Pkrevenue.com

Category: Budget

This is parent category of budgets presented by Pakistan government. Here you will find year-wise federal and provincial budgets.

  • FBR advised to allow tax adjustment on telecom services

    FBR advised to allow tax adjustment on telecom services

    KARACHI: Federal Board of Revenue (FBR) has been urged to allow adjustment of withholding tax on services provided telecom sector.

    The Overseas Investors Chamber of Commerce and Industry (OICCI) in tax proposals for budget 2019/2020 recommended that the eight percent minimum tax regime should be withdrawn and should be made adjustable.

    The OICCI said that through Finance Act, 2016, an amendment was made in Section 153(1)(b) of the Income Tax Ordinance, 2001 whereby the 8 percent withholding tax deducted against the services provided by telecom companies, along with other service providers, have been subjected to a charge of minimum tax instead of adjustable regardless their actual income or loss.

    This tax has thus changed the character of income tax from a direct tax to an indirect tax as the amount of charge would no longer be applicable on the quantum of income actually earned even under the standard income tax rules.

    Furthermore, the exorbitant rate of 8 percent will seriously erode the profitability, or further increase the losses, of the telecommunication industry which according to independent reports is in shackles and is already the victim of discriminatory taxation.

    Consequent to the above amendment in the law, non-issuance of exemption certificates under Section 153(1)(b) on Income Tax Ordinance, 2001 of the Income Tax Ordinance, 2001 in view of the imposition of the minimum tax has also increased the administrative burden of both the telecommunication companies and the withholding tax monitoring units of FBR as the tax that was previously deposited lump-sum as advance tax is now being collected by thousands of corporate customers across Pakistan.

  • Chemical merchants advocate FTR continuation for commercial importers

    Chemical merchants advocate FTR continuation for commercial importers

    KARACHI: Chemical merchants have strongly advocated continuation of Final Tax Regime (FTR) for commercial importers in the upcoming budget.

    In a statement issued on Saturday Shahid Vaseem, Chairman, Pakistan Chemicals & Dyes Merchants’ Association (PCDMA), said that because commercial importers pay 6 percent advance non-adjustable tax at import stage, whereas industrial importers of same raw material pay only 5.5 percent adjustable/refundable advance tax or avail tax exemption certificate facility, therefore it was not justified to withdraw Final Tax Regime (FTR) from Commercial importers without giving them options of claiming tax refund and facility for issuance of Tax exemption certificate if excess tax is already paid at import stage.

    In meeting with PCDMA memebers and leading importers of industrial Raw Materials, Chairman PCDMA, said that assessed value for calculation of customs levies of an industrial raw material whether it is imported by industrial importer or commercial importer; remains same either on the basis of valuation ruling (if available), international scan (if available) or custom data; therefore, chances of under-invoicing eliminated on import of industrial raw materials.

    Shahid Vaseem said in his opinion by imposing similar rate of sales tax on industrial raw materials will also eliminate the issue of imports by non-genuine industrial importers and excess imports by the genuine industrial importers, who just import big volumes of industrial raw materials to sale in market at huge profit due to less rate of tax and in some cases got extra ordinary benefits of various SROs. Which resulted in loss of billions of rupees to government revenue.

    Shahid Vaseem demanded the Government to provide a level-playing field for commercial importers who are importing industrial raw material and supply these essential raw materials to industries in SME segment. At import stage commercial importers are paying 17+3= 20 percent sales Tax as compared to 17 percent only, if same items are imported directly by industrial importers, this renders our customer industries in SME segment un-competitive in local as well as export markets, thereby eliminating job opportunities and hurting exports of value-added goods.

    He explained that 3 percent Additional Sales Tax on import of Industrial Raw Materials if imported by Commercial Importers is irrational and unjustified, because 3 percent ADDITIONAL Sales Tax can only be applied if the Value Addition on raw material is assumed 17.65 percent, which is not possible because there is no process of value addition involved and no inputs such as Land, Buildings, Machinery, Labor, Electricity and Gas etc. are used by commercial importers of same industrial raw materials.

