Wednesday, September 26, 2007

World Wide Web Pages with World Wide Legal Issues of Tax Jurisdiction

The Central board of revenue has only authority to tax the Pakistani source income of nonresident individuals and foreign corporations of income derive from the trade and business having direct connected with Pakistan and with respect to income that arises from a trade or business within the jurisdiction of Pakistan. For tax purposes the CBR generally asserts its jurisdiction only to taxable income which is directly connected with the course of a trading or business within Pakistan.

For avoidance of double taxation CBR has conducted various tax treaties with other Countries for defining Pakistan tax jurisdiction in matter connected with imposition of taxation. There are certain treaties which CBR has conducted other countries for defining the right to tax the Pakistani source trade or business income of foreign individuals or any other source and corporations only when such income is attributable on the principles of permanent establishment" or "fixed base" in the Pakistan. When we intend to apply these principle of taxation in electronic commerce, there emerge many legal issues which our tax administrative department or adjudicative system is not position to resolve complexities and technicalities caused by advancement of information technology. The application of our tax laws to Pakistani income derived by electronic commerce has caused our tax statutes ineffective neither their construction nor interpretation help in resolving these legal issues.

First, the legal issue whether a foreign person engaged in electronic commerce is conducting a trade or business "in Pakistan" is difficult to adjudicate by reference to the traditional criteria of imposition of taxation. The trade or business which is conducted in the jurisdiction of Pakistan evolved in the context of trading methods of interpretation of law provisions because application of law provisions where the identification of parties to transaction or business are identifiable physical locations but the technological advancement of electronic commerce has made it possible for parties to conduct transaction log in any jurisdiction without having any presence there. In above conclusion it can be said that electronic commerce allows the business concern to conduct through telecommunications and computer links that have no physical connection to the jurisdiction in which the income-producing activity occurs.

Secondly when any foreign person is conducting business is Pakistani customer who are residing in Pakistan but the question of permanent establishment of these foreign person in their territories are still matter of concern legal adjudication of dispute for imposition of taxation on these transactions. In other words a foreign person engaged in electronic commerce with Pakistan customers is supposed to be engaged in Pakistani trade or business; it may be even more problematic to adjudicate a matter that such a person has a "permanent establishment" in the Pakistan in the many cases that will be governed by Pakistan tax laws and treaties. The concept of permanent establishment implies anything which is fixed and attached to earth as a fixed place of business through which the business of the enterprise is wholly or partly carried on. The legal issue which are encountered in electronic commerce are that concept of permanent become obsolete because in number of delivery of goods and performance of services are done without anything attached to earth. These jurisdictional issues have significant implications for the neutrality and administrability principles for imposition and adjudication of tax issues. If income that a foreign corporation earns through electronic commerce will escape taxation either because it is not effectively connected with a trade or business "in Pakistan" or because the corporation lacks a permanent establishment in the Pakistan, it will negate the principle of neutrality earned through tax income generated by trade which are earning in competing market businesses and further offend basic principles on that commerce is itself is carried out. Neutrality considerations favor of similar jurisdictional rules for both forms of commerce conventional and electronic.

On the other hand, even if jurisdictional principles could be developed that would treat economically similar forms of commerce the same for income tax purposes regardless of their mode of delivery, it is not at all clear that such a rule would be administrable. The power to enforce the tax obligation in case where the tax payer presence can only be connected through remote server who are not falling in Pakistan or any effort on part of CBR to administrate or adjudicate on electronic commerce of remote hosting server who can only be connected by wireless means, it can be easily concluded that these enforcement of orders are beyond the power and jurisdiction of Central board of revenue.

Jurisdiction in cyberspace without any physical existence

The jurisdiction often is vested in authority to impose taxation where subject matter situates or where parties are residing. Jurisdiction of law traditionally defined as the geographical boundaries within where a law or set of laws are enforceable. The jurisdiction often vests in authority to impose taxation on the transaction of sellable goods and services rendered in the territorial boundaries of the country.

