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Category: Taxation

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  • FBR launches first phase of pre-filing in tax returns

    FBR launches first phase of pre-filing in tax returns

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday said it has launched first phase of pre-filling of some information enabled for individual taxpayers in annual income tax returns.

    In a statement regarding ongoing reform process, the FBR said that those efforts were bearing fruit.

    According to the statement, FBR has designed simplified income tax returns for individuals and small & medium enterprises (with turnover less than Rs.10 million).

    Auto-calculation and phase 1 of pre-filling of some information has been enabled for individual taxpayers.

     Phase 1 of automated income tax refunds has been enabled.

    The capability to file appeals through the system has been provided via the e-Appeals module.

    Automation of Sales Tax refunds via FASTER has been further improved.

    Similarly, the processing and payment of export duty drawbacks have also been automated.

    The revenue body said that in line with the vision of the Prime Minister as part of its reforms agenda, FBR has placed a lot of focus on facilitation of taxpayers, reducing human interaction, simplification of tax statutes and tax filing procedures through automation, integrity management, enforcement of tax code and policy measures to boost revenue and promote exports through increase in business activity, speedy payment of refunds and drawbacks and better service delivery.

    As a result of this reform process, significant improvement has been seen.

    FBR has exceeded the seven month revenue target for FY 2020 – 2021 by collecting Rs. 2,570 billion against the target of Rs. 2,550 billion.

    This target has been achieved despite the issuance of 80 percent more refunds in comparison with same period last FY (Rs.129 billion against 69 billion for last year). This has helped the business community in reducing cost of doing business and providing working capital for investment.

    A dedicated portal has been created to manage taxpayer complaints and to provide feedback. Large Taxpayers Office (LTO) has been opened in Multan to facilitate large taxpayers.

    Moreover, taxpayer registration for Sales Tax purposes has been enabled on the system (ICT based Sales Tax survey). Simultaneously, on the Customs side, an online import duty calculator has been enabled on WeBOC for the importers / customs agents in order to find the duty / taxes without filing of Goods Declaration.

    The Authorized Economic Operator (AEO) Program has been launched for trusted trade partners. This is also part of the Trade Facilitation Agreement (TFA) under WTO.

    A dedicated portal (Maloomat TaxRay) has been launched for taxpayers to view what information FBR holds about them. Moreover, the systems used for Prosecution, Appellate, and Alternate Dispute Resolution systems have been strengthened, revitalized, and automated.

    Additionally, on the Customs side, the Anti-Smuggling and Confiscation of goods portal has been enabled for data collection and analysis.

    FBR’s Integrity Management Mechanism has been strengthened. FBR Head Office & field formations have been restructured to improve efficiency.

    Customs Duty concessions and exemptions regime continues to be reviewed and simplified in collaboration with the tax policy board to further improve ease of doing business.

    Another positive development has been seen in the number of duty drawback claims processed via Automated Export Duty Drawback payment system. Since its official launch in end-December (as of 15 January 2021), 74 percent of all claims (55,790 out of 75,345) have been automated whilst 71 percent of amount has been remitted.

  • FBR procures video surveillance system for sugar mills

    FBR procures video surveillance system for sugar mills

    ISLAMABAD: Federal Board of Revenue (FBR) has decided to procure Video Analytic Surveillance (VAS) system from a single vendor to install the equipment at all the sugar mills across the country, sources said on Thursday.

    Earlier, it was decided that the cost of installation has to be borne by sugar mills but ongoing lackluster response and delaying tactics compelled the authorities to purchase the equipment for early solution of transparent monitoring of sugar production and supply.

    On February 08, 2021, the FBR presented a summary regarding procurement of VAS for proper monitoring of the production and sale of sugar in compliance with the directive of the prime minister. The Economic Coordination Committee (ECC) of the Cabinet approved an allocation of Rs350 million as a Technical Supplementary Grant for installation of the most optimal VAS solution at the sugar mills’ premises during the current crushing season as requested by the FBR.

    In order to properly monitor the production and sale of sugar and the attendant sales tax and income tax thereon, Federal Board of Revenue (FBR) issued SRO 889(I)/2020, dated 21.09.2020 warranting all sugar mills to install VAS System expecting that the process would be completed before official onset of the crushing season on 10.11.2020.

