How To Resolve Taxation Issues After Company Registration In Pakistan?

Hamza and Hamza
6 days ago
3 min read

After Company Registration In Pakistan, entrepreneurs often face challenges in meeting tax compliance requirements. These issues can range from filing errors to misunderstandings of tax obligations, delayed returns, or difficulties with audits and assessments. Resolving these taxation issues efficiently is crucial for ensuring the smooth operation and legal compliance of the business. Here’s a comprehensive guide to handling and resolving taxation problems post-company registration in Pakistan:

1. Understand Your Tax Obligations

The first step in resolving taxation issues is to fully understand your tax responsibilities as a registered entity. In Pakistan, companies are required to:

Obtain a National Tax Number (NTN) from the Federal Board of Revenue (FBR).
Register for Sales Tax if applicable (especially for manufacturing, trading, or services).
File monthly sales tax returns, quarterly withholding tax statements, and annual income tax returns.
Deduct and deposit withholding taxes on payments to employees, contractors, and suppliers.
Maintain proper financial records for audits and tax assessments.

Failing to comply with any of these can result in penalties, notices, and additional scrutiny from the FBR.

2. Hire a Qualified Tax Consultant or Accountant

One of the most effective ways to address and prevent taxation issues is by hiring a qualified tax consultant or chartered accountant. These professionals help in:

Accurate tax filing and documentation
Responding to FBR queries and audits
Managing tax notices and compliance
Planning tax strategies to minimize liabilities

A professional can also communicate with tax authorities on your behalf, especially if your company receives a notice or demand from the FBR.

3. Use the FBR’s Online Portal Effectively

The FBR’s IRIS portal is the primary platform for filing tax returns, submitting responses, and managing taxpayer profiles. Many issues arise from improper or delayed submissions on this platform.

To resolve issues:

Regularly log in and check for notifications.
Correct any discrepancies in profile information or returns.
Use the system’s built-in functionality to apply for tax refunds, respond to notices, or submit rectifications.

Staying familiar with the portal can help companies prevent and address problems early.

4. Respond Promptly to FBR Notices

Tax authorities often issue notices for non-filing, late filing, or underreporting of income or sales. Common notices of Company Registration In Pakistan include:

Section 114(4): For failure to file an income tax return
Section 122(5A): For amending assessments
Section 161/205: For failure to deduct withholding tax

When you receive a notice, take the following steps:

Review the notice carefully and understand the nature of the issue.
Consult with a tax advisor to draft an appropriate response.
Submit the response within the deadline mentioned to avoid further penalties.

Failure to respond can escalate the issue and may result in default assessments or legal action.

5. Amend Tax Returns if Necessary

If you discover an error in a previously filed tax return, it is possible to amend it within five years of the end of the tax year under Section 114(6) of the Income Tax Ordinance. You can submit a revised return through the IRIS portal, citing the reason for correction. This helps resolve discrepancies and avoid penalties.

6. Request for Reconciliation and Audits

If the FBR raises objections based on mismatched or estimated figures, you can:

Request a reconciliation statement of sales, purchases, or withholding tax deductions.
Provide supporting documents like invoices, bank statements, and tax challans.
Request a meeting or hearing with the tax officer to explain your case.

Being transparent and proactive in communication with the FBR often leads to favorable outcomes.

7. Appeal Against Unfair Assessments

If the FBR imposes an unfair tax liability, you have the legal right to file an appeal.

The appeal process involves:

Filing with the Commissioner Inland Revenue (Appeals)
Appealing further to the Appellate Tribunal Inland Revenue (ATIR) if needed

Ensure all appeals are filed within the time limits and accompanied by necessary evidence.

Conclusion

Resolving taxation issues after registering a company in Pakistan requires vigilance, accurate record-keeping, timely filings, and expert guidance. By understanding legal obligations, using digital tools, and engaging professionals, Hamza & Hamza Law Associates can avoid costly penalties and stay compliant with Pakistan’s tax laws.