    On the contrary the value addition by manufacturers is assumed as 10 percent only and the GST is charged at the rate of 1.7 percent despite all the above inputs.

    He claimed that by implementing same rate of taxes and extending benefits of various SROs to commercial importers, similar to the industrial importers of Raw materials for one year will result in significant drop in import volume by the industrial importers, which will prove the misuse of reduce tax facility by the industrial importers and will provide opportunity to the government to identify non-genuine industrial importers who are only existing for importing raw materials for commercial sales.

  • Hafeez Shaikh discusses budget proposals with chambers of commerce and industries

    Hafeez Shaikh discusses budget proposals with chambers of commerce and industries

    ISLAMABAD: Dr. Abdul Hafeez Shaikh, Adviser to Prime Minister on Finance and Revenue on Thursday met presidents of various chamber of commerce and industries to discuss proposals for budget 2019/2020.

    The Presidents and representatives of Lahore, Faisalabad, Sialkot, Karachi and Federation of Chambers of Commerce and Industry were at the meeting.

    The representatives of various chambers briefed the adviser about problems and challenges being confronted by the economy of the country.

    They gave various suggestions aimed at improving the economy and industrial sector of Pakistan.

    The delegation proposed ways and means to enhance the export of the country.

    The delegation also gave proposals for the budget 2019/2020.

    In order to facilitate the business community and attract foreign investment, the adviser informed that the government was focusing on improving the ease of doing business.

    He stated that the role of private sector was highly important in improving the economy of the country and urged the members of business community to play their role to increase the volume of exports.

    He assured that the proposals of the chambers would be considered and a business-friendly budget would be presented.

    Apart from the representatives of the chambers, the meeting was attended by Adviser to PM on Commerce, Textile, Industry and Production and Investment, Abdul Razak Dawood, Minister of State for Revenue, Muhammad Hammad Azhar, Secretary Finance, Naveed Kamran Baloch, Chairman, FBR, Shabbar Zaidi and Adviser, Ministry of Finance, Dr. Khaqan Najeeb.

  • ICAP proposes restricting powers of Directorate General Intelligence and Investigation

    ICAP proposes restricting powers of Directorate General Intelligence and Investigation

    KARACHI: Institute of Chartered Accountants of Pakistan (ICAP) has proposed restricting powers of Directorate General of Intelligence and Investigation (I&I) as multiple powers of tax authorities are causing hardship for taxpayers.

    The ICAP in its tax proposals for budget 2019/2020 said that the Federal Board of Revenue (FBR) through SRO 115 (I)/2015 dated February 09, 2015 conferred upon the Directorate General (Intelligence and Investigation), Inland Revenue, the powers of the Chief Commissioner/Commissioner:

    — to exercise powers and perform functions under Sections 174, 175, 176, 177 (other than power to initiate audit), 178, 179, 180, 181, 182, Part III, Part XI of Chapter X, Sections 205 and 221; and

    — to investigate Suspicious Transactions Reports (STRs) or other assets of persons or classes of persons impounded by any department or agency of the Federal or Provincial government and prepare/transmit reports to respective RTOs or LTUs for the purpose of application of Section 111 and for taking appropriate action under the Income Tax Ordinance, 2001.

    The ICAP recommended that the law should be amended so that the authority of Director General Intelligence and Investigation is exercised only to investigate Suspicious Transactions Reports (STRs) or other assets of persons or classes of persons impounded by any department or agency of the Federal or Provincial government and prepare / transmit reports to respective RTOs or LTUs for the purpose of application of Section 111 and for taking appropriate action under the Income Tax Ordinance, 2001 and should not exercise the powers under various sections of the Ordinance.

    The creation of parallel authorities for the purpose of sections 174, 175, 176, 177, 178, 179, 180, 181, 182, Part III, Part XI of Chapter X, Sections 205 and 221 is causing problems to the taxpayers.

  • PTBA suggests reducing record retention time to five years under Sindh tax laws

    PTBA suggests reducing record retention time to five years under Sindh tax laws

    KARACHI: Pakistan Tax Bar Association (PTBA) has submitted budget proposals 2019/2020 to Sindh Revenue Board (SRB) suggesting to reduce time limit for retaining records to 5 years from 10 years.

