Pkrevenue.com

Month: December 2019

  • FBR to issue procedure to document non-duty paid fast moving consumer goods

    FBR to issue procedure to document non-duty paid fast moving consumer goods

    ISLAMABAD: Federal Board of Revenue (FBR) will issue procedure for documenting smuggled and non-duty paid fast moving consumer goods (FMCG).

    In a tweet message on Saturday, FBR Chairman Syed Shabbar Zaidi said that the FBR was working in developing a ‘expeditious settlement’ of ‘non duty paid’ fast moving consumer goods available in the market.

    He said that the tax machinery would release details next week.

    “The purpose is to facilitate businessmen and improve documentation without disturbing business confidence,” he added.

    Recently, teams constituted by the FBR conducted physical survey of main markets and shopping centers/plazas to identify the presence of non-duty paid and smuggled goods.

    The FBR teams inspected imported products including garments, cosmetics, watches, toys, gift items, batteries, cigar, leather goods, designer bags etc.

    The sources said that the teams had identified smuggled and non-duty paid goods at big retails outlets.

    The FBR on August 17, 2019 decided to launch monitoring the presence of smuggled goods in main shopping markets across the country from this month. It was also decided to launch the monitoring by joint teams of Inland Revenue and Pakistan Customs.

    The Overseas Investors Chamber of Commerce and Industry (OICCI) recently in a letter to the FBR chairman the chairman highlighted the magnitude of smuggled/illegal goods.

    “There is not a single study to identify the complete magnitude of illegal trade in Pakistan but it is estimated that approximately 60 percent of the total demand for products of over half a dozen sectors of the formal economy, including petroleum, tea, mobile phones and auto parts industry, is met only through smuggling.”

    It said that bulk quantity of illegal/smuggled goods is available and these goods were mainly affecting sectors including petroleum, tea, mobile phones and auto parts industry.

    Highlighting the impact of illegal trade, the OICCI said: “virtually all major organized crime groups are not involved in the trade, resulting from huge profits but little risk, and whilst utilizing the services of children and slave labor.”

    These groups do not pay taxes, nor do they pay fair wages, and there is zero traceability of funds generated from the trade and their eventual disposition, the OICCI said, added: “More often than not, these funds may be redirected to terrorism, and money laundering.”

  • Draft law for collecting income tax from small shopkeepers

    Draft law for collecting income tax from small shopkeepers

    ISLAMABAD: Federal Board of Revenue (FBR) has drafted special procedure for collection of income tax from small shopkeepers.

    FBR sources said that an agreed mechanism between the FBR and small traders would be implemented from next week.

    They said that it would be another big achievement of the tax agency after convincing the banks for sharing information of account holders.

    The share of retailers in income tax collection is very low when compared with their contribution towards the national GDP.

    The sources said that on October 30, 2019 the agreement was finalized between the FBR and small traders for the collection of income tax and also to remove procedural glitches.

    According to draft law the small shopkeeper means an individual where the business is carried out at a premises having covered area less than 300 square feet.

    The small business owners will not include in the definition of small shopkeeper if he is engaged in the activity of a jeweler, wholesale, warehouse, real estate agent, builder and developer, doctor, lawyer, chartered accountant or any other category specified by the Board, a retailer operating as a unit of a national or international chain of stores, a retailer operating in an air-conditioned shopping mall, plaza or center, a retailer who has a credit or debit card machine, any person whose cumulative electricity bill exceeds Rs300,000 in the immediately preceding twelve months; and any person covered under section 99C of the Income Tax Ordinance, 2001.

    As per the draft law the small shopkeepers will be liable to pay income tax biannually.

    The FBR will not conduct examination and audit of small shopkeepers. Further, shopkeepers will also not liable to collect withholding tax.

    The sources said that the rate of tax likely be notified next week. They said whatever tax rate is agreed the tax payment will be increased by Rs5,000 annually.

    The FBR will also notify simple income tax return form for small shopkeepers, which will be filed for tax year 2019 onwards.

