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ISLAMABAD: The government has announced an incentive on sales tax rate on supplies made by restaurants and eateries on account of takeaway.
The FBR issued SRO 725(I)/2021 dated June 08, 2021 to exempt sales tax in excess of five percent chargeable on supplies made by restaurants and eateries on account of takeaway subject to the condition that no input tax shall be adjusted.
The notification shall remain in force up to June 30, 2021.
ISLAMABAD: The government has announced cut in sales tax rates on kerosene oil and light diesel in order to absorb the price hike on petroleum products.
In this regard the FBR issued SRO 726(I)/2021 on Tuesday to comply with the decision of the government for keeping the POL prices intact by absorbing a hike in prices through downward adjustment in sales tax rates.
The sales tax rate on kerosene oil has been reduced to 10.07 percent from the previous rate of 15.44 percent. Similarly, the sales tax rate on light diesel oil has been reduced to 3.67 percent from 7.56 percent. Meanwhile, the sales tax rates on petrol and high speed oil have been kept unchanged at 17 percent.
According to an official statement issued on May 31, 2021, the prime minister had decided to maintain the prices of petroleum products as they were on May 17, 2021.
“The government has not increased the prices of petroleum products since April 16, 2021 by adjusting sales tax and petroleum levy so that there is no corresponding increase in the prices of essential items and maximum relief is provided to the common man.”
KARACHI: The Association of Chartered Certified Accountants (ACCA) has suggested the government to impose income tax at 7 percent on landowners to increase the agriculture share in the GDP.
The ACCA in its proposals for budget 2021/2022 stated that agriculture (recently growing at 2.77 percent) has the potential to reach up to 55 percent of the GDP from the current levels of around 24 percent.
“There’s a need for large landowners to be taxed at minimal rates, i.e. 7 percent,” it added. The revenue generated through this should be used to subsidise seeds, fertiliser, water, electricity, fuel, etc. for the small farmers. The use of latest, sustainable farming technology and easy access to cheap or interest-free loans should be ensured.
It urged the government to reduce tax rates to a single digit and ensure broadening of the tax net by adopting Data Analytics and Artificial Intelligence leveraging rich data sources at government’s disposal such as NADRA.
The proposals also talk about the importance of moving away from indirect taxes and calls for rationalisation, standardisation and automation of tax laws & administration to minimise harassment of taxpayers.
The suggested structural reforms include harmonisation of federal and provincial tax laws, issuance of a single tax return, reduction in the discretionary powers of tax authorities, predicating appraisals of FBR functionaries on growth of business sectors under jurisdiction to instil a mindset of using tax as a means for GDP growth, incentivising tax payers to promote a tax culture, and establishing an independent appellate forum at Commissioner Appeals level.
The proposals also hope for the government to have a long-term strategy for import substitution, call for more incentives to local industry and favours heavy duties on non-essential imports and luxury items. Tax benefits to businesses pioneering UN’s SDGs have been recommended.
The negative growth in sectors such as mining and quarrying (-6.49 percent) and electric generation (-22.96 percent) is also highlighted for the government to take immediate action.
Proper legislation and rationalisation can help improve the situation for mining and can also result in attracting FDI. Focus on bringing down line losses, improving energy mix with clear plan for transition to renewables, as well as revising the existing costly agreements, can help reduce the negative trend for the electricity generation.
The document lauds government’s interventions such as Roshan Digital Account and incentives to the construction sector and mega projects such as Ravi Riverfront and calls for their continuation and further enhancements.
The global body has shown concern about the growing unemployment (11.56 percent) among the youth aged 20-24 and urges government to make youth employment one of the focus areas with considerable spending in the budget 2021-2022.
Further innovations in the Kamyab Jawan programme and introduction of new skills development and entrepreneurship support programmes with focus on emerging technologies should be government’s priority.
Significant increase in education budget with new programmes by provinces to support girls’ education, as well as adequate spending towards health and communications infrastructure, has been termed the ‘need of the hour’ by the global body. ‘Facilitation of high broadband penetration is critical for the future-fitness of our education sector and public services delivery,’ said ACCA.
Segmented approach in programmes such as Ehsas to ensure benefits reach the most marginalised segments of community across the country should be adopted for an inclusive growth.
Close collaboration with the IT/ITeS sector is needed, and the sector should be offered with tax rebates to facilitate its expansion. Similar to CPEC, it’s believed that there’s a potential for something like ‘China-Pakistan Technology Zone’ to connect our innovation value chain with economies in the region.
