Day: April 13, 2019

Amnesty shows 91pc assets declarants are registered

ISLAMABAD: The Amnesty Scheme 2018 has shown the 91 percent tax dodgers, who availed the scheme for declaring undisclosed foreign assets were registered with tax department.

According to presentation of the finance ministry on the previous tax amnesty scheme, the analysis showed around 6,195 persons availed the scheme to declare foreign assets.

It revealed that out of total declarants of foreign assets around 5,625 were already income tax return filers and registered with the Federal Board of Revenue (FBR).

Only 570 declarants of foreign assets were those who had file their returns for the first time.

In the last scheme black money/undeclared assets of around Rs1,060 billion was whitened out of that declaration the FBR got only Rs47 billion as tax revenue. The average tax rate to document the undisclosed foreign assets was 4.43 percent.

Only Rs6.42 billion worth foreign assets were repatriated under the amnesty scheme. While another Rs3.34 billion was investment into the government securities availing the amnesty scheme.

The finance ministry said that amnesty scheme 2018 for undisclosed foreign assets was mostly availed by filers.

Foreign amnesty scheme declaration showed 25 percent declarations in immovable properties mainly in UAE, UK and Canada.

It also revealed that people preferred to keep money outside Pakistan.

The documentation of domestic assets/cash declared under the amnesty scheme 2018 was stood at Rs1,503 billion by 76,952 persons. The FBR received an amount of Rs75 billion as tax revenue.

Interestingly, the quantum of black money invested in prize bonds and cash was 65 percent out of domestic assets that was whitened under the amnesty scheme.

The analysis showed that local scheme was primarily used for money whitening. It is further identified that amnesty did not lead to higher number of tax payments for return for return of tax year 2018.

It said that undisclosed properties and bank accounts still remain largely undisclosed.

April 13, 2019
IMF assistance only option for economy: Shaikh Rasheed

KARACHI: Sheikh Rasheed Ahmed, Federal Minister for Railways on Saturday said the economy is facing immense difficulties.

“We are stuck in a lot of crises and it is a well-known fact that IMF conditions will be really stiff. I, as Minister, have been reiterating this since day one that we have no other option but to approach the IMF for assistance,” he said while addressing business community at Karachi Chamber of Commerce and Industry (KCCI).

He also said that there will be no economic stability without the political stability.

Highlighting the improved performance of Pakistan Railways (PR), the Minister said that PR has earned Rs4 billion more as compared to the earnings during the same period of previous year. “We have also provided three more container trains to the business community and the number of freight trains during Imran Khan’s has enhanced from just 8 to 14,” he added.

He said that a total of 24 new trains have been initiated so far in which five categories have been defined for different types of passengers while the occupancy of Rehman Baba Train has reached 160 percent with improved earnings.

“We have also initiated Jinnah Express and Green Line which will be followed by Sir Syed Express with a target to attract all five types of customers and our overall strategies have been very successful.”

Referring to 1760km long ML-1 project from Karachi to Peshawar, the Minister said that in this regard, Prime Minister Imran Khan will be signing the agreement on 27th April 2019 which would result in laying of completely new double track from Karachi to Peshawar with fencing on both sides and a minimum speed of 160Kms. Work on this project will be completed in the next five years, he added.

Commenting on Karachi Circular Railway Project, the Minister committed that as soon as the Sindh government signs agreement, approves the design and feasibility, Pakistan Railway will remove all encroachments, of which many of the commercial encroachments have already been removed, and hand over the track to Sindh government but the Sindh government has to work in this regard.

“If KCR is not completed during our tenure, it will never be completed”, he opined, adding that it was a really essential project which has become part of CPEC now and the Gwadar port which is capable of docking 190 ships each day.

Responding to a suggestion, he invited the business community to undertake joint venture for setting up setting up the proposed parking plaza on PR land at II Chundrigar Road but Pakistan Railways must continue to get its share regardless of whether the parking plaza becomes successful or not.

Speaking on the occasion, Chairman Businessmen Group & Former President KCCI Siraj Kassam Teli, while referring to Imran Khan’s last year’s visit on July 22 to Karachi to meet the business community just a couple of days before the general election, requested the Sheikh Rasheed to ask PM Imran Khan to honor all his commitments including his commitment to visit KCCI.

He said, “during the said meeting, we suggested to remove all those individuals who are involved in wrongdoings and corruption. We cautioned that the corrupt bureaucracy will not allow Imran Khan to take remedial measures but these elements have to be pinpointed and sidelined while the honest officers must be brought forward at the helm of the affairs.”

“However, except a few nominal changes done recently, no major change was witnessed in the FBR, NAB and FIA and the same old corrupt elements were given freehand, allowed to continue their wrongdoings and asked to make corrections”, he added.

