UNIVERSITY OF SINDH

INSTITUTE OF LAW

ASSIGNMENT TOPIC
ELABORATE FINANCIAL YEAR AND TAX YEAR OF
PAKISTAN AND COMPARE IT WITH ARMENIA

NAME: UMAIMA ALI

ROLL NO: 2K22/LLM
TEACHER: SIR DANISH

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INDEX

I. FINANCIAL YEAR IN PAKISTAN

II. TAX YEAR IN PAKISTAN
III. COMPARISON OF FINANCIAL YEAR OF PAKISTAN WITH
ARMENIA
IV. COMPARISON OF TAX YEAR OF PAKISTAN WITH
ARMENIA
V. CONCLUSION

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 I. FINANCIAL YEAR OF PAKISTAN

The financial year in Pakistan is a period that runs from July 1st to June 30th of the following
year. It is a standardized time frame that holds significant importance for various financial
and economic activities within the country. Let's discuss the financial year of Pakistan in
detail:

1. Purpose and Significance: The financial year serves as a fundamental time frame for
various financial and economic activities in Pakistan. It provides a structured period
for financial reporting, budgeting, fiscal planning, and policy formulation. The
financial year allows businesses, government entities, and individuals to align their
financial operations and reporting with a consistent timeframe.

2. Regulatory Framework: The financial year in Pakistan is governed by the

Companies Act, 2017, and other relevant laws and regulations. These regulations
define the requirements and standards for financial reporting, auditing, and disclosure
of financial information by companies operating in Pakistan. The regulatory
framework ensures transparency, accountability, and adherence to international
financial reporting standards.

3. Financial Reporting: During the financial year, entities in Pakistan are required to
prepare financial statements in accordance with the International Financial Reporting
Standards (IFRS) or other applicable reporting frameworks. These financial
statements include the balance sheet, income statement, cash flow statement, and
statement of changes in equity. Financial reporting provides insights into the financial
performance, position, and cash flows of businesses, facilitating informed decision-
making and transparency.

4. Budgeting and Fiscal Planning: The financial year is a critical period for budgeting
and fiscal planning at the national level. The government of Pakistan formulates an
annual budget that outlines revenue projections, expenditure allocations, and policy
priorities for the upcoming financial year. The budgeting process involves estimating
government revenues, planning expenditures, and allocating funds to various sectors
such as education, healthcare, infrastructure, and defense.

5. Taxation: The financial year in Pakistan aligns with the tax year, which also runs
from July 1st to June 30th. During this period, individuals and businesses fulfill their

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 tax obligations by filing tax returns and paying taxes based on the Income Tax
Ordinance, 2001. The financial year provides a defined timeframe for taxpayers to
calculate their taxable income, claim deductions, exemptions, and credits, and meet
their tax payment deadlines.

6. Economic Analysis and Planning: The financial year is an important period for
economic analysis, monitoring economic indicators, and strategic decision-making.
Key economic indicators such as Gross Domestic Product (GDP) growth, inflation
rates, employment rates, trade balances, and investment trends are analyzed during
this period. Economic analysis helps policymakers, businesses, and investors assess
the performance of the economy, identify trends, and plan for future growth and
development.

7. Reporting Deadlines: Entities in Pakistan are required to prepare and submit their
financial statements within a specific timeframe after the end of the financial year.
The Securities and Exchange Commission of Pakistan (SECP) and other regulatory
bodies determine the reporting deadlines for different types of entities. Timely
financial reporting ensures transparency, accountability, and facilitates decision-
making by stakeholders.

II. TAX YEAR IN PAKISTAN

The tax year in Pakistan refers to the specific period during which individuals and businesses
calculate and fulfill their tax obligations. In Pakistan, the tax year runs from July 1st to June
30th of the following year. Let's discuss the tax year in Pakistan in detail:

1. Tax Laws and Regulations: The tax year in Pakistan is governed by the Income Tax
Ordinance, 2001, and subsequent amendments. This legislation provides the legal
framework for the assessment, calculation, and payment of taxes by individuals,
businesses, and other taxpayers. The tax laws specify the types of income, deductions,
exemptions, tax rates, and reporting requirements.

2. Taxable Income Calculation: During the tax year, individuals and businesses
calculate their taxable income by considering various sources of income, such as
employment income, business profits, capital gains, rental income, and other forms of
income. Taxpayers must determine their income, claim eligible deductions, and apply
applicable exemptions as per the provisions of the Income Tax Ordinance.

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3. Tax Rates: The tax rates in Pakistan are progressive, meaning that higher income
earners are subject to higher tax rates. The Income Tax Ordinance specifies the tax
brackets and rates for different income levels. The tax rates may vary for individuals,
salaried individuals, companies, and other taxpayers. It is important for taxpayers to
accurately calculate their tax liability based on the applicable tax rates.