It’s also pointed out that the past outstanding refunds have only been cleared partially. It’s important to strengthen the trust of the taxpayer as well as provide liquidity to businesses, especially at a time when businesses are recovering from the effects of the pandemic.
It’s reiterated that government needs to ensure openness and transparency to foster trust and cultivate a healthy tax culture in the country.
ACCA has also confirmed that it will be holding a number of seminars to discuss its budget proposals engaging country’s top business leaders and policy makers.
ISLAMABAD: Finance Minister Shaukat Tarin on Monday said that the government is considering to introduce a new tax regime that is in accordance with the changing economic environment.
The finance minister said this at a meeting with Managing Director / CEO Pakistan Stock Exchange Farrukh H. Khan to review proposals for Federal Budget 2021-2022.
The Federal Minister for Finance and Revenue, Shaukat Tarin, chaired the meeting here at the Finance Division with Adviser to PM on Austerity and Institutional Reforms Dr. Ishrat Hussain, SAPM on Finance and Revenue Dr. Waqar Masood, Chairman FBR and Secretary Finance Division were also present during the meeting.
MD, Pakistan Stock Exchange (PSX) gave a detailed presentation on the huge impact of stock markets on wealth creation and mobilization of capital.
He said that a broad-based capital market helps to achieve important economic and social objectives like increasing the number of tax payers, optimizing savings and investment rates, and reducing wealth inequalities.
Tax measures are an important policy tool to increase investments and savings in the economy and to stay competitive with other markets.
The Managing Director submitted proposals to align rates of capital gain tax on disposal of securities in line with regional practices, rationalization of tax rates for companies listed on the stock exchange, enhanced tax credit for listed small and medium enterprises, unlocking the potential of private funds and many other suggestions that will help broadening the tax base/ revenue collection.
The finance minister appreciated the recommendations from the MD Stock Exchange and said that the present government is strongly committed to strengthening of the financial markets and is ready to adopt measures that could mobilize capital to more productive sectors.
Shaukat Tarin welcomed the proposals and assured that these will be given due consideration in the upcoming budget.
ISLAMABAD: The Federal Board of Revenue (FBR) has made it mandatory of wearing uniform for officials in the grades up to BS-21 of Pakistan Customs Service (PCS).
The FBR issued SRO 722(I)/2021 on Monday to notify draft rules for making mandatory the wearing of uniform by all customs officials from July 01, 2021.
The FBR said that the purpose of the single uniform is to enhance the espirit de corps.
The revenue body said that there shall be service and office uniform of Charcoal Grey colour for all the officers and officials as prescribed from BS-I to BS-21, of Pakistan Customs Service.
Uniform allowance shall be made permanent part of the salary as per admissible limits determined from time to time by the FBR.
The FBR said that a Customs General Order (CGO) would be issued for the detailed design, description and accessories of the uniform.
All ranks of Pakistan Customs Service whether serving in Collectorates or Directorates except FBR Headquarters, shall wear the prescribed uniform with specific formation insignia as prescribed in the CGO issued in this regard.
“All ranks shall abide by the instructions or guidelines contained in the CGO for manners, etiquettes, appearance and official conduct whilst wearing uniform,” the FBR said.
Any breach of the guidelines as mentioned above, respective CGO or guidance notes annexed to the CGO shall be construed as misconduct under Civil Servants (Efficiency and Discipline) Rules, 2020, and may entail disciplinary proceedings, it added.
KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to issue Fee Tax Numbers (FTNs) to persons who are not liable for withholding tax.
In its proposals for budget 2021/2022, the Karachi Tax Bar Association (KTBA) said that Section 49(3) of the Income Tax Ordinance, 2001 has specified that any payment received by the Federal Government, a Provincial Government or a Local Government shall not be liable to any collection or deduction of advance tax.
No clarification or list of FTN entities to whom this subsection applies, the tax bar said.
In absence of any SRO or underlying Rules causes unease to the withholding agents to determine proper withholding tax treatment in such case.
FBR should issue a separate list of Fee Tax Numbers (FTNs), who are not liable to tax withholding as provided under section 49(3) of the Ordinance through a S.R.O.
The KTBA said that this will assist the withholding agents and save considerable time in deciding whether a respective FTN holder is required to produce exemption certificate or not.
KARACHI: Karachi Tax Bar Association (KTBA) has recommended amendments to provisions of the Income Tax Ordinance, 2001 related to automatic stay in recovery notices.
It is proposals for budget 2021/2022, the KTBA said that Sub-Section (2) of Section 138 if Income Tax Ordinance, 2001 provides that If the amount referred to in the notice issued under sub-section (1) is not paid within the time specified therein or within the further time, if any, allowed by the Commissioner, the Commissioner may proceed to recover from
— the taxpayer the said amount by one or more of the following modes, namely:
— attachment and sale of any movable or immovable property of the taxpayer;
— appointment of a receiver for the management of the movable or immovable property of the taxpayer.