Referring to a letter sent to Prime Minister Imran Khan, Siraj Teli said that the Private Sector’s representatives, who work on the Boards of Public Sector Companies such as Karachi Port Trust (KPT), Pakistan International Airlines (PIA) and Civil Aviation Authority (CAA) etc., take/ endorse decisions purely on the basis of whatever information is provided to them at the Board Meeting of any particular Public Sector company and that information may not be correct or may be incomplete.

“However, after a number of years when FIA or NAB find anything wrong in these public sector companies, they immediately start pursuing private sector representatives who have got nothing to do with day-to-day activities of the public sector companies yet they are accused and undergo extensive investigation and frequent summoning by NAB or FIA”, he added.

He asked Sheikh Rasheed to request the Prime Minister to look into this matter and give immunity to representatives of private sector from such investigations. They should not even be contacted until and unless there is a solid proof of their direct involvement or they being beneficiaries. The Karachi Chamber will never support anyone who is found guilty of any misconduct”, he said, adding that the business community was really worried and fed up due to constant harassment by NAB, FIA and FBR which is not acceptable to at all.

Commenting on the forthcoming Amnesty Scheme, Siraj Teli said that the previous amnesty was better but this amnesty scheme would become a failure due to lack of trust as those individuals who declared their assets in the previous amnesty scheme, were constantly being pursued and harassed by FBR, FIA and NAB. “Amnesty without protection and without dealing with the trust deficit would lead to failure”, he added.

President KCCI Junaid Esmail Makda, in his welcome address, stated that Karachi was one of the world’s most populous city and one of the mega cities. Lamentably, it may be the only city of this size that doesn’t have a mass transit transport system now when surprisingly, it did have Karachi Circular Railway (KCR) in the past.

He said that Karachi produces about 30 percent of the manufactured good, handles 95 percent of foreign trade and contributes more than 70 percent to the national revenue yet it remains deprived of basic facilities including KCR.

April 13, 2019
FBR lodges FIR against Shaheen Air for tax fraud

KARACHI: Federal Board of Revenue (FBR) has lodged First Information Report (FIR) against Shaheen Air International Limited for committing tax fraud to the tune of Rs 1 billion.

According to a copy of FIR made available to PkRevenue.com, the registered person has committed tax fraud as defined under section 2(37) of Sales Tax Act, 1990 in contravention to Section 11 (1) and 11 (4A) of the Sales Tax Act, 1990 read with the Sales Tax General Order No. 03 of 2004, dated June 12, 2004 and Section 4, 14 and 19 (1) of the Federal Excise Act, 2005 read with sub-rule 9 of the rule 41A, 47 and 60(1)(2)(3)(4) Table II etc.

The registered person M/s. Shaheen Air International (Pvt) Limited has failed to deposit government revenues, which the payment has collected / withheld from various passengers / travelers who opted to travel through the defrauder’s airline and has committed tax fraud within the maning and scope of tax laws.

April 13, 2019
RTO Karachi recommends revival of minimum tax for commercial importers in budget 2019/2020

KARACHI: Regional Tax Office (RTO) – II Karachi has recommended revival of minimum tax regime for commercial importers in the budget 2019/2020.

According to budget proposals sent to Federal Board of Revenue (FBR), the RTO-II Karachi recommended that Final Tax Regime for commercial importers should be withdrawn as it was creating distortion in the taxation system.

Sources said the FBR had been asked that the scope of Minimum Tax Regime (MTR) should be extended to commercial importers under Section 148 of the Income Tax Ordinance 2001 and for of goods under Section 153(I) and execution of contracts under section 153(1)(c) and Section 233 of the ordinance.

The RTO-II said that presently, the entire FTR sector, especially the commercial importers (by paying more six percent of tax), are at liberty to declare imputable income of their choice to explain assets or expenses.

This provision would bring them at par with other taxpayers, who do not enjoy this luxury, the FBR informed.

The RTO-II Karachi proposed concept of imputable income from FTR receipts: Section 169(4) which was ommitted through Finance Act 2004 may be re-incorporated in law.

This proposals should be made part of the budget in order to discourage those taxpayers who take undue benefit of provisions of law related to final tax regime and whiten those assets / incomes as well which are not from FTR recipts.

April 13, 2019
Weekly Review: Stock market likely gain on amnesty scheme, IMF talks

KARACHI: The stock market likely to perform better during next week owing to launching of new amnesty scheme and progress on IMF bailout package.

Analysts at Arif Habib Limited said that the market to turn positive in upcoming days with triggers including amnesty announcement and agreement with the IMF (principal agreement has been reached but staff level arrangement remains pending).

Moreover, budget proposal will continue to flow in and keep certain sectors under limelight.

The analysts said that this week the market winds blew in all directions, with the benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closing in green on 3/5 days and ending the week at 37,338 points (down by 184 points, 0.5 percent WoW).