    FBR ran a rigorous process of procurement as enshrined under the VAS Rules, 2020, and pre-qualified/approved seven vendors for supply and installation of the System on sugar factories.

    The FBR said that the VAS System, however, has so far been installed only by a few sugar mills and those too are sub-optimal solutions. “Ostensibly, the cost, which under the prevailing rules is to be borne by the sugar mills, has been the key factor towards non-implementation of the VAS System.”

    Sugar mill-owners, in an apparent effort to cut cost, went around getting demonstrations and quotations from all seven vendors consuming unending time in the process.

    Those that went ahead with installation eventually opted for the cheapest and sub-standard solutions.

    A relatively small contract size/volume (80 mills only) to be distributed over seven vendors, also did not prove enough an incentive for the vendors to aggressively invest in procurement of the systems and install in a timely fashion.

    The last deadline, i.e., January 31, 2021 has already expired and it seems unlikely that the system would be installed in a satisfactory manner across the board by all the mills.

    The FBR said that the situation warrants a change in approach.

    Accordingly, FBR has been tasked to select and contract one vendor to install the video-analytics solution across all manufacturers of sugar in Pakistan and in the shortest possible time.

    The cost is to be borne by the government and the vendor will submit its invoices to FBR for payment.

  • FBR transfers customs officers of BS-17-18

    FBR transfers customs officers of BS-17-18

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday announced transfers and posting of BS-17 and BS-18 officers of Pakistan Customs Service (PCS) with immediate effect until further orders.

    The FBR notified transfers and postings of following officers:

    01. Mrs. Saher Yasir (Pakistan Customs Service/BS-18) has been transferred and posted as Deputy Director, Directorate of IPR Enforcement (Central), Lahore from the post of Deputy Director, Directorate of IPR Enforcement (North), Islamabad.

    02. Syed Ali Akbar Zaidi (Pakistan Customs Service/BS-18) has been transferred and posted as Deputy Director, Directorate of Intelligence & Investigation, FBR, Lahore from the post of Deputy Director, Directorate of IPR Enforcement (Central), Lahore.

    03. Amjad Hussain Rajper (Pakistan Customs Service/BS-18) has been transferred and posted as Deputy Director, Directorate of Intelligence & Investigation, FBR, Quetta from the post of Deputy Collector, Model Customs Collectorate of Enforcement and Compliance, Quetta.

    04. Ms. Maryam Khalid (Pakistan Customs Service/BS-18) has been transferred and posted as Deputy Director, DirectorateGeneral of Intelligence &Investigation, FBR, Islamabad from the post of Deputy Collector, Model Customs Collectorate, Islamabad.

    05. Muhammad Zohaib (Pakistan Customs Service/BS-18) has been transferred and posted as Deputy Collector, Model CustomsCollectorate of Enforcement andCompliance, Quetta from the post of Deputy Director, Directorate ofIntelligence & Investigation, FBR,Quetta.

    06. Ali Asad (Pakistan Customs Service/BS-18) has been transferred and posted as Deputy Director, Directorate ofIntelligence & Investigation, FBR,Karachi from the post of Deputy Collector, ModelCustoms Collectorate ofAppraisement and Facilitation(East), Karachi.

    07. Majid Hussain Gaad (Pakistan Customs Service/BS-17) has been transferred and posted as Assistant Director, Directorate ofIntelligence & Investigation, FBR,Karachi from the post of Assistant Collector, ModelCustoms Collectorate,Islamabad.

    08. Beenish Rasheed (Pakistan Customs Service/BS-17) has been transferred and posted as Assistant Collector, ModelCustoms Collectorate, Islamabad from the post of Assistant Collector, ModelCustoms Collectorate ofAppraisement and Facilitation,Faisalabad.

    09. Hafizah Laraib Ghaffar (Pakistan Customs Service/BS-17) has been transferred and posted as Assistant Director, Directorate of IPR Enforcement (Central), Islamabad from the post of Assistant Collector, Model Customs Collectorate, Islamabad.

    10. Asad Aleem (Pakistan Customs Service/BS-17) has been transferred and posted as Assistant Collector, Model Customs Collectorate of Appraisement and Facilitation (East), Karachi from the post of Assistant Collector, Model Customs Collectorate of Exports, Custom House, Karachi.