  • Immovable property purchase above Rs5 million not allowed other than banking channel

    Immovable property purchase above Rs5 million not allowed other than banking channel

    KARACHI: Any immovable property purchased through cash or bearer instruments will liable to penalty of five percent of the total value of immovable property, sources in Federal Board of Revenue (FBR) said on Saturday.

    The sources said that a restriction had been imposed on the purchase of immovable property over Rs5 million through cash or bearer cheque.

    They said that any person who purchases immovable property having fair market value greater than rupees five million through cash or bearer cheque then such person shall pay a penalty of five percent of the value of property determined by the FBR under sub-section (4) of section 68 or by the provincial authority for the purpose of stamp duty, whichever is higher.

    The sources said that through Finance Act 2019 a Section 75A was inserted to Income Tax Ordinance, 2001, under which purchases of assets had been mandatory through banking channels.

    According to the section, no person shall purchase:

    (a) immovable property having fair market value greater than five million Rupees; or

    (b) any other asset having fair market value more than one million Rupees,

    otherwise than by a crossed cheque drawn on a bank or through crossed demand draft or crossed pay order or any other crossed banking instrument showing transfer of amount from one bank account to another bank account.

    For the purposes of this section in case of immovable property, fair market value means value notified by the Board under sub-section (4) of section 68 or value fixed by the provincial authority for the purposes of stamp duty, whichever is higher.

    In case the transaction is not undertaken:

    (a) such asset shall not be eligible for any allowance under sections 22, 23, 24 and 25 of this Ordinance; and

    (b) such amount shall not be treated as cost in terms of section 76 of this Ordinance for computation of any gain on sale of such asset.

  • Taxpayers should file true declarations to avoid 100 percent penalty

    Taxpayers should file true declarations to avoid 100 percent penalty

    KARACHI: The tax laws have explained that any false or misleading statement will liable to penalty of 100 percent of the amount of tax short paid.

    Officials at the Federal Board of Revenue (FBR) said that taxpayers should ensure correct and true entries in their income tax returns and wealth statement while filing their income tax returns for tax year 2019.

    The last date for filing income tax returns for tax year 2019 is December 16, 2019.

    According to Income Tax Ordinance, 2001, any person who –

    (a) makes a false or misleading statement to an Inland Revenue Authority either in writing or orally or electronically including a statement in an application, certificate, declaration, notification, return, objection or other document including books of accounts made, prepared, given, filed or furnished under this Ordinance;

    (b) furnishes or files a false or misleading information or document or statement to an Income Tax Authority either in writing or orally or electronically;

    (c) omits from a statement made or information furnished to an Income Tax Authority any matter or thing without which the statement or the information is false or misleading in a material particular.

    Such person shall pay a penalty of twenty five thousand rupees or 100 percent of the amount of tax shortfall whichever is higher:

    Provided that in case of an assessment order deemed under section 120, no penalty shall be imposed to the extent of the tax shortfall occurring as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayers’ position.

  • Weekly Review: market likely to continue positive momentum

    Weekly Review: market likely to continue positive momentum

    KARACHI: The stock market likely to continue its positive momentum next week on the back of continuous improvement in the macroeconomic situation of the country.

    Analysts at Arif Habib Limited said that foreign interest in the equity as well as debt markets posits healthy signs for overall investment climate going forward.

    The KSE-100 index is currently trading at a PER of 7.1x (2020) compared to Asia Pac regional average of 13.4x and while offering DY of around 7.9 percent versus around 2.6 percent offered by the region.

    Trading in the green continued this week as the index continued its bullish momentum as the banking sector led the charge this week.

    The current week saw Moody’s changing its outlook on Pakistan from “Negative” to “Stable” on account of improving external account position of the country on the back of the government’s corrective measures.

    This was followed by up-gradation of outlook to “stable” for the Big 5 banks, spurring buying activity in the banking sector.

    Trade deficit data came this week as well which once again saw an improvement, declining 36 percent YoY during November 2019.

    Consolidation of the country’s reserves continued, as SBP reserves touched an 8 month high at USD 9.1 billion. The KSE-100 Index settled at 40,732 points (up 1445 points WoW).