The concept of the jurisdiction to impose taxation was not difficult question before the e-commerce transactions have started in cyberspace which have no physical existence and location. The scattered individuals across the world conducting the e-commerce transaction without having any locus point of establishment. Where the encryption of data has taken place, rather the right to impose tax to be vested in place of where encryption of database has taken place or where the physical establishment is there. The world adjudication on electronic commerce taxation dispute is bifurcating on this particular point.

Legal issue of Jurisdiction to legislate, Adjudicate and enforce

The e-commerce world, the question who own jurisdiction to decide question who own the right to legislate, adjudicate and enforce the taxation is most crucial concern. Legislation is first step to ultimate adjudication of the matter, but question arises who can legislate. The selling e-commerce transaction, the purchaser could be from any jurisdiction across the globe, rather the country who own jurisdiction over the purchaser have the right to impose taxation and to reconstruct statutory provisions for same purpose.

Likewise the seller physical establishment and data encryption place also arise many tricky and crucial questions concerning the imposition of e-commerce taxation which are hard to answer in the light of scientific advancement of e-technology.

Multi dimensional location of Transaction

The geographic location of a person vest where the tax payer is a residing, however, physical location can not appropriately interpreted in light of present tax statutes when technology exists that enables taxpayers to carry out almost every e-business transaction into another jurisdiction while never actually physically leaving their geographic location even for a single day. Most crucial concern for the tax authorities is that a tax payer or customer can made effectively thousands of login into e-pages in moments via the World Wide Web page or other electronic communication means highway to another jurisdiction without ever being subject to a border control mechanism .

The seller and buyer jurisdiction and location is primary principle of imposition of taxation, but to figure out the location of the e-transaction is most formidable task.

The location of parties where they are residing, it could in within Pakistan tax jurisdiction or it could be any where, the parties residence arise the multi-jurisdictional issues.

The issue of jurisdiction has been defined in Sale Tax Act,1990 , which has considerably has followed the definition of jurisdiction based on the territory and place of transaction as has enunciated in sale tax the in Pakistan implies any thing within the territory of Pakistan.

"...taxable supplies made in Pakistan by a registered person in the course or furtherance of any taxable activity carried on by him".

Like wise the central excise duties Act 1944 also remained adhere to the jurisdictional issue to the definition of in Pakistan which are considerable important to look at the wordings of statutory construction.

" on all excisable services, provided or rendered in Pakistan as and at the rates, set forth in first schedule."

There is liberal definition of the statute is available in income tax ordinance 2001, let us look at the definition which has been enunciated in the income tax ordinance.

"...Subject to the provisions of this Ordinance, the total income, in relation to any assessment year, or a person,- (a) who is a resident, includes all income from whatever source derived, which- (i) is received, or is deemed to be received, in Pakistan in the income year by, or on behalf of, such person; or (ii) accrues or arises, or is deemed to accrue or arise, to him in Pakistan during such year; or (iii) accrues or arises to him outside Pakistan during such year; (b) who is a non-resident, includes all income from whatever source derived, which- (i) is received, or is deemed to be received, in Pakistan in the income year by, or on behalf of, such person; or (ii) accrues or arises, or is deemed to accrue or arise, to him in Pakistan during such year;

Where the data encryption has been taken place, jurisdiction issues arise there, as we could understand the matter, because of e-commerce transaction, the location of parties difficult to deduct, under given circumstances, because of factors which I understand are how to configure out the exact location of the parties unless the ISPs and web hosting sites are not monitored?

Issues of Evasion of taxation and imposition of double Taxation

Challenging for the policy maker to stop evasion and imposition of fair taxes on e-commerce transaction, but when the multi dimensional issue are invoked that could lead to imposition of double taxation or evasion of taxes. Unless the international co-operation is not sought to adopt desirable policy for the imposition of taxes, that can lead to imposition of double taxation.