    The FBR said that the Officers who are drawing performance allowance prior to issuance of this notification shall continue to draw this allowance on the new place of posting.

  • Board approves establishment of Tax Policy Unit

    Board approves establishment of Tax Policy Unit

    ISLAMABAD: The Federal Board of Revenue (FBR) Policy Board on Thursday approved establishment of Tax Policy Unit under the administrative control of the Finance Division.

    (more…)
  • Highlights of Tax Laws (Amendment) Ordinance, 2021

    Highlights of Tax Laws (Amendment) Ordinance, 2021

    ISLAMABAD: The federal cabinet approved the Tax Laws (Amendment) Ordinance, 2021 in its meeting held on February 09, 2021.

    According the approved draft of the ordinance, the government is making certain amendments in: Customs Act, 1969; Sales Tax Act, 1990; Federal Excise Act, 2005; and Income Tax Ordinance, 2001.

    A major relief has been granted to holders of Roshan Digital Accounts (RDAs). The tax relief has been allowed:

    — The exemption / concessions granted to non-residents holding Pakistan Origin Card (POC),  National Identity Card for Overseas Pakistanis (NICOP), Computerized National Identity Card (CNIC) for encouraging foreign remittances

    — Exemption to profit on debt income of RDAs

    — If investment is made through RDAs

    >> Reduction in tax rate from 15% to 10% on capital gain on disposal of shares in stock market— as final tax

    >> Taxation of sale and purchase of immovable property @ 1% as final tax in lieu of capital gain tax

    >> Reduction in tax rate from 20% to 10% on profit on debt from Naya Pakistan Certificates as final tax

    — Waiver from filing of return to non-resident RDA holders and resultant investors in shares, Naya Pakistan Certificates and immovable property

    — Placement of above non-residents on ATL to avoid higher taxation

    — Exemption to Islamic Naya Pakistan Certificate Company Ltd

    >> Corporate income tax

    >> minimum tax on turn over

    >> Withholding taxes

    Other tax concessions granted under various heads, which included:

    — Exemption from withholding tax u/s 153(1)(a) for whole of supply chain  of locally manufactured Mobile Phone Devices

    — Imposition of withholding tax on vehicles, if sold within 90 days of delivery – to discourage investors/  “on money” trend  

    — Extension of date of commencement of business for electricity transmission lines from 2018 to 2022 on recommendation of Cabinet Committee on CPEC – not even a single project / company qualified for exemption before change (Pak Matiari-Lahore Transmission Line Co.)

    — Exemption from withholding tax u/s 153(1)(b) on services provided by National Telecommunication Company (NTC) –the tax constituted minimum tax hence great hardship

    — Cotton Ginners –Tax liability to be equal to 1% of turnover as final tax. The tax regime existent upto 30-06-2019 proposed to be restored in line with 1994- agreement.

    — Extension of applicability of super tax on banking companies from tax year 2022 onwards

    — Withholding and turnover tax rates for dealers, distributors, wholesalers and retailers of fertilizer and fast moving consumer goods proposed to be reduced to 0.25%, provided they get themselves registered under Sales Tax Act, 1990 within 60 days— for promotion of documentation and equity

    — Exemption from withholding tax on temporary imports by international athletes for SAF Games.

  • Withholding tax imposed on motor vehicle sale to discourage ‘on money’

    Withholding tax imposed on motor vehicle sale to discourage ‘on money’

    ISLAMABAD: The federal government has approved an additional withholding tax on motor vehicles sold within 90 days of delivery in order to discourage ‘on money’ trend, sources said on Wednesday.

    The federal cabinet in its meeting on February 09, 2020 approved the Tax (Amendment) Ordinance, 2021 to implement through a presidential ordinance.

    The sources said that through the Tax (Amendment) Ordinance, 2021 withholding tax on vehicles had been imposed in case the motor vehicle was sold within 90 days of delivery.

    The tax has been imposed in order to discourage investors and ‘on money’ trend.

    The levy has already been approved by the economic coordination of the cabinet.

    The sources said that the withholding tax will be applicable after promulgation of the ordinance.

  • FBR issues rules for direct transfer of income tax refund payments

    FBR issues rules for direct transfer of income tax refund payments

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday introduced rules for making payment of income tax refunds directly to taxpayers’ bank account.

