Pkrevenue.com

Category: Budget 2020-2021

  • PSX proposes abolishing capital gains tax for two years

    PSX proposes abolishing capital gains tax for two years

    KARACHI: Pakistan Stock Exchange (PSX) has demanded eliminating Capital Gains Tax (CGT) for up to next two years in order to attract more foreign investment.

    The PSX in its tax proposals for budget 2020/2021 suggested the Federal Board of Revenue (FBR) to eliminate / reduce CGT for next 24 months or at a minimum align rates of capital gains tax on disposal of securities with other regional exchanges and OECD countries of the world.

    The PSX said that currently, carry forward of losses is only allowed up to a period of three years and that last year CGT collection was merely Rs1.3 billion. Moreover, with the falling market, tax collection will not be worthwhile at all.

    “Therefore, it is suggested that CGT should be eliminated for next 12-24 months.”

    This will be a big headline change, with no revenue impact, and will encourage new domestic and international investors to come into the market.

    The PSX made following proposals related to CGT:

    i. To eliminate CGT for next 12-24 months, if that is not possible then;

    ii. Since the current rate of 15 percent is very high and that too is without any benefit of holding period, therefore it is proposed to reduce this rate in line with other regional and OECD countries such as Bahrain, Hong Kong, India, Malaysia, Mauritius, Qatar, UAE, New Zealand, Hungary, Norway etc. where there is no or very low capital gain tax as compared to Pakistan.

    iii. when CGT was first introduced in the year 2011, to encourage and attract long term investment, the tax rate was:

    Less than six months: 10 percent

    More than six months but less than 12 months: 7.5 percent

    More than one year: zero percent.

    The PSX proposed rates at:

    Holding period up to twelve months: 10 percent

    Holding period more than twelve months: zero percent.

  • Tax relief package to mitigate COVID-19 shocks under consideration, FBR tells KCCI

    Tax relief package to mitigate COVID-19 shocks under consideration, FBR tells KCCI

    KARACHI: A top official of Federal Board of Revenue (FBR) has informed the office bearers of Karachi Chamber of Commerce and Industry (KCCI) that a tax relief package for business community was under consideration in order to dilute the adverse impact of coronavirus pandemic (COVID-19).

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  • Why non-filers happy in paying high withholding tax rates, FPCCI asks FBR

    Why non-filers happy in paying high withholding tax rates, FPCCI asks FBR

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over lower number of return filers and asked Federal Board of Revenue (FBR) to identify reasons that why non-filers happy in paying higher rate of withholding tax.

    According to a statement on Thursday, the FPCCI has finalize proposals for upcoming budget 2020/2021.

    The proposals have been drafted keeping in view of the objectives of (i) Revamping Taxation System (ii) Documentation of Economy (iii) Employment generation through Industrialization (iv) Promoting a responsive and equitable Taxation System (v) Infrastructure Development (vi) Trickledown effect of the fiscal space to the grass root level etc., and would be submitted to the concerned quarters within fortnight”.

    This was stated by Mian Anjum Nisar, President, FPCCI and Zakaria Usman, Convener of the FPCCI Budget Advisory Council.

    Elaborating the methodology of the budget proposals exercise, they stated that the FPCCI with a consistent commitment to developing and promoting a modern, responsive and equitable taxation system, has formulated these proposals on the basis of impartial, unbiased and transparent manner after taking a painstaking lengthy process which involved incorporating feedback received on matters related to revenue and taxation throughout the year from our members located across the country and input obtained from our member trade bodies, stakeholders, tax practitioners, knowledgeable people etc., through invitation of proposals, organizing workshops and holding a series of Budget Advisory Council meetings wherein these proposals were discussed in detail and some contradictory proposals were re-examined and final proposals were redesigned in line with the best interest of the country.   

    They informed that the FPCCI Budgetary document consists of three Volumes – Vol-I discusses issues / solution of macroeconomic nature ; Vol-II contains policy issues relevant to Taxation (Sales Tax, FED, Income Tax and Customs) ; while Vol-III contains Industry Specific Proposals received from FPCCI members .

    Moreover, the FPCCI would also submit its proposals to meet the challenges being faced by the trade & industry due to outbreak of COVID-19 as its severe and adverse impacts on various aspects of Pakistan’s economy is quite discern which may lead to negative growth rate, deterioration in current and fiscal balance, disruption in supply chain, increased unemployment etc.

    The FPCCI Chief Mian Anjum Nisar added, “The Macro Economic proposals contains long term action plan to boost exports ; promotion of Branding ; Enhancing SMEs sector ; Monetary Policy ; Creating Employment Opportunities through industrialization ; Taxpayers Bill of Rights ; Independent Tax Judicial System etc”.

    Zakaria Usman, Convener of the Budget Advisory Council disclosed, “In Direct Taxes, it has proposed to the Federal Board of Revenue (FBR) to reduce the tax rates to help increase competitive edge of indigenous products in both local and global markets; broadening of tax base; curtail parallel economy etc., as high tax rates provide incentives for tax evasion and corruption and results in high cost of doing business.

