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Category: Taxation

Stay updated on taxation news, tax laws, FBR policies, compliance, audits, income tax, sales tax, and fiscal developments in Pakistan.

  • President signs Pakistan Single Window Act

    President signs Pakistan Single Window Act

    ISLAMABAD: President of Pakistan, Dr. Arif Alvi on Friday signed the Pakistan Single Window Act, 2021, a statement said.

    Under the Pakistan Single Window Act, an independent institution having a Governing Council and Secretariat, would be established for the facilitation of national and international trade.

    The new law will provide a coordinated one-window system to facilitate exports, imports and transit trade.

    Establishment of an independent institution besides reducing the cost of doing business will also help ease cross border trade and transportation of goods.

    The institution will also help in timely processing of data and bring about improvement in the provision of quality services.

    The President also signed Senate Secretariat Services (Amendment), Act 2021.

    Under the Senate Secretariat Services (Amendment) Act 2021, signed into law by the President under article 75 of the Constitution, the BS-17 appointments in Senate Secretariat will be made through the Federal Public Service Commission (FPSC).

    However, the Senate Secretariat would be authorized to make appointments in BS-1 to BS-16.

    Direct appointments in BS-18 in Senate Secretariat have been done away with. The absorption of officers, posted in Senate Secretariat on deputation, has also been prohibited under the new law.

  • Tax collection from salary income grows by 69pc in TY2020

    Tax collection from salary income grows by 69pc in TY2020

    ISLAMABAD: The Federal Board of Revenue (FBR) witnessed a substantial increase in tax collection from salary income during tax year 2020, marking a sharp growth of 69 percent compared to the previous year. This significant rise is largely attributed to revisions in the income tax slabs for salaried individuals introduced under fiscal reforms.

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  • FBR issues office timings during Ramazan

    FBR issues office timings during Ramazan

    The Federal Board of Revenue (FBR) has issued special office timings to be observed during the upcoming holy month of Ramazan.

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  • FBR to reintroduce track and trace system for tobacco products by end-June

    FBR to reintroduce track and trace system for tobacco products by end-June

    KARACHI: Federal Board of Revenue (FBR) may reintroduce track and trace system for tobacco products by end-June 2021 with a new strategy after a higher court declared the earlier system invalid.

    According to country report on Pakistan issued by the International Monetary Fund (IMF) on Thursday, the Pakistan authorities through Letter of Intent (LOI) pledged to reintroduce the track and trace system by end-June 2021.

    “The procurement procedures related to the track-and-trace licenses to address the smuggling of tobacco products have been declared invalid by the Islamabad High Court (IHC) and the roll-out of the track-and-trace system for tobacco products was suspended,” according to the report.

    Nonetheless, and building on the lessons from this experience, the authorities are seeking to reintroduce and roll out the track-and-trace systems for tobacco products by end-June 2021 and will consider its introduction for other items subject to high levels of smuggling, including sugar, drinks, and cement, it added.

    The authorities said that that for tax policy measures to be successful and to generate the expected revenues, we need to step up tax administration reforms and enforcement. To this end, we will focus on:

    (i) introducing a centralized, risk-based compliance function;

     (ii) modernizing the IT system and further advancing automation;

    (iii) actively using third-party data, strengthening data cross-checking, and analysis;

    (iv) simplifying registration and filing processes;

    (v) modernizing audit practices and taking a more targeted audit approach; and

    (vi) further strengthening the large taxpayer approach and expanding the activities of the Large Taxpayer Office (LTO).

    Additionally, the authorities will continue the process of sales tax harmonization, implement the single return and taxpayer portal by end-June 2021, and launch a Collectible Debt Campaign by end-March 2021 to redress the high percentage of outstanding debt.

    To support GST harmonization, the authorities will establish the single filing portal by September 2024.

  • Salary income tax brackets to be reduced to five

    Salary income tax brackets to be reduced to five

    KARACHI: The government is working on reducing the brackets of salary income tax to five from existing 11 besides reducing the income slabs, according to country report on Pakistan issued by International Monetary Fund (IMF) on Thursday.