The writer is an advocate of High Court and practicing immigration and corporate laws in Pakistan since September 2001. Author can be contacted by Adil Law Company (Advocates and Immigration lawyers) Office No.3 2nd Flr Hafeez Chambers 85 The Mall Rd Lahore Pakistan Telephone: +9242-6306195 +9242- 6360108 Fax: + 9242 6360108 Cell: +92300 4254910 E-mail:

Replacing a Stock Radio in a Ford Taurus 2002 SEL

So my friend and I are somewhat into car audio/visual (it's a lot of fun) and decided to change out my stock Ford radio for an aftermarket one.

We didn't really know what we were getting ourselves into until we got out the old deck. The 'ol junker (well not really a junker, since it's an EATC temperature control module coupled with a CD player) was one big circuit board. This thing looked so out-of-date that man could have went to the moon with it (produced in 1974).

We got the deck out, bought an aftermarket dash kit from the local car audio dealer, and connected the new deck. THAT part was easy - but wiring the EATC back up (electronic automatic temperature control) was worse then sticking yourself in the eye with a hot poker.

Here's a tip to anyone who wants to replace their stock car radios - NEVER cut the wiring harnesses. That being said, finding another wiring harness for the beast that actually works has been almost impossible. None of the wiring diagrams off any website were of merit - and Ford has none themselves that could be of help to us.

On top of that, the aftermarket dash kit we bought didn't have any knobs - they expected us to supply ones from the last heating system - and nothing to plug the knobs into. We could order the knobs - $12 each - order the switches - etc. The wiring harness was $80, the switches were around $100 for all the total cost for fixing this heating system would be getting close to $500 when you incorporate the cost of the aftermarket dash kit as well.

I don't think I'll ever replace the stock radio in a Ford again. At least if I do, it would have to be a model that Ford RECOGNIZES and actually has help regarding the model. Buying replacement parts at Canadian Tire just dosen't cut it - they never work or fit - and when a Ford dealership can barely help you, you really wonder who can.

Long story short - with winter fast approaching we fused two wires together to turn the heat on for the winter. Simple solution. Likely when summer rolls around, we'll fuse a couple together to turn on the AC.

Only thing that bothers me is I can't turn the heat up or down. But it's on - so scrue it.

Please check out our website, selling audio/visual at Canadian wholesale prices at

Starting Up A New Business - How You Can Quickly and Easily Do a Break Even Analysis

Break-even analysis is a good tool for quickly determining if an idea has any legs under it. It is not meant to be used alone as a sole decision making tool. Most business formula-tools work better when tracked over time and compared with other decision making tools, including the owner's gut instinct.

Break-even needs you to track your direct costs. Direct costs are expenses that only occur when you sell a product. Examples of direct costs are cost of products you sell and supplies. Once you subtract these costs from your income, you know how much each sale contributes to pay for your overhead (another term for indirect/fixed costs) costs. Business terminology can get confusing but hang in there.

This can also be done with percentages.

Step 1 is to subtract your direct costs from your income to get a number called Gross Profit.

Step 2 is to divide the gross profit number by your income to determine its percentage of income; e.g.

$2,000 of income minus $500 of direct costs equals $1,500 of gross profit.

$1,500 divided by $2,000 equals 75%. This means that 25 cents of every $1 of sales goes to paying direct costs (products and supplies) and that 75 cents is left over to pay for all the other expenses (indirect costs) plus your profit.

If your company has rent, advertising, utilities, and auto expenses (all indirect costs) of $1,000.

Then $1,000 divided by .75 equals $1,333 (this is the sales volume necessary to pay all your indirect costs and your profit equals zero.

The $1,333 level of sales in this case represents your break-even point.

How can you use break-even info? Using the above example, say you want to hire a helper that is going to cost you $800 per month. How much more income do you need to pay for this helper?

$800 divided by .75 equals $1,067.

You need $1,067 additional income per month to pay the $800.

Break-even analysis is a great way to set sales goals for your sales staff. The base salary you pay would be an indirect cost and any commission would be a direct cost.

Lets use the above example.

$800 for base and you are going to offer a 20% commission on all sales.

The 20% would have to be added to the direct costs (25% + 20% commission = 45%).