— arrest of the taxpayer and his detention in prison for a period not exceeding six months arrest of the taxpayer and his detention in prison for a period not exceeding six months
Provision of automatic stays not all exhaustive.
The tax bar said that if a person pays ten percent of the disputed demand under section 140 even then the recovery from taxpayers may be made through the modes envisaged under sub-section (2) of section 138 which is harsh and rendered section 140 redundant and superfluous.
The tax bar proposed that the condition of the payment of ten percent of amount due shall also be made applicable for section 138 to create synchronization between section 138 and 140 of the Ordinance.
The proposed amendment seeks to address the inequity afforded in the law.
ISLAMABAD: Anti-Benami Zone – I Islamabad of the Federal Board of Revenue (FBR) has impounded a luxury vehicle from a residential premise in the capital.
A FBR spokesman on Friday said that it was first of its kind operation in which the anti-benami zone confiscated a luxury five-door vehicle from a residential premise in the capital.
Initial clue to this vehicle’s benami ownership was traced from Excise Office Islamabad Capital Territory.
The suspected benami owner was not enrolled with FBR and upon enquiry he disowned the vehicle and disclosed that he was just a driver whose CNIC was used by the beneficial owner of the vehicle.
After completion of enquiry and investigation, a reference was filed to the Adjudicating Authority which was decided in favor of ABI.
Whereabouts of the vehicle were traced to a house in Islamabad which was subsequently searched, and, on 2nd June 2021, the vehicle was confiscated / impounded with the help of local Law Enforcement Agencies (LEAs) under the Benami Transactions Prohibition Act 2017.
In accordance with the directions of the Prime Minister, momentum against benami assets accelerated in June 2019 with the inception of Anti Benami Zones across Pakistan.
Newly created zones have so far filed more than 90 references of various categories of assets including shares, bank accounts, vehicles, land etc. Among them are 33 vehicles which shall be confiscated as soon as these references attain finality under the law.
KARACHI: Karachi Tax Bar Association (KTBA) on Friday said that after intervention of the Federal Board of Revenue (FBR) many audit cases have been withdrawn from IRIS Portal, which were initiated under Section 122(5) of the Income Tax Ordinance, 2001.
KTBA President Muhammad Zeeshan Merchant in a letter to Chief Commissioners of tax offices located in Karachi welcomed the steps taken for deletion of audit cases that were initiated without definite information.
The KTBA on May 21, 2021 sent communication to all the chief commissioners of tax offices in Karachi informing them that Inland Revenue offices were issuing incorrect audit notices in order to avoid restriction of time limit as defined in the Income Tax Ordinance, 2001.
The tax bar strongly criticized the issuance of faulty audit notices for tax year 2015 in order to avoid time restrictions.
The KTBA said that notices had wrongly been issued by the field formation without properly appreciating returns of income tax as well as statements of wealth and also without proper application of mind as host of such cases pertains to income from property, salary, dividend etc. and also because the grounds advanced in the notices do not constitute ‘definite information’ within the meaning of Section of 122(8) of Income Tax Ordinance, 2001.
“As the time limitation prescribed for initiating proceedings for the tax year 2015 draws closer, bar members are afraid of encountering more such weird notices in days to come, which in no way tend to serve the purpose of the Ordinance and are likely to create chaotic situation,” the tax bar said.
In response to the KTBA letter, the FBR took notice and directed the IR officials to avoid opening audit cases merely on surmises and assumptions.
The FBR said that it had received representations suggesting that the field offices were recklessly issuing notices under section 122(5) read with section 122(9) of Income Tax Ordinance, 2001 where purportedly the threshold of ‘definite information’ as defined under section 122(8) was not met.
“It goes without saying that amendment proceedings under section 122(5) of the Ordinance, merely on basis of audit suspicion picked from within the declarations lodged by the taxpayers themselves, is an enforcement travesty and need to abate,” the FBR said.
The scheme of law warrants that a taxpayer must be dealt with precisely as per principle of justice and fair play, it added.
The FBR directed the field formation to adhere with law and due diligence must be ensured in respect of each taxpayer and no case should be opened merely on surmises and assumptions. “All taxpayers must be provided adequate opportunity of being heard, too,” the FBR added.
In the instant letter, the KTBA said that most of cases notices with provoked and resentful reasons had been deleted/withdrawn from IRIS portal; whereas in some cases where online deleted/withdrawn communication was made the deletion/withdrawal was still awaited.