    At present the total numbers of NTN holders in Pakistan are over 4 million, however, the FBR has miserably failed to obtain return of income from such NTN holders and increase the number of active taxpayer during the last decade.

    They added that according to a study, 2.1 million Pakistanis (individuals) filed income tax returns in 2006-07 which shows that FBR during the last 14 years could not fetch much tax filers, despite prescribing higher withholding tax rates for non-filers”.

     “This underscores the need that FBR should conduct a study to find out what has gone wrong that even after penalizing the non-filers, they are happy to pay more by way of advance tax instead of filing returns”.

    He proposed that it is desirable that measures should be taken to facilitate to those, who are already existing taxpayers and contributing in the national tax pool in all manners, so that they become goodwill ambassador for FBR.

    “Resultantly, since many years, the registered taxpayers are less than 1 percent of the population of our country, which need to be enhanced”, he concluded.

  • Budget Strategy: No amnesty schemes; individual tax threshold to be lowered for broadening of tax base

    Budget Strategy: No amnesty schemes; individual tax threshold to be lowered for broadening of tax base

    ISLAMABAD: The government has prepared budget strategy under which no more amnesty scheme will be offered in future. Meanwhile, the tax threshold to broaden the tax base.

    The medium term budget strategy paper 2020/2023 released by the ministry of finance stated that the government will increase the share of direct taxes in revenues by enforcing real-income based income tax, to be achieved by broadening of tax base.

    Documentation of the economy to increase taxation in wholesale and retail, real estate and speculation businesses is also a priority. “Amnesty schemes will no longer be offered, and exemptions will be curtailed. Income tax slabs will be rationalised, and thresholds will be lowered to broaden tax base.”

    Gradual phasing out of final tax regime will help in taxing real income. Through amendments in tax law, simplification of laws and regulations, and improvement in tax administration, a legal basis will be provided to risk-based audit system.

    Taxpayer facilitation measures include awareness campaign and taxpayer education facilitation. Investments in IT based customer relationship management system, support lines, emails and website will be strengthened.

    Measures will also be taken to encourage voluntary compliance through facilitation measures and increasing certainty of detection and enforcement of law.

    Proper targeted awareness campaign through official media houses, using commercial media means will be carried out.

    FBR is effectively using Information Technology support for efficient detection, monitoring and facilitation of the tax regime. Data on foreign bank accounts of Pakistani citizens is being received and analyzed to detect tax evasion.

    IT based databank regarding foreign bank accounts will be established. Tracking and tracing system for collection of Federal excises duty on cigarettes has commenced with the issuance of licenses. Electronic monitoring of production and sales of various sectors will also commence in due course of time.

    Installation of point-of-sale (PoS) integration on all Tier-I retailers has been enforced since 15 December 2019.The online integration of the prescribed registered persons with PoS will be enforced through effective monitoring. FBR is developing IT strategy for this.

    The recently launched app “Tax Asaan” will be improved and more features will be introduced to make it user friendly. Introduction of Corporate Income Tax (CIT) reform will result in fewer exemptions and crediting schemes.

    The practice of issuing new preferential tax treatments or exemptions will be discontinued so that tax exemptions as a tool for philanthropy and social, investment and export promotion are discouraged.

    Exemptions will be phased out except basic food and nutrition items and provisions of health sector. Harmonization between Federal and Provincial taxation regimes is to be achieved by removing duplication of taxation and introducing uniform laws and procedures.

    The constitution assigns income taxes (except for agriculture income), the General Sales Tax on goods, customs duties, federal excises, and the capital gains tax to the federal level to be collected by the Federal Board of Revenue (FBR).

    While, GST on services, tax on professions, Agricultural Income Tax, Motor Vehicle Tax, Urban Immovable Property Tax, and other taxes related to real estate (e.g. stamp duty, Capital Value Tax) are assigned to the provinces.

    This arrangement fragments Pakistan into five tax jurisdictions in the services sector, with consequences such as double taxation, cascading effects of taxes and high compliance burden.

    Work on a unified tax portal with standardised forms that will enable taxpayers to file and pay federal and provincial taxes with less cost and compliance time will be completed.

    In 2020-2021, FBR will be working on removal of structural anomalies in the taxation regime such as anomalies from SROs (Statutory Regulatory Orders) / aligning certain SROs with the main statute and Rules, Simplified tax returns and forms.

  • FBR invites sales tax proposals to eliminate flying invoices, tax fraud

    FBR invites sales tax proposals to eliminate flying invoices, tax fraud

    The Federal Board of Revenue (FBR) has issued an invitation to business chambers and associations to submit their sales tax and federal excise proposals for the upcoming budget 2020/2021. The primary aim is to eliminate flying invoices and tax fraud while broadening the tax base and increasing revenue.

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  • FBR asked to suggest measure to eliminate exemptions

    FBR asked to suggest measure to eliminate exemptions

    ISLAMABAD: The ministry of finance has asked Federal Board of Revenue (FBR) to suggest measure to eliminate exemptions and concessions.

    The Finance Division (Budget Wing) of the finance ministry asked the FBR to provide information for development of budget strategy paper 2020-2021 – 2022-2023.

