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Category: Taxation

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  • FBR raises steel valuation amid high commodity prices

    FBR raises steel valuation amid high commodity prices

    ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday increased the valuation of steel products considering rising commodity prices in the international markets.

    The FBR has fixed the valuation of steel products for the collection of sales tax, instead of the prevailing rates in the open market.

    The fixed valuation is the minimum price on which sales tax is to be collected on the supply of steel products.

    The FBR issued SRO 489(I)/2022 on April 05, 2022.

    Previously, the FBR issued SRO 1465(I)/2021 dated November 15, 2021 in this regard. The FBR issued SRO 985(I)/2021 dated August 04, 2021, to introduce the valuation for collection of sales tax at 17 per cent on supply of steel products.

    The FBR enhanced the valuation to Rs164,037 per metric ton from Rs153,000 per metric ton on the supply of steel bars and other long profiles.

    READ MORE: FBR increases valuation of steel products

    The value has been increased to Rs133,813 metric tons from Rs131,000 per metric ton on supply of steel billets.

    However, the value of steel ingots has been kept unchanged at Rs126,000 per metric ton for the collection of sales tax.

    The value of ship plates has been increased to Rs129,584 per metric tons from Rs126,000 per metric ton for collection of sales tax.

    The value of other re-rollable iron and steel scrap has been increased to Rs125,688 per ton from Rs119,000 per metric ton for the purpose of sales tax.

    The FBR further said that in case notified value of supply of the goods is higher than the value fixed, the value of goods shall be the value at which the supply is made.

  • FBR issues list of 185 retailers for mandatory integration

    FBR issues list of 185 retailers for mandatory integration

    ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday issued a list of 185 retailers for mandatory integration with online tax system.

    The FBR directed the retailers to integrate with the online tax system by April 10, 2022 in order to avoid harsh action.

    The revenue body issued Sales Tax General Order No. 11 of 2022 asking Tier-1 retailers for integration with FBR’s Point of Sale (POS) system.

    READ MORE: FBR issues list of 1,358 retailers for mandatory POS

    The FBR said that the Finance Act, 2019 added sub-section 6 to section 8B of the Sales Tax Act, 1990 whereby a Tier-1 retailer, who did not integrate its retail outlet in the manner prescribed under sub-section 9A of Section 3 of the Sales Tax Act, 1990 during a tax period, its adjustable tax for that period would be reduced by 15 per cent. The figure of 15 per cent has been raised to 60 per cent through Finance Act, 2021.

    The FBR further said that in order to operationalize the important provision of law, a system-based approach has been adopted whereby all Tier-1 retailers, who are liable to integrate but have not yet integrated, with effect from July 2021 (sales tax return filed in August 2021) are to be dealt with as per the procedure laid down in STGO No. 1 of 2022 issued on August 3, 2021.

    READ MORE: Prize scheme on invoices issued by retailers

    As per latest the STGO a list of 185 identified Tier-1 retailers has been issued allowing them to integrate with FBR’s system by April 10, 2022 and the procedure of exclusion from the list of 185 identified retailers shall apply as laid down in Para 2 of STGO 1 of 2022 dated August 03, 2021.

    The FBR said upon filing of sales tax return for the month of February 2022 for all notified Tier-1 retailers having yet integrated, their input tax claim would be disallowed as above, without any further notice or proceedings, creating tax demand by the same amount.

    READ MORE: FBR decides penal action against defaulting retailers

  • Erstwhile FATA/PATA units to get exemption on quota

    Erstwhile FATA/PATA units to get exemption on quota

    ISLAMABAD: The Federal Board of Revenue (FBR) has decided to allow tax exemption to industries located in erstwhile FATA/PATA on the basis quota determined against installed capacity.

    An important meeting held in FBR Headquarter on April 01, 2022, (Friday). Chairman FBR Dr. Muhammad Ashfaq Ahmed reviewed progress regarding determination of quota for import of raw material on the basis of installed capacity for the industrial units located in erstwhile FATA/PATA.

    READ MORE: March collection up over 20% amid political unrest: FBR

    The participants of meeting were informed that out of total 140 units of steel , oil and ghee, plastics and textile etc. in erstwhile FATA/ PATA identified for joint survey for determination of manufacturing capacity, reports about 58 units have been sent to the FBR, while reports of 20 more units were in the pipeline.

    The Director General IOCO stated that the survey and reports on the remaining units will be completed in couple of weeks. Chairman FBR directed that exercise/survey to determine the installed capacity needed to be completed by April 15, 2022 positively.