    The apex tax bar said that under present legislation a taxpayer is required to retain records for a period of 10 years and show-cause notices may be issued within a period of 8 years from the date of relevant tax period.

    This is in excess of the statute of limitation provided under the Sales Tax Act and Income Tax Ordinance. It will not only put excess burden on the taxpayer, but also disincentivizes the tax authorities from taking timely action.

    It is therefore recommended that the time period for retention of records and assessment of tax should be reduced to five years.

    This would save taxpayers from practical difficulties and unnecessary burden while pushing the tax authorities to take more timely action.

    The PTBA also highlighted the issue that no input tax is allowed to be claimed on goods or services acquired prior to six months preceding the date of commencement of the provision of taxable services by a taxpayer.

    Therefore it is recommended that such restriction should be eliminated.

    Giving rationale to the suggestions, the PTBA said that any bar on admissibility of input tax borne by the taxpayer prior to six months preceding the commencement of provision of taxable services is against the basic principal of VAT. It is also not justifiable in case of a long term projects.

    Regarding assessment order, the apex tad bar said that it can be amended by a tax officer on the basis of any subsequent information, etc.

    “Such powers are arbitrary and unjust and may open the doors for harassment and corruption.”

    The PTBA suggested that the taxpayer should first be confronted with a show-cause notice with substantial reasons and definite information/evidence(s) that warrant reopening or amending the assessment order.

    “Further, the powers to amend any assessment order should only be vest with the Commissioner or Board only.”

    This recommendation would introduce transparency in the tax system for revision of shut and close transactions and provide justice to the taxpayer.

    The PTBA further pointed out that the tax officer is empowered to ask for any information from a taxpayer without specifying the reason or nature of the case being investigated by him.

    Scope of Section 52(1) should be restricted to specific parties and transactions which are within the jurisdiction of Sindh and are specifically identified by the tax officer instead of fishing and roving enquiries.

    This promotes equity and natural justice and avoids harassment and unnecessary proceedings.

  • FBR urged to extend tax credit to investment in infrastructure

    FBR urged to extend tax credit to investment in infrastructure

    KARACHI: Federal Board of Revenue (FBR) has been urged to extend tax credit facility to investment in factory building and manufacturing related infrastructure.

    Pakistan Tax Bar Association (PTBA) in its tax proposals for budget 2019/2020 said that tax credit under section 65E of Income Tax Ordinance, 2001 is restricted to investment in plant and machinery.

    Tax credit under section 65D is available only at the time of setting up a new industrial undertaking. No tax credit is given on subsequent expansion of such an industrial undertaking since section 65E restricts eligibility to companies formed before 01 July, 2011.

    Expansion of plant or undertaking a new project involves investment in factory building and manufacturing related infrastructure and as such, these types of investments should also be made eligible for tax relief.

    Expansion is also possible in industrial units’ set-up after 01 July, 2011.

    It is, therefore, recommended that tax credit under section 65E should also be extended to investment in factory building and manufacturing related infrastructure.

    Applicability of section 65E to only such companies’ setup after 01 July, 2011 may be relaxed to include industrial undertakings formed thereafter as well, which undergo expansion.

    An increased availability of tax credits may act as an incentive to new investment since the investors foresee tax benefits which they may practically be able to utilize.

    The tax bar further highlighted that tax credits under sections 65B and 65E are restricted to investment in plant and machinery.

    The rational behind these tax credits is not the purchase of plant and machinery but industrial expansion and increased economic activity. In this regard, it may be appreciated that expansion of business (and the consequent increase in economic activity) is not achieved from plant and machinery in isolation and is, for all practical purposes, not possible without an appropriate support structure.

    In order to streamline section 65B(4) with the wordings of section 65B(1), the following wording, in bold, may be inserted:-

    “65B (4) make an investment for the purposes of extension, expansion, balancing, modernization and replacement of the plant and machinery.”