The new gross profit as a percent would be 100% (total sales) - 45% = 55% gross profit.

$800 base salary divided by .55 = $1,455 in additional sales to pay for their base salary and commission.

Lets say you want $5,000 per month for yourself. Add the $5000 to the indirect costs and then divide by the Gross Profit % and you now have a pretty good idea of what your sales volume needs to be to provide you with $5,000 a month income.

Let's build on the salesperson example.

$5,000 plus the indirect costs of $1,800 equals $6,800.

$6,800 divided by the gross profit % of 55% or .55 = $12,364 in monthly sales volume should provide you with $5,000 in monthly income.

Break-even analysis is a linear tool and assumes that operational relationships between sales and expenses will remain the same (as laid out in the formula). Decisions involving longer terms or with multiple variables are more difficult to predict and should be re-analyzed over time.

Bruce Hunter is the CEO of CORE Magazine CORE is the leading online source for starting up a new business Visit our free online resource center now to get free access to information on loans for small businesses

Love The Thrill of Risk? Invest in an Annuity!

With the stock market in steep decline, people are looking for safe places to invest their savings. Many banks and investment companies are pushing annuities. Annuities offer a higher interest rate than CD's, but are they safe?

You could view an annuity as a tax deferred CD. You don't pay taxes on the interest until you start drawing from the annuity. But there are some important differences between an annuity and a CD.

An annuity is a product offered by an insurance company. With giant corporations like Enron, Kmart, Worldcom, and United Airlines going bankrupt, can you guarantee that the insurance company won't fold, leaving you with nothing? Insurance companies are insured by re-insurers, like General Re. But it seems no matter how large a company is, you can't be sure it won't fold. The bankruptcy of a large insurance company might cause the re-insurer to collapse along with it.

Bank CD's are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $100,000 per bank. The FDIC is a branch of the U.S. Government, who, as you know, are the people who print the money. If they go bankrupt, we'll have more to worry about than just losing our savings!

A new type of annuity called a charitable gift annuity has come on the market recently. These are issued by charity organizations. You give your money to the charity, you receive a tax benefit, and in exchange the charity promises you a fixed payment for life. Unfortunately, this scheme has become a mode of operation for con artists.

The charitable gift annuity has been added to top ten scam list of the North American Securities Administrators Association. They explain that charitable gift annuities are subject to virtually no federal regulation. Here in Arizona, 430 investors lost their savings in a ponzi scheme run by the Mid-America Foundation Inc.

Banks and investment companies hawking annuities promote the higher than CD interest rates, but they fail to reveal the hidden fees and high early withdrawal penalties. If you need to access your annuity before age 59, you could be subject to a 10 percent penalty.

With the recent bankruptcies, and discovery that many giant corporations have been cooking their books for years, I feel it's best to play it safe. If you love the thrill of risk, or if you have already purchased an annuity, I wish you luck. As Will Rogers said, "I am not as concerned about the return ON my money as I am about the return OF my money".

Permission is granted for the above article to forward, reprint, distribute, use for ezine, newsletter, website, offer as free bonus or part of a product for sale as long as no changes are made and the byline, copyright, and the resource box below is included.

About The Author

Copyright(C)2002 Bucaro TecHelp. To learn how to maintain your computer and use it more effectively to design a Web site and make money on the Web visit To subscribe to Bucaro TecHelp Newsletter Send a blank email to

Discover the Biggest Trading & Investing Mistake

Any online investor / trader seeks an excellent off or online future trading career opportunity. Despite this goal, did you know 95 percent of all traders go broke within the first two months? Why do investors lose vast amounts of wealth in one or more of the following markets option trading, forex trading or currency trading, stock trading, future or commodity trading etc in such a short amount of time?

Most online investors / traders interact in devastating forms of thinking, which convinces the mind to the point where the trader believes that an educational enhancement ability that develops superb market research skills is not important. On the contrary, if trading is not treated as other business opportunities, the new sales and trading job will cripple the trader. You must develop a purposeful or industrious undertaking to learn how it works. Would you conduct business as a brain surgeon with out a college or university degree? I do not think so; similarly, the same course of action holds true for trading success.

