ISLAMABAD: Commercial importers will require to file return of income and statement of assets to the tax authorities after the removal of final tax regime.
Tax authorities said that the commercial importers would require to submit details of imports and source of payment for opening the letter of credit (LCs) through their returns.
According to budget commentary by EY Ford Rhodes on Finance Bill, 2019, before the Finance Act, 2018, tax required to be collected under Section 148 on import of plastic raw material imported by an industrial undertaking, falling under PCT headings 39.01 to 39.12, edible oils and packing material is treated as minimum tax.
Furthermore, tax required to be collected on import of goods that are sold in the same condition as they were when imported was treated as final tax.
The Finance Act, 2018 brought a substantive conceptual shift with respect to taxation of commercial importers whereby such tax collection was deemed to be “minimum tax” in respect of such importers.
Due to the aforesaid change in taxability of commercial importers, there were grave concerns shown by the above sector, as this change would have required the commercial importers to declare the financial results for comparison of tax on profits to the minimum tax on imports.
As a result of strong lobbying by commercial importers, amendments were made in Section 148 through the Finance Supplementary (Second Amendment) Act, 2019 whereby tax collected at import stage from commercial importers was again treated as final discharge of tax liability of such importers.
“The Finance Bill 2019 now proposes to restore the position as stood after the amendments made through the Finance Act, 2018 to change the character of such tax collection from “final tax” to “minimum tax”.
“Such commercial importers, pursuant to the proposed amendments will now be required to file a return of income instead of filing a statement in terms of Section 115 of the Ordinance.”
The Bill also proposes amendments in Sub-section (8A) of Section 148 whereby tax collected at the time of import of ships by ship-breakers is also to be treated as ‘minimum tax’.