    An explanation be added to sub-section (1) of Section 65B:-

    “For removal of doubts, for the purposes of this section, it is declared that the words “purchase of a plant and machinery” includes all direct expenses which are necessary to make the Plant and Machinery in a workable condition and also includes factory buildings and manufacturing related infrastructure.”

    Tax credit under Section 65E should also be extended to investment in factory building and manufacturing related infrastructure, the PTBA recommended.

    The proposed amendment/modification in tax credits will clarify the ambiguity for the companies’ set-up before first day of July, 2011 and shall promote industrial expansion and increased economic activity.

  • FBR suggested reduced corporate tax rate for job creation

    FBR suggested reduced corporate tax rate for job creation

    KARACHI: Federal Board of Revenue (FBR) has been suggested to reduce corporate tax rate by one percent for companies creating 50 or more new jobs in a year.

    Pakistan Business Council (PBC) in its tax proposals for budget 2019/2020 suggested the government to reduce tax rate for companies creating more jobs during a year.

    “One percent lower tax rate for existing companies that create 50 or more new jobs on their own payroll in a year.”

    Giving rationale to the proposal, the PBC said that Pakistan needs to find employment for two million youth each year.

    The PBC further suggested first year depreciation allowance for investment in making upgrades to the provision of facilities (including lifts, ramps) for the specially challenged in the workplace or business.

    It further suggested 0.5 percent lower tax rate for providing livelihoods to specially challenged persons equal to five percent of the workforce.

    Giving rationale to the changes, the PBC said that in order to demonstrate a commitment to creating livelihoods for all and work toward target of sustainable development goal – “By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.”

    It further said that no or limited facilities that allow access in the workplace or business for the specially challenged thereby deterring the disabled from working.

  • Ban foreign cigarettes without health warnings: OICCI

    Ban foreign cigarettes without health warnings: OICCI

    KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) has recommended to the government to impose a ban on the import of cigarettes lacking health warnings, as part of a strategy to deter the rampant smuggling of tobacco products.

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  • PTBA suggests allowing further tax adjustment to suppliers

    PTBA suggests allowing further tax adjustment to suppliers

    KARACHI: Pakistan Tax Bar Association (PTBA) has recommended the Federal Board of Revenue (FBR) to allow adjustment of further tax against input tax.

    The PTBA in its proposals for budget 2019/2020, said that presently further tax has been charged by the registered person on the supplies made to the person who are required to be registered but does not obtain registration is not available for adjustment against input tax in pursuance of section 7(1) of the Sales Tax Act, 1990.

    Moreover, through the Finance Act, 2017, further tax at the rate of 2 percent was also levied on zero-rated supplies.

    The PTBA said that this results in unnecessary increase in cost of doing business and unrest amongst the taxpayers which is creating a negative business environment.

    “Due to this amendment, all zero –rated supplies including exports are subject to further tax.”

    Exports are made to non-resident persons who are not required to be registered with Pakistan tax authorities. Resultantly, the exporters will have the bear the amount of further tax charged to exporters which will badly affect their competiveness in the international market.

    The PTBA recommended that the supplier should be allowed adjustment of further tax against input tax.

    Appropriate clarification should be issued that export sales are not subject to further tax, the PTBA further advised.

    The proposed amendments would put an end to unnecessary litigation, result in reducing the cost of doing business and create trust between taxpayers and tax collector.

    The exporters will not be burdened with extra cost of further tax.

  • Hafeez reviews proposals for budget 2019/2020

    Hafeez reviews proposals for budget 2019/2020

    ISLAMABAD: Dr. Abdul Hafeez Shaikh chaired a meeting on Sunday to review the proposals for budget 2019/2020.
    Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR), gave a detailed presentation about the budget proposals for the upcoming budget.
    He proposed various steps to expand the tax base as well as increase revenue of the country.
    The adviser directed FBR to make tax collection process further easier and initiate measures to broadening the tax base.
    The meeting was also attended by the Adviser to PM on Commerce, Textile, Industry and Production and Investment, Abdul Razak Dawood, Minister of State for Revenue, Muhammad Hammad Azhar and other senior officials of Finance Ministry and FBR.