The Appellate Tribunal Inland Revenue (ATIR) Lahore has ruled that foreign assets declared under the Foreign Assets (Declaration & Repatriation) Act 2018 (FADRA) are exempt from Capital Value Tax (CVT) imposed under the CVT Act 2022. This decision was made in response to a taxpayer’s appeal against the Federal Board of Revenue (FBR), which had attempted to levy CVT on assets previously declared under the amnesty scheme.
Key Points of the Ruling:
- FADRA Prevails Over CVT Act 2022
- The tribunal determined that FADRA is a special law and therefore takes precedence over the CVT Act 2022.
- Assets declared under FADRA are immune from taxation, including CVT.
- Taxpayer’s Appeal & Tribunal’s Decision
- The taxpayer had declared foreign assets under FADRA and paid the required taxes at the time.
- The FBR later issued a CVT demand of Rs. 37,381,018, arguing that CVT applied to all foreign assets.
- The taxpayer challenged this demand, arguing that FADRA protects declared assets from future taxation.
- The ATIR annulled the CVT demand, ruling in favor of the taxpayer.
- Legal Precedent & Implications
- The tribunal clarified that previous rulings by the Lahore and Sindh High Courts did not address the supremacy of FADRA over CVT.
- This ruling establishes a legal precedent, ensuring that foreign assets declared under FADRA remain protected from subsequent tax impositions.
Conclusion
The ATIR Lahore’s decision reinforces the legal immunity of foreign assets declared under FADRA, preventing the FBR from imposing CVT on them. This ruling provides clarity and protection for taxpayers who participated in the 2018 amnesty scheme, ensuring that their declared assets remain exempt from additional taxation.