4. Filing Tax Returns: Taxpayers in Pakistan are required to file their tax returns within
a specific period after the end of the tax year. The Federal Board of Revenue (FBR)
determines the filing deadlines for different categories of taxpayers. Tax returns are
submitted electronically through the FBR's online portal or manually, depending on
the taxpayer's category and income level.

5. Tax Payments: Taxpayers are responsible for making timely tax payments based on
their tax liability. Payments can be made through various methods, including online
banking, electronic funds transfer, or physical payment at designated bank branches.
Advance tax payments may also be required during the tax year to meet specific
requirements, such as for salaried individuals.

6. Tax Assessments and Audits: Following the end of the tax year, the tax authorities
have the authority to assess and audit tax returns to ensure compliance with the tax
laws. Tax audits are conducted to verify the accuracy and completeness of the
information provided in the tax returns. If discrepancies or non-compliance are
identified, the tax authorities may conduct further investigations, impose penalties, or
initiate legal proceedings.

7. Tax Planning and Compliance: The tax year provides an opportunity for individuals
and businesses to engage in tax planning activities to optimize their tax positions. Tax
planning involves analyzing the tax implications of financial decisions, utilizing
available deductions and exemptions, and structuring transactions in a tax-efficient
manner. Taxpayers need to ensure compliance with tax laws, maintain proper
documentation, and keep accurate records to support their tax positions.

8. Tax Refunds: In cases where taxpayers have paid more tax than their actual liability,
they may be eligible for tax refunds. Tax refunds are processed by the tax authorities
after the assessment of tax returns. The refund process involves verifying the
taxpayer's claims and issuing refunds through electronic means or by issuing refund
cheques.

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III. COMPARE FINANCIAL YEAR OF PAKISTAN AND ARMENIA

The financial year in Pakistan and Armenia, although serving the same purpose of organizing
financial activities and reporting, have some notable differences. Let's compare the financial
year of Pakistan and Armenia:

1. Duration:
In Pakistan, the financial year starts on July 1st and ends on June 30th of the
following year. This duration aligns with the tax year in Pakistan.
On the other hand, Armenia follows the calendar year for its financial year, starting
on January 1st and ending on December 31st.

2. Regulatory Framework:
Pakistan's financial year is regulated by the Companies Act, 2017, and other relevant
laws and regulations that define the requirements for financial reporting, auditing, and
disclosure.
Armenia has its own set of laws and regulations governing financial reporting, such
as the Law on Accounting and Reporting and the Law on Auditing.

3. Financial Reporting Standards:

In Pakistan, entities are required to prepare financial statements in accordance with
the International Financial Reporting Standards (IFRS) or other applicable reporting
frameworks.
In Armenia, on the other hand, follows the Armenian Accounting Standards (AAS)
which are based on the International Financial Reporting Standards (IFRS) with some
modifications to suit local requirements.

4. Reporting Deadlines: The reporting deadlines for financial statements differ in

Pakistan and Armenia.
In Pakistan, entities are required to submit their financial statements within a specific
timeframe after the end of the financial year. The Securities and Exchange
Commission of Pakistan (SECP) and other regulatory bodies determine these
deadlines.
In Armenia, companies must submit their financial statements to the State Revenue
Committee of Armenia within 3 months from the end of the financial year.

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 5. Tax Year Alignment:
In Pakistan, the financial year aligns with the tax year, which runs from July 1st to
June 30th. This alignment allows businesses and individuals to use their financial
statements prepared during the financial year for tax calculations and reporting.
In Armenia, although the financial year follows the calendar year, the tax year also
aligns with the calendar year.

6. Government Budget: The financial year plays a crucial role in the budgeting process
of both countries.
In Pakistan, the government formulates an annual budget for the upcoming financial
year, outlining revenue projections, expenditure allocations, and policy priorities.
Armenia also prepares an annual budget that covers the calendar year, setting forth
the government's financial plans and priorities.

While there are some differences in the duration, reporting frameworks, and deadlines
between the financial year of Pakistan and Armenia, the underlying purpose of organizing
financial activities, budgeting, and reporting remains the same. Both countries emphasize the
importance of transparency, accountability, and compliance in financial reporting.

IV. COMPARE TAX YEAR OF PAKISTAN AND ARMENIA

The tax year in Pakistan and Armenia, although designed to govern tax-related activities,
have some notable differences. Let's compare the tax year of Pakistan and Armenia:

1. Taxable period

 In Armenia, the taxable period is the calendar year which starts from 1st janruary and
ends at 31 December.
 In Pakistan A tax year aligns with financial year which starts on 01st day of July and
ending on 30th day of June

2. Tax Laws and Regulations:

 Armenia, has its own tax laws and regulations, including the Law on Profit Tax and
the Law on Value Added Tax, which govern the taxation of individuals and
businesses.

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  The tax year in Pakistan is governed by the Income Tax Ordinance, 2001, and
subsequent amendments. It provides the legal framework for the assessment,
calculation, and payment of taxes by individuals, businesses, and other taxpayers.

