Day: August 31, 2019

All sales tax refund claims to be processed through risk management system

ISLAMABAD: Federal Board of Revenue (FBR) has said that every refund claim of sales tax refund shall be processed through Risk Management System of the FBR’s computerized system.

The FBR amended the Sales Tax Rules, 2006 through SRO 918(I)/2019 to make mandatory the routing of refund claims through RMS of the FBR’s computerized system.

Based on the parameters in RMS, a refund claim shall be routed to any of the following three channels as described below, namely:−

(a) Fully Automated Sales Tax e-Refund System (FASTER), The provisions related to this channel are prescribed in Chapter V-A.

(b) Expeditious Refund System (ERS), The claims filed by the manufacturer cum-exporters under section 10 of the Act that do not fulfill parameters of FASTER channel and the same are considered as involving medium risk by RMS shall be routed to ERS. The RPO for verified amount shall be generated and forwarded to CSTRO for payment.

(c) Sales Tax Automated Refund Repository (STARR), The claims that do not fulfill criteria for both FASTER and ERS channels shall be processed through STARR in the manner as provided in rule 29.

For the refund claims processed through FASTER or ERS, the part of the refund claim that is not verified or not found admissible shall be subjected to system validation checks every week and Refund Payment Order (RPO) shall be generated for the amount found valid during each validation check. After every validation process, the information regarding RPO generated, if any, as well as the objections shall be communicated by the system to the refund claimant and also to the concerned RTO or LTU for information.

The FBR said that RPO so generated shall be communicated to the State Bank of Pakistan for payment in the aforesaid manner. After eight validation checks, including the initial one, if any amount still remains un-cleared, the same shall then be processed under STARR channel.

August 31, 2019
Abolition of SRO 1125 does not affect income tax concessions

KARACHI: The abolition of SRO 1125(I)/2011 has not taken away concessions available under income tax laws, the ministry of law and justice said in its opinion.

The SRO 1125(I)/2011 has been rescinded through Finance Act, 2019 and all the benefits available under this such as zero-rating of sales tax and reduced rates of sales tax had been abolished.

The Federal Board of Revenue (FBR) sent an Office Memorandum (OM) to the ministry of law and justice explaining that SRO 1125(I)/2011 dated December 31, 2011 had prescribed zero-rate sales tax for a particular class of taxpayers, while SRO 480(I)/2007 dated June 09, 2007 had specified the Sales Tax Procedure Rules, 2007.

Both SROs stood rescinded through SRO 694(I)/2019 dated June 29, 2019.

“Thus, in view of the aforesaid recession there is no doubt that the sales tax concession available under SRO 1125 and SRO 480 is no longer available.”

The ministry said that the answer to the queries raised in the OM warrants to be divided into two parts. The first part deals with Part II of the First Schedule to the Income Tax Ordinance, 2001, which deals with imports under Section 148 of the 2001 Ordinance; while the second part deals with Section 235-B(1) of the 2001 Ordinance.

“We have been instructed to the effect that Part II of the First Schedule to the 2001 Ordinance has given a certain reprieve to a ‘specified class of taxpayers’ for the purposes of import under section 148 of the 2001 Ordinance. In prescribing the said reprieve of income tax, the specified class of taxpayers who qualify for the said concession have been described in Part II of the First Schedule to the 2001 Ordinance to be those who are covered under SRO 1125 i.e. the notification which had prescribed the zero rated sales tax.”

“Therefore, the precise query posed to us is whether the repeal of SRO 1125 automatically also takes away the income tax concession given under Part II of the First Schedule to the 2001 Ordinance, in respect of imports under Section 148 of the 2001 Ordinance, 2001? The simple answer is that the concession prescribed in Part II of the First Schedule to the 2001 Ordinance has not been taken away.”

It is only for the purpose of a handy and convenient description of the person who are meant to enjoy the benefit or reprieve under Part II of the First Schedule to the 2001 Ordinance have been cross referred or defined to be the ‘specified class of taxpayers’ who qualify for the reprieve under SRO 1125.

The said reference is only for the purpose of a convenient identification of that class which is meant to enjoy the concession under Part II of First Schedule to the Income Tax Ordinance, 2001, the ministry said.

August 31, 2019
Customs stops goods removal from EPZ without authority

In a bid to tighten regulatory oversight and prevent unauthorized movement of goods, Pakistan Customs has barred customs agents from removing goods from Export Processing Zones (EPZ) without a proper authority letter issued by the relevant investor or importer.
(more…)

August 31, 2019
Weekly Review: Bulls likely return on attractive levels

KARACHI: The stock market may witness bullish trends during the next week after bears dominated the current week, analysts said.

Analysts at Airf Habib Limited said expect that the market to remain positive in the upcoming weeks since valuations have opened up to attractive levels.

Moreover, the government intends to issue Rs200 billion Sukuks so as to address problems of power sector. Any development in this regard will serve as a positive trigger for the market. With foreign reserves and external accounts improving as well as stability on PKR/USD front, they expect foreign interest to revive.