KARACHI: Finance Minister Shaukat Tarin has announced that tax audits to be done by third party. Further it has been decided to launch universal self assessment scheme (USAS).
“I want to remove harassment by FBR. Although there are good people at FBR but there are also some troublemakers. Hence, we have agreed upon Universal Tax Self-Assessment and the audits by third party only,” he added while speaking at an online meeting with BMG Leadership and KCCI Office Bearers on Thursday.
A statement issued by the Karachi Chamber of commerce and Industry (KCCI) on Thursday quoted Shaukat Tarin that if any wrongdoing was found after the audit by third party, it will result in initiation of investigation and punitive action.
“In this regard, we have created a section to review all the bills, number of deposits and travel history etc. of individuals and if any person is found liable to pay taxes but is a defaulter, such cases will be sent to third-party auditors to prove tax default and if proven, these defaulters will be put behind bars,” Tarin said, adding that laws will be devised to put such persons behind bars responsible for willful default.
He stated that the government was focused on rationalizing the turnover tax in order to make some sense as it varies in numerous cases.
The minister also agreed that when three percent penalty was being charged in case of unregistered persons, the CNIC condition should not be there. Hence, the minister directed FBR to look into this matter and stop demanding CNIC.
“A call center will also be established at FBR in which complaints can be lodged which I will personally review on daily basis to ensure accountability at the FBR,” he added.
In response to concerns expressed over dilapidated infrastructure of Karachi, Shaukat Tarin informed that a three years package of Rs900 billion has been allocated under PSDP for Karachi which will be finalized by the PM.
“During discussions on this allocation at a meeting which will be presided over by the Prime Minister, I will definitely raise business community’s concerns and I will be your promoter.”
He said that the government was trying its best to facilitate the SMEs and, in this regard, the SMEs falling under the bracket of Rs2 million will be provided ‘clean credit’ facility with no security. For this purpose, the government will be providing huge amount of funds to banks at 8 percent which will be given to SMEs at 9 percent while credit insurance will be provided by the government. “It is a matter of grave concerns that out of a total of 6 to 8 million SMEs, only 180,000 SMEs have access to credit, hence efforts will be made to extend credit facility to at least 1 million SMEs in the next two years.”
He said that FBR will also be directed not to stop refunds of SMEs and small businesses. “We will clear all the backlog of refunds within a few months by issuing Tradeable Bonds so that the businesses could have sufficient amount of liquidity available with them and a smarter mechanism will be introduced to clear refunds within 60 to 90 days.”
Referring to concerns expressed over Rs58 billion refunds pending under DLTL scheme, Shaukat Tarin termed it as ‘a very good point” and directed FBR expedite the refunds while DLTL should not be collected this year as the FBR already owes huge amount.
Commenting on a suggestion to treat indenters commission as export proceeds, the Finance Minister said that it was a very good idea to consider indenters’ commission as export proceeds as it has been observed that many indenters prefer to keeping their earnings outside the country but if these earnings were treated as export proceeds, it would encourage them to bring funds to Pakistan.
He said that reforms were being introduced at the revenue side which will ensure that no harassment takes place and there will be no double taxation. “The IMF has been pushing us to stop all exemptions and impose additional tax of Rs140 billion on existing taxpayers which I denied”, Shaukat Tarin said, “Only blatant exemptions will be dealt otherwise the rest will continue. We are broadening the tax base by making good use of technology and innovation which will neither be coercive nor regressive but will be devised in consultation with the business community.”
Finance Minister also assured to regularly hold meetings with KCCI at least once in three months so that dialogue on an ongoing basis continues to promptly resolve business community issues while the FBR will be directed to consider and resolve all the technical issues being raised by KCCI.
Speaking on the occasion, Chairman BMG Zubair Motiwala pointed out that despite the outbreak of COVID-19, Karachi has given 18 percent growth in exports and it overall exports stood at 58 percent therefore, the Federal Government must take Karachi’s robustness into consideration and accordingly give its due share which has unfortunately not been given so far.
He said that although a subsidy was earmarked for Karachi’s energy needs but as per Ministry of Energy, the earmarked amount exhausts by paying for uniform tariff across the country and no amount is left to give subsidy for gas at 6.5 dollars per MMBtu to the five export-oriented sectors. The subsidy does not account for the Hydel electricity portion which is given to KE as a right of Karachi over Hydel Power. If the same is calculated at the cost of hydel electricity, then this subsidy can automatically be saved and given for the sale of gas at 6.45 per MMBtu to the five export-oriented sectors.