3. Tax Filing and Payment Deadlines:

 In Armenia, the tax return filing and payment deadlines are also determined by the
tax authorities and generally fall within a few months after the end of the tax year.
 In Pakistan, taxpayers are required to file their tax returns within a specific period
after the end of the tax year. The Federal Board of Revenue (FBR) determines the
filing deadlines for different categories of taxpayers. Tax payments are also due
within specific deadlines based on the tax liability.

.4. Tax Rates and Structure: The tax rates and structure vary between Pakistan and
Armenia.

 Armenia has a progressive tax system, but with different tax rates and income
brackets. Additionally, Armenia has different tax rates for various types of income,
including personal income tax, corporate income tax, and value-added tax (VAT).
 Pakistan has a progressive tax system, where higher income earners are subject to
higher tax rates. The tax rates in Pakistan vary for different income brackets and types
of income. Tax Treaties: Both Pakistan and Armenia have entered into various
bilateral tax treaties with other countries to avoid double taxation and promote
international cooperation in tax matters. These treaties provide guidelines for
determining the tax liabilities of individuals and businesses engaged in cross-border
transactions between the two countries.

5. Tax Incentives and Deductions: Pakistan and Armenia provide certain tax incentives,
deductions, and exemptions to encourage investment, promote specific industries, and
support economic growth. The specific tax incentives and deductions available in each
country may differ based on their respective tax laws and policies.

6. Tax Administration: The tax administration and enforcement mechanisms may vary
between Pakistan and Armenia. Each country has its tax authorities responsible for tax
assessment, collection, and enforcement. The tax authorities conduct audits, investigations,
and take appropriate actions to ensure compliance with tax laws and regulations.

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While the tax year in Pakistan and Armenia shares the objective of regulating tax-related
activities, there are differences in their duration, tax laws, filing deadlines, tax rates, and tax
administration. These differences reflect the unique legal and regulatory frameworks of each
country. Understanding these distinctions is crucial for individuals and businesses to
accurately calculate and fulfill their tax obligations within the respective jurisdictions.

In conclusion, the tax year in Pakistan and Armenia provides a defined period during which
individuals and businesses assess their tax liabilities, file tax returns, and make tax payments.
The tax laws, rates, deadlines, and administration procedures differ between the two
countries, reflecting their unique legal and regulatory frameworks. Complying with the tax
regulations in each country is essential to ensure accurate reporting and adherence to tax
obligations.

V. Conclusion:

In conclusion, the tax year in Pakistan and Armenia represents the designated period during
which individuals and businesses fulfill their tax obligations. While there are similarities in
terms of the objective of regulating taxation, there are notable differences between the tax
years of the two countries.

The tax year in Pakistan begins on July 1st and ends on June 30th of the following year,
aligning with the financial year. In contrast, Armenia follows the calendar year, with the tax
year running from January 1st to December 31st. This difference in duration has implications
for tax planning, reporting, and compliance activities.

Another distinction lies in the tax laws and regulations governing each country's tax year.
Pakistan operates under the Income Tax Ordinance, 2001, while Armenia has its own set of
tax laws, including the Law on Profit Tax and the Law on Value Added Tax. These legal
frameworks define the tax obligations, rates, exemptions, and reporting requirements for
taxpayers.

Filing and payment deadlines also differ between Pakistan and Armenia. In Pakistan,
taxpayers are required to submit their tax returns within a specific period after the end of the
tax year, with payment deadlines based on the tax liability. Similarly, Armenia sets its own
filing and payment deadlines, generally falling within a few months after the end of the tax
year.

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Tax rates and structures vary between the two countries as well. Pakistan operates a
progressive tax system, with higher income earners subject to higher tax rates, while Armenia
also employs a progressive tax system with its own set of rates and income brackets.
Different types of income, such as personal income, corporate income, and value-added tax,
may attract varying tax rates in Armenia.

Additionally, each country has its own tax administration responsible for tax assessment,
collection, and enforcement. The tax authorities conduct audits, investigations, and take
appropriate actions to ensure compliance with tax laws and regulations. Both Pakistan and
Armenia have also entered into tax treaties with other countries to avoid double taxation and
promote international cooperation in tax matters.

Understanding the differences in the tax year between Pakistan and Armenia is crucial for
individuals and businesses operating in these countries. It enables taxpayers to accurately
calculate their tax liabilities, comply with the respective tax laws, meet filing and payment
deadlines, and engage in effective tax planning.

Overall, while the tax year serves a similar purpose in Pakistan and Armenia, the differences
in duration, tax laws, filing deadlines, tax rates, and administration highlight the unique
aspects of each country's taxation system. Complying with the specific regulations of the tax
year in each country is essential for taxpayers to fulfill their obligations and contribute to the
economic development and stability of their respective nations.

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