Pakistan-related matters

Insa lawyers have recently assisted Norwegian-Pakistanis who want to sell their properties in Pakistan and bring the money back to Norway.

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In this context, we have assisted clients with the following:

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• Sale of property
• Drafting of agreements and execution of settlements
• Transfer of money to Norway
• Reporting assets to the tax authorities/applying for tax amnesty

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For those who have spent large parts of their lives in Norway, this type of process in Pakistan can appear very complicated and difficult. Therefore, it may be desirable for many to hand over responsibility for the entire process to a professional player based in Oslo. We can assist with everything from marketing and selling the property until the money is in your account in Norway.

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When drafting sales agreements and deeds, it is important to remember that the money will be transferred to Norway. When transferring money, it will be necessary to document where the money comes from and why it should be sent out of the country.

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In connection with the settlement, it is convenient to receive the money in an account in Pakistan. When transferring money to Norway, you will normally encounter a number of challenges. In our experience, the local banks normally reject a request to transfer money abroad, saying that this is only possible in connection with studies or for treatment of illness. Although there are severe restrictions on money transactions abroad, it is still possible to legally transfer money abroad. It is required that an application be submitted to the State bank to apply for permission to transfer the money first. Such an application must be submitted via a bank or foreign exchange company.

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When choosing a foreign exchange company, we focus on how much money we can transfer, how quickly the transfer can be made and how much the foreign exchange company charges. Our clients have been satisfied with the company we use.

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Some of the people who have assets in Pakistan have not reported this to the tax authorities. They can still do this without risking sanctions if the conditions for tax amnesty are met.

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Do you have questions or need help in connection with the transfer of assets from Pakistan to Norway? Get in touch with usand we'll figure out the way forward together.

Despite the political unrest, there are major investment opportunities in Pakistan. With a population of over 220 million people, there are large markets for various business activities such as retail, restaurants and hotels, real estate, education and healthcare, etc.

Investors from abroad, such as Norway, may face various challenges when starting a business in Pakistan.

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Firstly, the business must normally be run through an enterprise. There are several different company forms to choose from. The most common is the Private Limited Company. This form of company is the closest thing to a Norwegian limited company. The company must be registered in accordance with Pakistani law and it is required to prepare and submit a Memorandum of Association and Articles of Association. In addition, the company is required to have two "Directors". Once the company is registered, bank accounts are established and an accountant must be engaged.

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The necessary public permits must then be obtained for the business in question. For example, if you want to start a private school, you must apply for registration with the Ministry of Education. This requires the following:

- Approved map of the school building

- An attested Affidavit showing name of school, level, owner's name

- Copy of Rent deed / Ownership deed

- Printed Prospectus and Admission Form

- Teachers Appointment order and their Testimonials

- Building Fitness Certificate from registered engineer or registered architect

- Hygienic Condition Certificate from DHO, Health Department

- Rules & Regulations of the Institution

- Memorandum of the Association in case of Registered Body

- Registration Certificate in case of NGO / Association / Body / Registered by Authority Joint Stock / Social Welfare Department

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Similarly, it may be necessary to register other types of businesses.

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Insa advokater assists clients in registering companies, applying for the necessary permits, registering businesses and obtaining the necessary documentation and certificates. In addition, we assist investors with tax matters and marketing. Contact us free of charge here.

The tax authorities become aware of your financial circumstances in Pakistan

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As of September 30, 2018, the Norwegian Tax Administration has received information about Norwegians' bank deposits and financial affairs in Pakistan. It's not too late to rectify the situation after September 30, 2018. Save yourself from additional tax of up to 60% and a police report by correcting the situation today.

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All Norwegians who are resident in Norway for tax purposes are obliged to report their income and assets, but they do not have an automatic obligation to pay tax in Norway on assets abroad. Norway has an agreement with Pakistan that ensures that you do not pay double tax. If you have not reported your income and assets in Pakistan, you should do so as soon as possible to avoid possible criminal tax and a police report.

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What is the likelihood of the tax authorities finding out about my assets in Pakistan?

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It is impossible to give any concrete answers to this. Pakistan has developed an electronic register of all properties in Pakistan, but this is not yet fully operational. At present, it is therefore not easy to get an overview of Norwegian-Pakistanis' property in Pakistan. Other assets, such as savings in banks, funds, etc. will be easier for the tax authorities to gain insight into. In any case, you should report your income and assets, regardless of which asset the money is invested in.

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Why should I report my assets in Norway?

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Firstly, as a tax resident in Norway, you have a duty to report your income and assets in Pakistan. Secondly, very few people risk paying large sums of money for reporting their income and assets to the Norwegian tax authorities. Norway and Pakistan have a tax treaty from 1986 that prevents double taxation. Thirdly, you will be able to transfer money from Pakistan to Norway without the risk of additional tax and notification if your income and assets are reported in Norway.

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Should all assets in Pakistan be reported to the tax authorities?

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If you are resident in Norway, all income and assets in Pakistan must be reported to the Norwegian tax authorities. This applies to property, housing, money in the bank, shares and other assets. Your assets must be entered in your tax return every year. The fact that the assets are entered in your tax return does not necessarily mean that you must pay tax on them. Read more about tax liability below.

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Should I pay tax on everything I own in Pakistan?

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No, due to the tax treaty between Norway and Pakistan, there is no automatic tax liability in Norway for everything you own in Pakistan. For example, if you have paid tax on rental income from a home in Pakistan, tax is not payable on the same rental income in Norway. However, the home is taxed as property in Norway.

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Do I risk penalties if I report my assets to the tax authorities?

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There may be cases where there is a risk of both additional tax and reporting due to failure to report to the Norwegian tax authorities. Due to the tax treaty between Norway and Pakistan, those who have paid tax in Pakistan will in principle not risk additional tax or prosecution if a voluntary correction is requested.

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I know I should have paid tax in Norway, but I haven't. What do I do?

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Apply for voluntary correction with the tax authorities.

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If wealth is taxed, is there also a deduction for debt interest and debt?

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There is no full deduction for interest on debt, but there is a full deduction for debt.

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I want to transfer the money to Norway. Can I do that?

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Yes, it is completely unproblematic to transfer money from Pakistan to Norway. However, make sure that you have arranged your tax affairs in Norway before you transfer the money here.

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Read more about reporting property in Pakistan to Norwegian tax authorities here.