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The Institute of Taxation

Member of International Fiscal Association

Paper 1 – Direct Taxes (Application)

This paper is to develop applied knowledge and practical expertise relating to Pakistan Direct Tax Laws and Systems as applicable to individuals, unincorporated businesses and companies. Proficiency will be developed in dealing with specific technical issues arising in the direct taxes and to plan and write professional advice on these issues. It also includes legal drafting and pleading.

The purpose of this paper is
therefore to test the candidate’s ability to produce a report which a client
would value. It does this by focusing on three areas in which candidates must
demonstrate competence:

  • Structure
  • Identification and Application
  • Relevant Advice and Substantiated Conclusions

The contents of this paper will be examined through mini case
studies over the duration of 3 hours and 15 minutes:

  1. Income Taxes

  • The Income Tax Ordinance 2001
  • Notifications, Rules, General Orders and Circulars Issued under The Income Tax Ordinance 2001
  • Tax Planning and Advice, Legal drafting and pleading relevant to Direct Taxes (Note 1 & 2)
  • Forensic Tax Audit

2.Provincial Taxes

  • Property Taxes
  • Agriculture Tax
  • Excise and Taxation

3.Others

  • Anti-money Laundering Act 2010
  • Benami Act 2017
  • Rules and regulations issued under above laws

 

Note 1.  Legal
Drafting and Pleading

This part of syllabus provides an extensive understanding on Legal Drafting and Pleading.  It analyses the importance of pleadings as well as Order VI of the Civil Procedure Code 1908. It further elaborates upon the format of various civil pleadings like plaint, written statement, injunction, affidavit etc.

  • Legal
    Drafting – General principles of drafting and relevant substantive rules
  • Pleading
    – Petition and Pleading in general and relevant to tax matters

Note 2.  Tax Planning and Advice

The objective of this part of the syllabus is to bring aspects of direct
taxes. Examination of this part covers all tax heads covered in this paper in
an integrated manner.  Less detailed
answers are required as the questions do not require students to do detailed
calculations, students will need to summarise the tax issues. This section also
covers anti-avoidance legislation, appeal procedures as well as giving
consideration to the ethical issues that a Tax Adviser may face when giving tax
advice.

This part of the paper will examine students on their
ability to:

1. Translate complex legal concepts
and the implications of same to taxpayers, including individuals, companies and
other entities
i) Interact with other professionals to provide the final advice
ii) Communicate implications of tax advice to taxpayers

2. Support the successful and
effective implementation of advice provided
i) Identify the steps required to implement any advice provided and interact with other professionals to agree the responsible parties

ii) Prepare an implementation plan for the advice provided

3. Understand the role of tax advisers in representing and defending taxpayers

i) Justify recommendations and research findings to specialists and non-specialists including the taxpayers and tax authorities

ii) Represent the taxpayer in practical situations and formulate responses to unpredictable and complex problems
iii) Interact professionally with taxpayers and tax authorities
iv) Communicate with tax payers and with tax authorities on complex tax return issues
v) Critical awareness of the fundamental issues for the tax profession in representing and defending taxpayers

Paper
2 – Advanced Indirect Taxes (Application)

This
paper is to develop applied knowledge and practical expertise relating to
Pakistan Indirect Tax Laws and Systems. Proficiencies will be developed in
dealing with specific technical issues arising in the indirect taxes and to
write professional advice on these issues. It also includes legal drafting and pleading.

The purpose of this paper is
therefore to test the candidate’s ability to produce a report which a client
would value. It does this by focusing on three areas in which candidates must
demonstrate competence:

  • Structure
  • Identification and Application
  • Relevant Advice and Substantiated Conclusions

The
contents of this paper will be examined through mini case studies over the
duration of 3 hours and 15 minutes:

  • The Sales Tax Act 1990
  • The Sales Tax Ordinance 2000 Promulgated by The Provinces
  • The Islamabad Capital Territory (Tax on Services) Ordinance 2001
  • The Federal Excise Act 2005
  • Notifications, Rules, General Orders and Circulars Issued Under the above-mentioned Laws
  • Tax Advice, Legal drafting and pleading relevant to Indirect Taxes (Note 1 & 2)
  • Forensic Tax Audit

Note 1.  Legal
Drafting and Pleading

This part of syllabus provides an extensive understanding on Legal Drafting and Pleading.  It analyses the importance of pleadings as well as Order VI of the Civil Procedure Code 1908. It further elaborates upon the format of various civil pleadings like plaint, written statement, injunction, affidavit etc.

  • Legal
    Drafting – General principles of drafting and relevant substantive rules
  • Pleading
    – Petition and Pleading in general and relevant to tax matters

Note 2.  Tax Planning and Advice

The objective of this part of the syllabus is to bring aspects of direct
taxes and indirect taxes together. Examination of this part covers all tax
heads covered in this paper in an integrated manner.  Less detailed answers are required as the
questions do not require students to do detailed calculations, students will
need to summarise the tax issues. This section also covers anti-avoidance
legislation, appeal procedures as well as giving consideration to the ethical
issues that a Tax Adviser may face when giving tax advice.