    Sector-wise positive contributions came from i) Commercial banks (645 points), ii) Oil & Gas Marketing (131 points), and iii) Power Generation & Distribution (97 points) iv) E&P (84 points), and v) Insurance (79 points). Scrip-wise positive contributions were led by HBL (155 points), MCB (144 points), UBL (87 points), BAFL (78 points) and HUBC (75 points).

    Foreign buying was witnessed this week clocking-in at USD 1.1 million compared to a net sell of USD 8.1 million last week. Buying was witnessed in Fertilizer (USD 8.4 million) and OMCs (USD 2.2 million).

    On the domestic front, major selling was reported by Banks / DFIs (USD 22.3 million) and Other Organization (USD 3.3 million). Average Volumes settled at 465 million shares (up by 34 percent WoW) while average value traded clocked-in at USD 105 million (up by 31 percent WoW).

  • FTO committee expresses distress over tax recovery from bank accounts

    FTO committee expresses distress over tax recovery from bank accounts

    ISLAMABAD: The advisory committee of the Federal Tax Ombudsman (FTO) has expressed distress over attachment of bank accounts and coercive recovery by Federal Board of Revenue (FBR) from bank accounts of taxpayers.

    A meeting of the advisory committee of the FTO was held recently and discussed various issues related to refunds and coercive recovery of the FBR from bank accounts of taxpayers, according to the FTO new letter issued last month.

    The committee expressed great distress about the attachment of bank accounts and coercive recoveries. The participants suggested that attachment of accounts may be affected only after Tribunal’s decision.

    On the issue of refunds, the participants observed following:

    Delayed refund is a serious issue which continuously poses challenge to the survival of business community.

    Refund amount should be paid after two stages of appeals in favor of taxpayer, even if department then goes to reference before the higher court.

    An online system for tracking of refund by claimants should be put in place by FBR.

    A system of adjustment of refund in the next return should be devised to get rid of the chronic issue of delayed refund.

    Even after verification of claim, cheques are not issued in time.

    The refund payment system ought to be dovetailed with magnitude of amount as 70-75 percent of refunds fall in the category of up to Rs100,000 only and need automated settlement.

    Compensation for delayed refunds should be ensured as delayed has its own cost.

    Regarding assessment by the tax officials, the FTO advisory committee observed following:

    Arbitrary, coercive and malafide assessment is the root cause of all subsequent tax maladministration and victimization of business community.

    There is no accountability on arbitrary, coercive and malafide assessment.

    There should be some check on the quality of assessment made by an assessing officer.

    At times undated orders are issued.

  • SECP issues qualified capital criteria for NBFCs

    SECP issues qualified capital criteria for NBFCs

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Friday issued criteria for qualified capital and its terms and condition for Non-Banking Finance Companies (NBFCs).

    The criteria have been issued for those NBFCs which exclusively in the business of issuance of guarantees to enhance the quality debt instruments issued to finance infrastructure projects in Pakistan, namely:

    Qualified capital means the aggregate of callable capital and contingent capital (including any drawdown threunder);

    Explanation: For the purpose of this clause the expressions:

    i. Callable Capital means share capital that, in terms of written agreement entered into between the NBFC and sponsor, shareholder and/or investor, as the case may be, is agreed to be subscribed on the following terms and conditions:

    a. the shares shall be fully subscribed over a period of 24 months from the date of the written agreement;

    b. during the subscription period specified in sub-clause (a), the obligation to subscribe to shares shall be irrevocable and on demand, at the sole discretion of the NBFC; and

    c. the subscription obligation shall be secured by a bank guarantee or standby letter for credit from a commercial bank rated AAA or higher by a credit rating agency registered with the commission;

    ii. Contingent Capital means long term commitment for finance that, in terms of a written agreement entered into between the NBFC and a Qualified Financial Institution(s), is provided as a second loss facility on the following terms and conditions:

    a. at any time, the contingent capital, in aggregate, shall not exceed one and a half times of the sum of paid up share capital and callable capital of the NBFC;

    b. the commitment shall, in accordance with the terms thereof, be irrevocable, confirmed and fully committed;

    c. the long term commitment and the finance thereunder shall be available on a revolving basis;

    d. the finance under the commitment shall be callable and demand upon a capital event and the sole discretion of the NBFC or on a direction by the Commission (after giving the NBFC a reasonable opportunity of a hearing), which shall be binding on the NBFC; and

    e. the commitment shall be replaced by the NBFC if the financing entity ceases to be a qualified financial institution;

    iii. Qualified Financial Institution means a local or a international or multilateral financial institution rated AAA by a credit rating agency registered with the Commission;

    iv. Capital Event means the depletion of the equity (after the callable capital has been completely drawn down by the NBFC) of the NBFC.

