Share transfers: Foreign investors seeking clarity on FBR exemption certificates

Foreign investors have urged the Federal Board of Revenue to issue prompt clarification on exemption certificates, according to Business Recorder. They want a simpler, time-bound certificate process for registering foreign-held share acquisitions, along with assurance that Rule 19H of the Income Tax Rules will not reach back to transfers completed before it took effect.

The rule came in with amendments to section 37 of the Income Tax Ordinance, aimed at improving tax compliance for indirect transfers and for cross-border transactions involving Pakistani assets. Investors say its practical rollout has created significant uncertainty, and some tax authorities reportedly view deals between two non-residents as possibly falling under section 101A, leaving certificates unissued in some cases. Since SBP registration increasingly depends on proof of Rule 19H compliance, FBR delays are stalling shareholder registrations even after acquisitions are complete.

Stakeholders argue that a clear position is needed on transactions completed before Rule 19H came into force, as well as on transfers between non-residents. They warn that without such steps, administrative holdups may keep hindering foreign investment flows and leave investors facing needless ambiguity.