    READ MORE: Pakistan needs to introduce laws to tax crypto income

    It was also decided that exemptions under Sixth Schedule of Sales Tax Act, 1990 and Income Tax Ordinance, 2001 will not be available to industrial units beyond their quota determined on the basis of their installed capacity after April 15, 2022.

    It was reported that some of industrial units were delaying the exercise on frivolous grounds. However, such units will not be allotted any quota to import raw materials after completion of the exercise.

    Chairman FBR reiterated that the business community should play its positive role to complete this survey so that misuse of exemption of taxes in these areas could be discouraged and thus a level playing field may be ensured to industries located in all parts of the country.

    READ MORE: Tax slabs reduction may be considered: FBR chairman

    It is pertinent to mention that at the time of merger of erstwhile Federally Administered Tribal Areas/Provincially Administered Tribal Areas in Khyber Pakhtunkhwa in 2018, tax exemptions had been granted to these areas for 5 years up to June 30, 2023.

    Currently several industrial units located in these areas are manufacturing different goods including Iron & Steel, Plastic, Ghee, Textile, Plastic etc.

    These units import raw material through sea port at Karachi without payment of Sales Tax and Income Tax. However, these units are required to sell the finished goods only in the newly merged Districts of erstwhile FATA/PATA and not in the tariff areas/other Districts of the Province or in other Provinces.

    READ MORE: Withholding tax should be on income: FBR Chairman

    To frustrate and prevent the misuse of facility of exemption of taxes on the import of raw materials by these units, different measures are being taken by FBR including escort of containers from Azakhail Dryport to the location of the concerned unit.

    The meeting was attended by Member IR Operations, Member IR Policy, Member Customs Policy, Director General Input Output Coefficient Organization (IOCO), Chief Commissioner Peshawar, Chief Collector Khyber Pakhtunkhwa, concerned Collector Customs, Commissioner IR, Director IOCO and other senior officers of FBR.

  • March collection up over 20% amid political unrest: FBR

    March collection up over 20% amid political unrest: FBR

    ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that the revenue collection in March 2022 registered a growth of over 20 per cent despite political uncertainties and import compression.

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  • IR offices to work till midnight on March 31

    IR offices to work till midnight on March 31

    ISLAMABAD: The offices of Inland Revenue (IR) will observe extended working hours on last two days of the current month and facilitate tax payment till midnight on March 31, 2022.

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  • Banks to observe extended hours for tax collection

    Banks to observe extended hours for tax collection

    The State Bank of Pakistan (SBP) has directed banks to observe extended working hours on the last two days of March 2022. This decision aims to streamline the tax payment process and provide convenience to individuals and businesses fulfilling their financial obligations.

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  • Pakistan needs to introduce laws to tax crypto income

    Pakistan needs to introduce laws to tax crypto income

    KARACHI: Pakistan needs to introduce laws to tax income from gains on cryptocurrency trading, Karachi Tax Bar Association (KTBA) said in its annual report on Tuesday.

    “ … trading of real-estate in Pakistan is grossly under-taxed while inheritance, gift and crypto tax is yet to be explored over here,” the tax bar said in its annual report for the year 2021.

    READ MORE: KTBA elects Rehan Jafri as President

    According to the general secretary’s statement the year 2021 had been exceptional where service of Artificial Intelligence in the tax matters was given legal sanctity under section 175A and 175B of Income Tax Ordinance, 2001 and NADRA is mandated to compute ‘indicative income’ to identify tax evasions.

    Similar provision has also been introduced in Sales Tax Act, 1990 under Section 56A and 56AB.

    READ MORE: KTBA identifies anomaly in SRB’s appellate system

    On global score OECD was able to bring 136 countries to a minimum tax rate of 15 per cent w.e.f. year 2023 with use of digital payment for Multinational Entities (MNEs) to offset the abuse of transfer pricing/profit shifting.

    ”Pakistan needs to timely synchronize its banking and tax infrastructure to cater these challenges,” according to the report.

    READ MORE: KTBA highlights anomalies in single sales tax return

    It said that year 2021 had been an incredible year. By working with Federal Board of Revenue (FBR), Sindh Revenue Board (SRB) and other tax/regulatory authorities across the country, KTBA was able to extend its legacy of working towards the strengthening of rule of law in tax and corporate regimes.

