The PRC certificate. I am struggling to get PRC from bank as well but PRC should contain the trail of these remittances.
Regarding your specific case, I don't have exact details about your case but the deposit should directly in your account. i.e. Customer ----> to your account.
where customer can be your client, upwork client etc...
So I had a foreign bank account and payment were coming to that foreign account and from there I was transferring to my PAK account. Turns out that doesn't qualify for exemption. I didn't claim the exemption either. Other can also add to this info.
Ok so basically exemption have 2 conditions.
1. Money must come in your bank account
2. 80% of the money must be encashed in PKR, so that govt can keep the USD & get the benefit of foreign currency .
IT services are for sure exempted, but I'm not sure how the exemption can be provien in your case since you're transferring from USD to PKR account.But I'd assume it shouldn't be so hard to proof that your income is from IT services.
One thing you can try and get a written contract/agreement with your permanent clients to show in case ever an audit comes.
But also try to consult couple of more lawyers. As far as I've seen, most of the lawyers have not much exposure to freelance work & hence they're not very helpful.
You can also call FBR helpline and ask them to connect you with their legal wing (9am to 4pm), maybe a reasonable person will be willing to hear your case & guide you properly, but this also depends on luck who picks up the phone lol.
Keep us posted on your case.
WS, not if you withdraw USD from your USD account, but as far as I know, now they changed policy and USD account holders can only withdraw in PKR, so technically it should be exempted but please call FBR to be sure.
Good healthy discussion going on.
I just want to take opinion of you guys about my scenario.
I am working as a full time freelancer on Upwork and I withdraw all of my earnings first from Upwork to Payoneer and then from Payoneer to my local PKR bank account.
Do i qualify for the tax exemption by fulfuling the two requirements of all transaction through proper banking channel and that 80% foreign exchange thingy?
Would really appreciate your response.
For a Freelancer , I am not sure but as a company as per 133 IT service income is exempted , But under section 113 Minimum Tax , Exempted income is entitled to minimum tax rate on gross turnover.
Correct me if i am wrong.
Great discussion! I would like to ask about this scenerio:
1- I have clients in Upwork, i withdraw all my payments to Payoneer and transfer to my local bank personal account. All these payments are tagged as 'Home Remittance' rather than IT export income in the PRCs i get from my bank.
2- I have clients outside Upwork who want to pay directly to my bank accout through wire transfer, right now i have no way for them to pay me directly. So for these clients, I need a business account for my comapny (sole owner company which i registered). I can get PRC from my bank easily for these payments with purpose code as IT export/ business income.
My questions are:
Q1- Right now in my return i mention all income from 1 and 2 as my business income IT export. Is this correct?
Q2-Can i get money from Payoneer in my business account under IT export?
1. Yes, correct. Any income you're receiving by offering IT services online are exempted from tax.
2. I don't think it should be a problem.
1. Did you only registered sole prop just to receive wires? Was that not possible for individual account?
2. What kind of PRC you get from your bank? I once asked my branch for PRCs, they said if you want PRC from head office, it will take forever, but bank manager helped by printing all my remittances for a certain period on a white paper with bank logo on it, signed & stamped it. He said this will serve as the PRC, but there was no mention of any purpose code on it. That time I had no idea that purpose code is needed. So I've no idea if this is valid but if anyone knows please let me know.
Maybe I can ask my branch manager to reprint that doc but this time with a purpose code on it. If anyone knows please guide me.
I have another question:
Q1: Can we receive payments from Payoneer in a personal foreign currency account? Will those be exempted from tax in that case?
Answers to your questions are below:
1: Yes, i was having problems when my client sent me a payment from abroad into my personal account. My bank manager said pupose of this payment is trade, then how can it come in personal account. My bank also held my payments for 3-4 months and then finally released saying next time i cannot have payments in my personal account from direct wire transfers from clients. So I decided to open a business account (still in process).
2: I contacted my bank manager and asked him to give me PRCs, i had to call him and go to my bank multiple times, eat their heads for few months and finally received my PRCs. Each PRC is printed on intermediary bank letterhead and has amount and date and purpose of payment mentioned as Home remittance. Askari Bank is the bank in case of Upwork payments and for Payoneer payments there are different banks every time.