The secret of my success required an earnest and conscientious effort on my part. This action accomplished something to the point of pure boldness; in other words, no matter how boring or non-important you think learning how to trade may be, it must be done to insure a success story.

Every successful company needs a business plan. Yet, when most people take a gamble on the securities industry, they fail to put a trading plan into place. In other words, they end up going on an emotional roller coaster, governed by how the market performs.

Without a trading plan, the majority of traders approach the financial market in an inconsistent manner - i.e. they follow their whims. The typical pattern may include the following:

Day 1 - experiment with option trading
Day 2 - randomly select any online trading brokerage firm.
Day 3 try out future trading
Day 4 read about oriental trading then decides to go into that direction
Day 5 change mind completely and try currency trading or forex trading
Day 6 try day trading then in midstream chooses to hold trade for the long term
Day 7 venture off into stock trading
Day 8 dabble in commodity trading
Day 9 give up because you think it is a hopeless cause.

This example is meant to look confusing. Similarly in the illustration above, this trader may use one set of indicators one day, and the next day they will throw these indicators out the window and take on a completely set of new rules.

Unfortunately, with no consistent approach, your trading decisions, governed by emotions, are doomed to failure here is why.

When faced with losing money in the market, what do traders do? Usually, they end up rationalizing to hold on to a losing stock. The driving force behind this is that they do not want to be wrong. They let their ego get in the way of making profits.

LOOK! Let us set the record straight. THIS IS A FIRM FACT - not every trade will be a winner. You will not make the maximum profit out of every trade. There is no Holy Grail trading system! You just need a trading plan, which matches your personality.

When I say trading plan, I am not talking about fundamental analysis or technical analysis specifically, I am talking about setting up a simply a set of guidelines to follow regardless of what stock selection method you use.

In fact, through a study of successful traders, I found there are many different trading methods for entering a security. I have seen people use technical analysis; fundamental analysis even astrology to determine when to enter a trade. Despite these varied entry methods, one component remains the same among successful traders they all have a trading plan that suits them.

In fact, successful traders have a written plan and my friend this is the essential component to their success. I guarantee that investors who stick like glue to a trading plan are the ones who make NOT LOSE MILLIONS of dollars in their activities of online investing.

David Jenyns is recognized as the leading expert when it
comes to designing profitable trading systems.

His most recent course Ultimate Trading Systems is a step-
by-step trading roadmap to designing profitable trading
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Your House Is Your Biggest Investment Do You Really Just Want a Loan Advisor?

A Loan Officer may be able to help you qualify for a loan. Is that really what you want? When you consider that your home is your biggest investment shouldn't it be part of an Entire Investment Plan?

Most people don't look at their house as part of their overall financial plan. That is a huge mistake especially when you consider that for most people a house will be the biggest investment they ever make. When the house is integrated into an overall financial plan it by a qualified financial Advisor magic happens.

When you are young and starting out your only concern may be just to get the mortgage that will allow you to qualify for that house. Back in 1985 when I bought my first house I actually had a 40 year ARM because that was the only way I could qualify for a house. A few years later after my second daughter was born I didn't nearly have enough life insurance or emergency savings but I just couldn't afford it.

Wow if I knew then what I know now. Today most people can lower their mortgage payment by about 40% with a power option ARM. That 40% savings can be used for many things. For a young family it can be used for Life Insurance and an Emergency fund. For the older couple it can be used to help build a retirement nest egg.

A loan advisor would never be able to tell you all that. A Good financial advisor would be able to help you use your house as an integral part of your total financial plan

About the Author
Mike Makler Offers Financial Services (Mortgages,Life Insurance, Annuity) in Florissant Missouri which is in North St. Louis County Missouri Just Across the Bridge from St. Charles Missouri

Call Mike at 314 398-5547

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Copyright 2005-2006 Mike Makler