Foreign income: IRIS drops reduced tax rate option

By ISLAMABAD: Taxpayers declaring foreign income are facing serious difficulties in filing their income tax returns for tax year 2026, as the Federal Board of Revenue's (FBR) IRIS portal no longer offers the option to apply reduced tax rates on such income. M. Amayed Ashfaq Tola, President Tola Associates told Business Recorder here on Thursday that the 'Attribute' tab, which was available in last year's return form, has been removed from this year's version of the return on the IRIS portal. In the previous year, taxpayers used the 'Attribute' tab to apply the reduced tax rates applicable to foreign income, including foreign dividends and profit on debt, etc, covered under the Avoidance of Double Tax Treaties. With the tab missing this year, Tola said, taxpayers are left with only two options while declaring such income. They can either show it as exempt income or offer it for tax at the normal applicable rates. Neither option allows the correct treatment of foreign income in the return, he added. Treating the income as exempt may lead to incorrect reporting, while taxing it at normal rates would result in a higher tax liability than what the relevant tax treaty envisages and provides. He said the absence of the 'Attribute' tab is creating hurdles in correctly filing returns and applying the relevant reduced rates on foreign income. Tax experts urged the FBR to restore the facility on the IRIS portal so that taxpayers can file accurate returns. Copyright Business Recorder, 2026