This part of the paper will examine students on their
ability to:

1. Translate complex legal concepts
and the implications of same to taxpayers, including individuals, companies and
other entities
i) Interact with other professionals to provide the final advice
ii) Communicate implications of tax advice to taxpayers

2. Support the successful and effective implementation of advice provided
i) Identify the steps required to implement any advice provided and interact with other professionals to agree the responsible parties
ii) Prepare an implementation plan for the advice provided

3. Understand the role of tax advisers in representing and defending taxpayers

i) Justify recommendations and research findings to specialists and non-specialists including the taxpayers and tax authorities

ii) Represent the taxpayer in practical situations and formulate responses to unpredictable and complex problems
iii) Interact professionally with taxpayers and tax authorities
iv) Communicate with tax payers and with tax authorities on complex tax return issues
v) Critical awareness of the fundamental issues for the tax profession in representing and defending taxpayers

 

Paper 3 - International Taxation

Section – A (Principles of International Taxation)

This section is not country specific and focuses on key issues of global taxation such as principles of international tax law, residence, double taxation and treaty interpretation, transfer pricing, the work of OECD and international tax avoidance of direct and indirect taxes.

  1. Basic principles of International Tax Law
  • An Overview of International Taxation
  1. What is International Taxation?
  2. International Tax Conflict and Double Taxation
  3. Double Tax Treaties
  4. Domestic Tax System
  5. International Offshore Financial Centers
  6. Anti-avoidance Measures
  7. International Tax Planning
  8. Non-Resident Taxation in Pakistan
  • Principle of International Taxation
  1. International Tax Law
  2. Application of Tax Treaties
  3. Interpretation of Tax Treaties
  4. Some Legal Decisions on Treaty Interpretations
  5. Model Tax Conventions
  6. Multilateral Tax Agreements
  7. European Union
  8. Harmful Tax Competition
  • Model Tax Conventions on Double Tax Avoidance
  1. OECD Model Convention on Income and Capital (OECD MC)
  2. UN Model Convention (UN MC)
  3. US Model Convention (US MC)
  4. Articles in the Model Conventions
  5. Bilateral Tax Treaties
  • Impact of Domestic Tax Systems
  1. Introduction
  2. Tax Residence or Fiscal Domicile
  3. Source of Income or Gain
  4. Basis of Tax Computation
  5. Treatment of Tax Losses
  6. Advance Tax Rulings
  7. Passive Income
  8. Foreign Tax Relief

2. Transfer Pricing and Thin Capitalization Rules

  1. Introduction
  2. what are Transfer pricing issues?
  3. What is Transfer Pricing?
  4. Meaning of the term “arm’s length Principle”
  5. Significance of arm’s length principle
  6. Practical difficulties in application of ALP
  7. Evolution of Transfer Pricing
  8. Computation of income from transaction with non-resident
  9. Associated Enterprises
  10. International Transaction
  11. Specified domestic transactions
  12. Computation of Arm’s length price
  13. Functions, assets and risk (Far Analysis)
  14. Concepts of Comparability adjustments
  15. Documentation and Compliances
  16. Specific reporting requirements- Country by Country reporting
  17. Transfer Pricing Assessments
  18. Transfer of Income to Non- residents
  19. Introduction of specific anti avoidance measures in respect of transactions with person located in notified jurisdictional area
  20.  Limitation of interest deduction in certain cases

3. International Tax Avoidance

  1. Base erosin and profit shifting
  • Background
  • Overview of BEPS
  • Addressing the tax challenges of the digital economy
  • Neutralise the effects of hybrid mismatch arrangements
  • Strengthen controlled foreign companies (CFC) Rules
  • Interest deductions and other financial payments
  • Counter harmful tax practices
  • Preventing treaty abuse
  • Prevent the artificial avoidance of permanent establishments (PE) status
  • Transfer pricing outcomes in line with value creation/intangibles/risk and capital and other high-risk transactions
  • Measuring and monitoring BEPS
  • Disclosure of aggressive tax planning arrangements
  • Re-examine transfer pricing documentation
  • Making dispute resolution more effective
  • Developing a multilateral instrument

2. Other anti-avoidance measures

Section – B (Second Jurisdiction Taxation)

Candidates are expected to be aware of the key features of the tax system of one of the various tax regimes and be able to answer questions on international tax in relation to a secondary jurisdiction without being expected to offer expert advice on that jurisdiction’s tax system.

Students are expected to have knowledge of the either of the following two aspects of the taxation of the chosen tax jurisdiction:

  1. Income Tax
  • Jurisdiction to tax
  • Taxation of individuals
  • Taxation of companies and other entities
  • Ascertainment of chargeable income and tax liability
  • Tax planning
  • Tax administration
  • Relief from international double taxation

2. Goods and Services Tax

  • The charge to tax
  • Scope of charge: supply; consideration; taxable person; in the course of furtherance
    of business
  • Value of supply and time of supply
  • Ascertainment of tax liability
  • International services and taxation of the digital economy
  • Business-to-business supplies of imported services under the reverse charge mechanism regime
  • Business-to-consumer supplies made to non-GST registered persons
  • Anti-avoidance
  • Tax planning
  • Tax administration

Candidates have to write a thesis on section B

 Thesis

Candidates are required to write a research thesis for section B of papers of Professional Level (after attending advanced research methodology webinar) consisting of 6,000 to 7,500 words on any topic from section B of Paper 3 of Professional Level. Prior approval from the Students and Members Committee is compulsory for writing Research Thesis

 Eligibility: CTA Skills Level passed/referred or equivalent

 Exemptions

A candidate may be eligible to apply for exemptions from some of the CTA examinations if he holds certain recognized educational qualifications. The candidate can only apply for exemptions using educational qualification where he has become fully exam qualified, meaning the candidate has completed all of the necessary examinations for the relevant academic qualification or a mapped level of professional qualification.