    READ MORE: KTBA passes resolution against FTO Asif Jah

    “Be it overstepping by the field formation in the domain of Section 11 of Sales Tax Act, 1990; abuse to amend the assessment under section 122 of Income Tax Ordinance, 2001, transgression of constitutional provisions by SRB or uninspiring assertions from Federal Tax Ombudsman (FTO), KTBA’s intensified actions had helped in easing the situations for this fraternity.”

  • KTBA elects Rehan Jafri as President

    KTBA elects Rehan Jafri as President

    In a recently held Annual General Meeting, the Karachi Tax Bar Association (KTBA) announced the results of its elections, with Syed Rehan Hasan Jafri being re-elected as the President for the year 2022.

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  • Tax slabs reduction may be considered: FBR chairman

    Tax slabs reduction may be considered: FBR chairman

    KARACHI: Dr. Muhammad Ashfaq Ahmed, chairman, Federal Board of Revenue (FBR) on Tuesday said reduction in income tax slabs may be considered.

    Addressing the business community at Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said that existing income tax slabs were implemented after due consideration.

    Earlier, the business community pointed out high number of tax slabs in the Income Tax Ordinance, 2001.

    READ MORE: Withholding tax should be on income: FBR Chairman

    Commenting on requirement of Computerized National Identity Card (CNIC) on transactions, he said this condition was introduced three years ago. The FBR has gathered bulk of information due to this condition. Further, many cases of using fake CNICs for making transactions were also reported, he added.

    The FBR chairman said that retailers had positively responded to integration of Point of Sales (POS) in Karachi. “Many issues will be resolved with improvement in supply chain,” he added.

    The business community raised the issues of audit notices. Dr. Ashfaq said that action would be taken if audit notices were not responded. “The audit notices should be responded with documentary evidence,” he said.

    READ MORE: UAE favorite hiding for Pakistan assets: Dr. Ashfaq

    About the tax laws, he said that foreign companies investment in Pakistan are unaware about our domestic laws, he said and assured that the FBR would facilitate both local and foreign investors to understand tax laws.

    Earlier, Anjum Nisar, Chairman, Businessmen Panel (BMP) said that delay in tax refunds create liquidity issues for industries. He said if taxpayers delays in compliance then he is subject to penalty and surcharges. Similarly, this should be apply to tax officials, he added.

    Irfan Iqbal Sheikh, President FPCCI, put forward the concerns and complaints of the business, industry and trade community of Pakistan to the Federal Board of Revenue during the detailed visit of its Chairman, Dr. Ashfaq Ahmed; along with the top brass of FBR.

    READ MORE: FBR explains cash discount under sales tax laws

    FPCCI President said that excessive and unsubstantiated tax notices; maladministration and corrupt elements; requirement of buyers’ CNIC copy; huge backlog of refund cases; double taxation; misuse of erstwhile FATA & PATA exemptions; higher rates of corporate, sales and withholding taxes; mandatory POS integration with FBR; multiplicity of income tax slabs and SRO culture are the major impediments in reforming the taxation system and broadening of the tax base.

    Irfan Iqbal Sheikh added that 29 percent corporate tax and 17 percent sales tax are too high for economic growth, industrialization and employment generation; and, rates of these taxes should be gradually and progressively brought down. He elaborated that no country of the world has ever progressed in the absence of industrialization; while commending the recently announced industrial growth package of the federal government.

    READ MORE: FBR amends fresh property valuations for Islamabad

    Engr. M.A. Jabbar, VP FPCCI, emphasized that we have to do away with the notice manufacturing practices of the taxation machinery as that prohibits the new taxpayers to register themselves into the system to avoid unnecessary regulatory interferences.

    Dr. Ashfaq Ahmed, Chairman FBR, expressed his willingness to have policy deliberations over FPCCI’s demand of reducing audit period to three years from the current six years. He also apprised the session that FBR has performed exceedingly well despite the debilitating economic conditions arising out of COVID-19 pandemic and have collected record taxes. He also expressed his optimism that FBR can soon achieve a Tax-to-GDP ratio of 12 per cent.

  • Withholding tax should be on income: FBR Chairman

    Withholding tax should be on income: FBR Chairman

    Karachi, March 14, 2022 – The Chairman of the Federal Board of Revenue (FBR), Dr. Muhammad Ashfaq Ahmed, emphasized the need for a shift in the approach to withholding tax (WHT), suggesting that it should be levied on income rather than transactions. He made these remarks during an address at the Karachi Chamber of Commerce and Industry (KCCI) on Monday.

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