    Pakistan has assured the IMF to take major initiatives in the upcoming budget 2021/2022. According to the report the Pakistani authorities assured the IMF that in the next step of tax policy reform efforts and to further support fiscal objectives, the government will introduce both a general sales tax (GST) and a personal income tax (PIT) reform with the FY 2022 budget, yielding an estimated 1.1 percent of GDP.

    The government may introduce change the existing tax rate structure by reducing the number of rates and income tax brackets from eleven to five and decreasing the size of the income slabs, with a view to simplifying the system and increasing progressivity.

    The authorities further pledged to reduce tax credits and allowances by 50 percent (except for Zakat and those provided for disabled and senior citizens).

    Besides, they also pledged to introduce a special tax procedure for very small taxpayers, aimed at preventing further tax base erosion and facilitating the formalization of the economy.

    The authorities may adopt a long-term strategy to reduce labor informality and to bring additional taxpayers into the PIT net. This reform is expected to yield 0.4 percent of GDP on an annualized basis.

    For the broadening and harmonizing the General Sales Tax (GST) base, the authorities assured the IMF through its Letter of Intent (LoI) signed by the finance minister and governor State Bank of Pakistan (SBP) that the government will advance the reforms to our GST system, underpinned by a unified tax base and within the confines of the current constitution.

    The authorities pledged the following:

    (i)  to eliminate all zero-rated goods (Fifth Schedule), except on export and capital machinery goods and move them to the standard sales tax rate;

    (ii) remove reduced rates under the Eight Schedule and bring all those goods to the standard sales tax rate;

    (iii) eliminate exemptions (Sixth Schedule) excluding a small subset of goods (i.e., basic food, medicines, live animals for human consumption, education and health-related goods) and bring all others to the standard rate; and

    (iv) remove the Ninth Schedule to replace a specific tax rate for cell phones with the standard rate. These reforms are expected to yield an estimated 0.7 percent of GDP on an annualized basis.

    Moreover, the government is also in the process of harmonizing the service sales tax across provincial jurisdictions, with support from the World Bank, expected to be completed by end-June 2021.

  • FBR’s tax collection projected at Rs4,691 billion for current fiscal year

    FBR’s tax collection projected at Rs4,691 billion for current fiscal year

    The Federal Board of Revenue (FBR) is facing a projected revenue collection shortfall of Rs272 billion for the current fiscal year, according to the International Monetary Fund (IMF).

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  • SRB Appellate Tribunal issues Ramazan timings

    SRB Appellate Tribunal issues Ramazan timings

    KARACHI: Appellate Tribunal, Sindh Revenue Board (SRB) on Thursday issued timings during the holy month of Ramazan ul Mubarak 1442 Hijri.

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  • MoU signed for single sales tax return

    MoU signed for single sales tax return

    ISLAMABAD: The revenue authorities of federal and provincial governments on Wednesday reached on an agreement to provide a single web portal to taxpayers for filing only one sales tax return for all revenue authorities.

    A statement stated that Federal Board of Revenue (FBR) and all the four provincial revenue authorities Wednesday signed a Memorandum of Understanding (MOU) for a single sales tax return and single web portal.

    According to the statement issued by the FBR, the signing of the MOU was one of the most significant components of harmonization of sales tax initiative currently underway between the Federation and the provinces.

    On behalf of FBR, the MoU was signed by Chairman FBR, M. Javed Ghani whereas the heads of all provincial revenue authorities signed the document on behalf of their respective departments.

    The representatives of Khyber Pakhtunkhwa Revenue Authority (KPRA) and Balochistan Revenue Authority (BRA) were physically present in the ceremony whereas the representatives of Sindh Revenue Board (SRB) and Punjab Revenue Authority (PRA) participated virtually through Zoom.

    Speaking on the occasion, Special Assistant to Prime Minister on Revenue, Dr. Waqar Masood Khan said that signing of the document was another step towards completion of Prime Minister’s vision to make FBR fully automated.

    “This step will bring facilitation for taxpayers and it will help a great deal in improving the country’s position on ‘Ease of Doing Business Index’,” he added.

    He further added that now persons associated with businesses would only have to file one Sales Tax Return instead of many returns.