    Terms and Conditions:

    i. The NBFC shall not take any exposure against the qualified capital unless it has obtained a certificate from its statutory auditor that all the requirements have been complied with;

    ii. The certificate shall be supported by a legal opinion from a reputed law firm and a copy of the certificate along with the legal opinion shall be submitted to the commission: and

    iii. With regard to its qualified capital, the NBFC, in relevant notes to its financial statements, shall make disclosures, which are necessary for the users to understand its salient features.

  • FBR notifies transfers, postings of BS-20 IRS officers

    FBR notifies transfers, postings of BS-20 IRS officers

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday notified transfers and postings of BS-20 officers of Inland Revenue Service (IRS) with immediate effect until further orders.

    The FBR notified transfers and postings of following officers:

    01. Muhammad Farrukh Majid (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue Inland Revenue (Appeals-V), Lahore from the post of Commissioner, (HRM) Corporate Regional Tax Office, Lahore.

    02. Ms. Irum Sarwar (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue (Appeals-VI), Lahore from the post of Commissioner, (HRM) Large Taxpayers Unit, Lahore.

    03. Ms. Ayesha Imran Butt (Inland Revenue Service/BS-20) has been transferred and posted as Commissioner Inland Revenue (Appeals-VII), Lahore from the post of Commissioner, (IP/TFD/HRM) Regional Tax Office II, Lahore.

    The FBR said that the officers who are drawing performance allowance prior to issuance of this notification shall continue to draw this allowance on the new place of posting.

  • SBP announces incentives for banks to make remittance transactions attractive

    SBP announces incentives for banks to make remittance transactions attractive

    KARACHI: State Bank of Pakistan (SBP) on Friday made attractive the inflow of home remittances through formal channels and announced incentives for banks.

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  • FBR announces implementation of agreement with traders from next week

    FBR announces implementation of agreement with traders from next week

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday announced implementation of agreement with traders from next week.

    FBR chairman Syed Shabbar Zaidi in a tweet message said that committees represented by the traders of each area/ market, covering the whole country will be notified.

    “Traders and FBR will work together for registration,” the chairman said and termed it a new beginning for taxation history of Pakistan.

    The FBR and trade community were at odd on the implementation of some of initiatives for documentation of economy, especially the introduction of CNIC.

    However, on October 30, 2019 an agreement was signed between FBR and traders.

    Following is the 11-point agreement between the tax authorities and traders associations:

    01. The tax rate shall be lowered to 0.5 percent from 1.5 percent for traders having turnover up to Rs100 million.

    02. No liability on a trader having up to Rs100 million to collect / deposit withholding tax on transactions.

    03. Threshold of annual electricity bill of Rs600,000 for mandatory sales tax registration has been increased to Rs1.2 million.

    04. Turnover tax for sectors having lower returns will be revisted with consultation with traders associations.

    05. Tax issues of jewelers will be resolved in consultation with jewelers associations.

    06. The renewal license fees on middlemen will be revisited.

    07. To resolve traders taxation issues a desk at FBR headquarters will be set up with immediate effect. A BS-20/21 officer will be designated to resolve the traders’ problems.

    08. For new registration of traders a simple income tax return form in Urdu Language will be introduced. Trade associations will cooperation in FBR’s registration drive.

    09. Which trader will be exempted from registration having 1000 square feet shop will be decided by traders committees.

    10. The registration of those retailers engaged in wholesale business will be decided in consultation with traders community.

    11. The FBR will take no action on sales transactions without CNIC information till January 31, 2020.