While low GDP forecast by the IMF and cement price cut mid-week in North and South ruined market sentiment initially, growth in remittances, positive outcome of the Finance Minister’s meeting with World Bank and IMF in the US, anticipation of another Amnesty Scheme together with talks of cement price restoration by cement manufacturers, revived the colour of the market.

The analysts also highlighted that the market fell below its 3-year low this week.

Negative sector-wise contributions came from i) Cement (209.9 points) as news of cement players cutting prices eroded investor confidence, ii) Oil & Gas Exploration Companies (63.7 points), iii) Fertilizer (39.1 points), iv) Textile Composite (19.3 points), and v) Pharmaceuticals (18.6 points).

On the flip side, sectors that contributed positively include i) Power Generation & Distribution (73.4 points), ii) Commercial Banks (72.2 points), iii) Oil & Gas Marketing Companies (20. points), iv) Food & Personal Care Products (11.8 points), and v) Automobile Assembler (11.7 points). Scrip-wise major negative contributions came from LUCK (60.7 points), FCCL (36.1 points), and DGKC (35.7 points).

Foreign selling continued this week clocking-in at USD 2.2 million compared to a net sell of USD 3.7 million last week.

Selling was witnessed in Commercial Banks (USD 4.0 million) and Power Generation & Distribution (USD 0.7 million). On the domestic front, major buying was reported by Banks / DFIs (USD 4.0 million) and Companies (USD 3.6 million).

Volumes settled at 148 million shares (up by 25 percent WoW) while value traded clocked in at USD 34 million (up by 36 percent WoW).

April 13, 2019
Sales Tax Act 1990: exemption on domestic supplies, imports

KARACHI: The government has allowed exemption on supply of goods and import of goods falling in the Sixth Schedule of Sales Tax Act, 1990.

Section 13 of updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), explained the exemptions on domestic supplies and imported goods.

Section 13: Exemption

Sub-Section (1): Notwithstanding the provisions of section 3, supply of goods or import of goods specified in the Sixth Schedule shall, subject to such conditions as may be specified by the Federal Government, be exempt from tax under this Act.

Sub-Section (2): Notwithstanding the provisions of sub-section (1) –

(a) the Federal Government may, whenever circumstances exist to take immediate action for the purposes of national security, natural disaster, national food security in emergency situations, protection of national economic interests in situations arising out of abnormal fluctuation in international commodity prices, removal of anomalies in taxes, development of backward areas and implementation of bilateral, multilateral agreements and matters relating to international financial institutions or foreign government-owned financial institutions by notification in the official Gazette, exempt any taxable supplies made or import or supply of any goods or class of goods, from the whole or any part of the tax chargeable under this Act, subject to the conditions and limitations specified therein;

Sub-Section (3): The exemption from tax chargeable under sub-section (2) may be allowed from any previous date specified in the notification issued under clause (a).

Sub-Section (4): omitted

Sub-Section (5): omitted

Sub-Section (6): The Board shall place before the National Assembly all notifications issued under this section in a financial year.

Sub-Section (7): Any notification issued under sub-section (2), after 1st July, 2015 shall, if not earlier rescinded, stand rescinded on the expiry of the financial year in which it was issued:

Provided that all such notifications, except those earlier rescinded, shall be deemed to have been in force with effect from the 1st July, 2016 and shall continue to be in force till the 30th June, 2018, if not earlier rescinded:

Provided further that all notifications issued on or after the first day of July, 2016 and placed before the National Assembly as required under sub-section (6) shall continue to be in force till thirtieth day of June, 2018, if not earlier rescinded by the Federal Government or the National Assembly.

April 13, 2019
SRB suspends registration of IT firm for unrealistic input tax adjustment

KARACHI: Sindh Revenue Board (SRB) has suspended sales tax registration of an information technology (IT) firm for unrealistic adjustment of input tax adjustment.

According to a notice, the SRB suspended sales tax registration of M/s. Cube XS Weatherly (Pvt) Limited. The SRB said that the taxpayer had filed nil return for the tax periods from October 2013 to January 2019 and claimed / adjusted heavy amount of input tax wherein the input-to-output tax ratio is as much as 2,573 percent, which is neither economically possible nor is allowed under provision of Sindh Sales Tax Act, 2011.

The SRB further said that the taxpayer had adjusted/claimed full amount of input tax without apportioning the same which was tantamount to tax fraud and was also contravention under provincial tax laws.

The taxpayers had been asked in hearing on February 14, 2019 to furnish the copies of audited financial statements along with bifurcation of revenues/sales but registered person failed to do so.

“The registered person has neither deposited the Sindh sales tax nor e-filed the returns for the tax period of February 2019,” the SRB said.

The SRB directed the taxpayer to take remedial actions by April 25, 2019 to revoke the suspension.

In case of non-satisfactory response or failure to take remedial measures on or before April 25, 2019 the case would be further proceeded for cancellation of the taxpayer’s registration with SRB, the notice said.

April 13, 2019