    The finance division asked the FBR to provide information on the key points:

    01. Tax policy over the medium-term including measure to eliminate exemption / concessions.

    02. Planned tax administration reforms to enhance tax-base and improve tax-to-GDP ratio.

    03. Number and types of new sectors, which were out of the tax net, to be added in the tax system.

  • Razak Dawood hints incentives for exporters in next budget

    Razak Dawood hints incentives for exporters in next budget

    KARACHI: Abdul Razak Dawood, Adviser to Prime Minister on Commerce, Industry and Production on Saturday said that the ministry of commerce is planning a comprehensive strategy with the help of Federal Board of Revenue (FBR) to introduce export incentives in the next federal budget 2020/2021.

    Razak Dawood was addressing during his visit to Karachi Chamber of Commerce and Industry (KCCI). He said that increase in exports is must for economic growth. The adviser said that the purpose of increasing exports is to boost foreign exchange reserves of the country.

    The adviser said that the economy was facing immense challenges a year ago. The economy was facing monthly $2 billion deficit during the period. The present government had taken decisions to improve the economic condition. “These decisions have resulted in shrinking current account deficit,” he added.

    The foreign exchange reserves of the country have increased to $18 billion from $11 billion.

    He pointed out criticism on five percent growth in exports and rupee devaluation and said that it should be realized that globally exports had declined. He said that Pakistani exports had increased in terms of volume.

    Razak Dawood said that exports should be duty and tax free. “In this regard we are planning with the FBR to facilitate exporters,” he added.

    He informed that India was allowed duty drawback on around 1,000 items. “If India is granting duty drawback on 1,000 items then we should increase the numbers,” he added.

    The adviser said that in the past the country had focused only on five sectors for exports. “We need to identify and increase the number of exportable items.”

    He said that businessmen complaining about non-issuance of refunds. “This is not correct. The government has released Rs17.5 billion refunds,” he added. “This month more refunds will be issued to non-textile sector.”

    The adviser said that the export of meat and poultry had increased by 54 percent. “We analyzed data and identified the exports of livestock was going to Saudi Arabia and UAE,” he said, adding that around 60 tons sea food products had been exported to China.

  • Federal budget 2020/2021 tentative schedule issued for May

    Federal budget 2020/2021 tentative schedule issued for May

    ISLAMABAD: The government is planning to present federal budget 2020/2021 in the cabinet and the parliament in the month of May this year.

    The finance ministry on Wednesday issued budget call circular for the schedule of budget making process and its presentation in the parliament.

    The finance ministry has given tentative schedule of presenting the budget 2020/2021 in May 2020 before the cabinet and the parliament.

    The circular further said that the completion of all budget documents, schedules and summaries for the cabinet shall be completed by last week of April 2020.

    On April 10, 2020 the principal account office shall submit BO/NIS forms, already entered into SAP system by respective PAOs, for development expenditure to the Budget Wing, Finance Division. Fair copies of the NISs for Development / Capital budget may be sent to Budget Implementation-II Section of Budget Wing, Finance Division after the same have been countersigned by the relevant Technical Section / Programming Section of the Planning, Development and Special Initiatives Division.

    On the same date the office shall submit BO/NIS forms, already entered into SAP system by respective PAOs, for current expenditure to the Budget Wing, Finance Division.

  • Sindh issues schedule for announcing budget 2020/2021

    Sindh issues schedule for announcing budget 2020/2021

    KARACHI: Sindh government has announced to present provincial budget for 2020/2021 in first or second week of June 2020.

    According to schedule issued by Sindh Finance Department the budget for the fiscal year 2021/2020 likely to be presented to the cabinet and the provincial assembly by the finance minister in the first or second week of June 2020.

    According to the schedule by May 28, 2020, the finance department would complete all budget documents, schedules, and summaries for the cabinet.

    The planning and development department would present finalized Annual Development Program (ADP) – 2020/2021 by third or fourth week of May 2020.

    The meeting of National Economic Council (NEC) is scheduled for first week of May 2020.

    The finance department would finalize new taxation proposals and review existing taxes and fees by April 30, 2020.

    The meeting of Annual Plan Coordination Committee (APCC) to be held by fourth week of April 2020.

    The finance department would finalize Medium Term Budge Framework (MTBF) 2022/2023 by March 31, 2020.

    The finance department would finalize of revised estimates for 2019/2020, budget estimates for 2020/2021 and SNE 2020/2021 for recruitment budget by March 31, 2020.

    Last date for incorporation of any modification in the ADP 2020/2021 for Annual Plan Coordination Committee by April 20, 2020.

    The Sindh government issued budget circular which is integrated the formulation of the Recurrent (non-development) & Development budget and it is being issued in consultation with Planning & Development Department.

    Accordingly two additional forms (Form BCC-X and BCC-XI) have been incorporated in the circular for the formulation of development budget.

    The Planning & Development Department will have the lead role in development budget formulation, whereas, the Finance department will be formulating the non-development Budget, Receipts and MTBF.

    All Administrative Departments are required to submit budgetary proposals on prescribed forms which will be scrutinized by Finance Department and Planning & Development Department in detail, as per prevailing practice.