioner (Appeals), while those exceeding the limits will be directed to the Appellate Tribunal.
- For cases arbitrated by the Commissioner (Appeals), the subsequent appellate forum will be directed to the High Court instead of the Appellate Tribunal.
- The Appellate Tribunal is mandated to resolve tax appeals within 90 days, and the High Courts must resolve appeals within six months. However, an extension of up to 90 additional days from the Ministry of Law and Justice may be requested by the Tribunal if necessary.
- The fees for appeals have been increased, and the timelines for filing appeals and reference applications have been reduced.
- The modifications promote the use of Alternative Dispute Resolution (ADR) by reducing the tax liability dispute threshold to PKR 50 million and reducing the timeframe for appellate forums to resolve pending appeals within 90 days after an ADR committee is abolished.
- Following an Appellate Tribunal decision, tax dues are protected from recovery for 30 days. If a reference application is submitted to the High Court, a stay may be granted, contingent on paying 30% of the assessed tax. The stay is valid only for six months.
- The Commissioner may postpone a refund resulting from a High Court decision if there is consideration to appeal to the Supreme Court.
The Amendment Act is expected to go into force on 16 June, 2024.