The market commenced on a negative note this week, carrying the pressure from last Friday since Asia Pacific Group kept Pakistan on enhanced monitoring mechanism. Moreover, privatization commission’s decision to divest some portion of government’s stake in State Owned Companies such as OGDC, PPL, KAPCO and PAKRI kept the sentiment weak.

However, amendment in GIDC Act 2015, giving 50 percent waiver to Fertilizer, Chemical, Cement and Textile Companies, cushioned the dip. Albeit, the market closed at 29,672 points down by a massive 1,678 points (5.4 percent WoW).

Sector-wise negative contributions came from i) Oil & Gas Exploration Companies (519 points) ii) Commercial Banks (400 points), iii) Oil & Gas Marketing Companies (160 points), iv) Cement (139 points), and v) Power Generation & Distribution (216 points). Scrip-wise negative contributions were led by OGDC (247 points), PPL (193 points), HBL (134 points), BAHL (79 points) and PSO (63 points).

Foreign buying was witnessed this week clocking-in at USD 0.97 million compared to a net sell of USD 4.97 million last week. Buying was witnessed in Commercial Banks (USD 2.5 million) and Technology and Communication (USD 1.0 million).

On the domestic front, major selling was reported by Mutual Funds (USD 13.5 million), however Individuals remained net buyers of USD 7.8mn. Average Volumes settled at 124mn shares (down by 29 percent WoW) while average value traded clocked-in at USD 29 million (down by 23 percent WoW).

August 31, 2019
FBR lists prohibited items for import, export

KARACHI: Federal Board of Revenue (FBR) has issued list of items that are prohibited for clearance of import or export under Customs Act, 1969.

The FBR issued Customs Act, 1969 updated till June 30, 2019 (incorporating changes brought through Finance Act, 2019) and explained Section 15 related to prohibition.

Section 15

Prohibitions:- No goods specified in the following clauses shall be brought into or taken out of Pakistan, namely:-

(a) counterfeit coins, forged or counterfeit currency notes, and any other counterfeit product;

(b) any obscene book, pamphlet, paper, drawing, painting, representation, figure, photograph, film, or, article, video or audio recording, CDs or recording on any other media;

(c) goods having applied thereto a counterfeit trade mark within the meaning of the Pakistan Penal Code, 1860 (Act XLV of 1860), or a false trade description within the meaning of the Copyright Ordinance, 1962 (XXXIV of 1962), the Registered Layout-Designs of Integrated Circuits Ordinance, 2000 (XLIX of 2000), the Registered Designs Ordinance, 2000 (XLV of 2000), the Patents Ordinance, 2000 (LXI of 2000), and the Trade Marks Ordinance, 2001 (XIX of 2001);

(d) goods made or produced outside Pakistan and having applied thereto any name or trade mark, being or purporting to be the name or trade mark of any manufacturer, dealer or trader in Pakistan, unless,-

(i) the name or trade mark is, as to every application thereof, accompanied by a definite indication of the goods having been made or produced in a place outside Pakistan; and

(ii) the country in which that place is situated is in that indication shown in letters as large and conspicuous as any letter in the name or trade mark, and in the same language and character as the name or trade mark;

(e) goods involving infringement of copyright, layout-design of integrated circuits, industrial designs, patents within the meaning of the Copyright Ordinance, 1962 (XXXIV of 1962), the Registered Designs Ordinance, 2000 (XLV of 2000), and the Patents Ordinance, 2000 (LXI of 2000), respectively; and

(f) goods made or produced outside Pakistan and intended for sale, and having applied thereto, a design in which copyright exists under the Copyright Ordinance, 1962 (XXXIV of 1962), the Registered Layout –Designs of Integrated Circuits Ordinance, 2000 (XLV of 2000), the Patents Ordinance, 2000 (LXI of 2000), and the Trade Marks Ordinance, 2001 (XIX of 2001), in respect of the class to which the goods belong or any fraudulent or obvious imitation of such design, patent, copyright except when the application of such design has been made with the license or written consent of the registered proprietor, right holder of the design, patent or copyright, as the case may be:

Provided that offences relating to goods imported or exported in violation of Intellectual Property Rights shall, notwithstanding any thing contained in any other law for the time being in force, be adjudicated under section 179 by the appropriate officer of customs.

Section 16

Power to prohibit or restrict importation and exportation of goods.- The Federal Government may, from time to time, by notification in the official Gazette, prohibit or restrict the bringing into or taking out of Pakistan of any goods of specified description by air, sea or land.

Section 17

Detention, seizure and confiscation of goods imported in violation of section 15 or section 16.- Where any goods are imported into, or attempted to be exported out of, Pakistan in violation of the provisions of section 15 or of a notification under section 16, such goods shall, without prejudice to any other penalty to which the offender may be liable under this Act or the rules made there under or any other law, be liable to detention, for seizure or confiscation subject to approval of an officer not below the rank of an Assistant Collector of Customs, and seizure for confiscation through adjudication, if required.

It may be mention here that the ministry of commerce through SROs 927 and 928 dated August 9, 2019 imposed complete ban on trade with India.

August 31, 2019