    He further said that this step would help bring simplification in tax system and procedure and expressed commitment that other issues currently existing between FBR and provincial revenue authorities would soon be resolved which would further bring ease for business community.

    Waqar Masood congratulated Chairman FBR, heads of Provincial Revenue Authorities and FBR’s Policy Wing Team on achieving this significant milestone.

  • Gwadar free zone becomes operational as Pakistan Customs clears first consignment

    Gwadar free zone becomes operational as Pakistan Customs clears first consignment

    ISLAMABAD: Gwadar Free Zone has become practically operational with the first consignment clearance by Pakistan Customs, a statement said on Wednesday.

    According to the statement, Pakistan Customs has facilitated the clearance of the first import cum export consignment by M/s. HK Sun Corporation limited, which will be further processed in Gwadar Free Zone established under China CPEC and later on items will be exported from Pakistan.

    The first consignment consisting of metal scrap was processed and cleared by the Model Customs Collectorate, (A&F) West, Karachi and goods reached Gwadar Free Zone regulated by Model Customs Collectorate Gwadar.

    More shipments of raw material of the same company are under way to Pakistan which will be further used in manufacturing of goods to be exported.

    M/s. HK Sun Corporation is the first enterprise which has started manufacturing and processing activity in the free zone followed by other investors to contribute in the development of first ever free zone of country established in Gwadar Baluchistan under CPEC.

    According to the concession agreement signed between China Overseas Ports Holding Company (COPHC) and Gwadar Port Authority (GPA), the development and operation of Gwadar free zone is being performed by COPHC.

    The planned development period is from 2015 to 2030, which is divided into four phases.

    With import of the current consignment, the Gwadar Free Zone has practically become operational leading to the development of other economic zones under CPEC in Pakistan.

    The free zone will integrate and strengthen the linkage of industries between China and Pakistan. The free zone is positioned as economic development engine of Gwadar aiming to transform international trade logistics hub under CPEC.

    The project will create employment opportunities for local population; and will play a role of catalyst for economic growth and development of country.

    Federal Board of Revenue is committed to achieve the vision of Prime Minister and is taking such landmark steps to facilitate and provide support for swift clearance of Free Zone Cargo to prevent any possibility of loss or hardship to the export industry.

    Such steps shall boost exports and will result in trade facilitation by ensuring competitiveness of our exported goods in international markets.

  • FBR collects Rs24 billion on purchases of immovable properties

    FBR collects Rs24 billion on purchases of immovable properties

    ISLAMABAD: Federal Board of Revenue (FBR) has collected Rs24 billion as withholding tax on purchase of immovable properties during tax year 2020.

    According to collection statistics for tax year 2020 released by the FBR on Tuesday revealed the withholding tax collection on purchase of immovable properties increased to Rs24 billion as compared with Rs13.50 billion in the preceding fiscal year, showing an increase of 78 percent.

    The collection of withholding tax on purchase of immovable properties is made under Section 236K of the Income Tax Ordinance, 2001.

    Prior to Finance Act, 2019, the withholding tax rate was at zero percent where value of immovable property was up to Rs4 million. While, withholding tax at two percent for income tax return filer was to be collected where the value of immovable property is more than Rs4 million. However, at this value of immovable properties the withholding tax for non-filers was prescribed at 4 percent.

    However, through Finance Act, 2019 the withholding tax rate was amended to one percent on fair market value of the immovable properties purchased during tax year 2020 and onwards in case the purchase is on the Active Taxpayers List (ATL).

    The rate of withholding tax in case person is not on the ATL is 2 percent.

    The withholding tax was imposed on purchase of immovable properties under Section 236K was introduced through Finance Act, 2014 in order to encourage income tax return filing.

    According to the Section 236K of Income Tax Ordinance, 2001, any person responsible for registering, recording or attesting transfer of any immovable property shall collect withholding tax at the time of registering, recording or attesting the transfer shall collect from the purchaser or transferee.

    It further said that the person responsible for registering, recording or attesting transfer includes person responsible for registering, recording or attesting transfer for local authority, housing authority, housing society, co-operative society and registrar of properties.