    The FBR issued SRO 175(I)/2021 dated February 10, 2021 to notify draft amendments to Income Tax Rules, 2002.

    According to the draft rules, a Centralized Income Tax Refund Office (CITRO) would be established for centralized payment of refunds.

    After completing all codal formalities the Commissioner Inland Revenue shall pass an order under Section 170(4) and transmit the order to CITRO. The same shall be reflected in CITRO in real time.

    The CITRO shall generate an electronic advice of approve amount for onwards submission to the State Bank of Pakistan (SBP) through dedicated VPN tunnel established between FBR and SBP. The SBP shall credit amount directly to the account of taxpayer.

    The SBP shall confirm the transfer of amount to the taxpayers account or vice versa electronically to CITRO.

    The CITRO shall reconcile the payments issued as per instructions during the month with the electronic scrolls received from the SBP and record the outcome of such reconciliation in the system.

    Where any payment instruction is returned back by the SBP due to any reason, the CITRO shall transmit the same to concerned commissioner for correction in payment instructions.

    The FBR shall ensure that complete data of refunds issued is made available to the concerned commissioner electronically.

  • FBR warns against issuing manual tax notices

    FBR warns against issuing manual tax notices

    KARACHI: Federal Board of Revenue (FBR) has warned tax officials of initiating disciplinary proceedings for issuing manual tax notices, including audit and assessment.

    The FBR in an official communication sent to Large Taxpayers Offices (LTOs), Regional Tax Offices (RTOs), Corporate Tax Offices (CTOs) and Medium Taxpayers Office (MTO) that instances had been reported to the revenue board that field officers tend to issue manual notices and assessment orders.

    These manual notices have created problems for the taxpayers as they preferred to file appeal and were also adversely affecting the efficiency of the field formations.

    The FBR issued following instructions to the tax offices:

    i. All statutory notices available in IRIS shall be issued electronically without any exception; manual issuance of notices, available in IRIS, is not allowed.

    ii. All orders shall be issued electronically through IRIS; issuance of manual orders is not allowed.

    iii. All Commissioners are requested to conduct periodic inspection to ensure that notices/orders are issued electronically.

    Any divergence from instructions shall be viewed as inefficiency and shall entail disciplinary proceedings, the FBR said.

  • Tax waiver of Rs64.2 billion avail by only 37 enterprises

    Tax waiver of Rs64.2 billion avail by only 37 enterprises

    ISLAMABAD: An amount of Rs64.2 billion has been granted as waiver to only 37 enterprises, including the State Bank of Pakistan (SBP), Dr. Ikramul Haq, Advocate Supreme Court said on Monday.

    He was addressing a webinar hosted by Pakistan Institute of Development Economics on the topic of ‘Impact of SROs on Pakistan Economy’.

    Further highlighting the cost of tax exemption, Dr. Ikram said that the Supreme Court of Pakistan’s Diamer-Bhasha Mohmand Dam Fund donations had cost Rs2.13 billion as tax expenditure under income tax.

    “Total cost of exemption on perquisites, benefits and allowances received by judges of Supreme Court of Pakistan and High Court is estimated at Rs 283 million. Value of tax-free superior judicial allowance was at Rs526.507 million for in-service judges and for the retired judges it was Rs605.280 million,” according to presentation of Dr. Ikramul Haq.

    While criticizing the issuance of SROs, he said that the SROs, other than for rule making or clarification or guidance, are in utter violation of the supreme law of the land and binding judgments or Supreme Court under Article 189 of the Constitution.

    “Even rule-making power should be subjected to approval by Parliament as is the case in many countries,” he added.

    The impact of SROs on the economy, Dr. Ikramul Haq said a typical shock follows a cumulative drop of real GDP per capita of 5.8 percent over the court of 10 years.

    “This means about 0.171 percent – 0.885 percent of real GDP per capita growth is lost every year due to SRO exemptions,” he added.

    Taxation that includes reduction or enhancement of rates or giving exemptions, waivers and concessions by SROs is a flagrant violation of the Constitution.  “Blame lies solely with legislators that have delegated (rather abdicated) their constitutional obligation,” he added.

    He further added: “Delegation of power to executive to issue SROs is violation of Article 77 read with Article 162 as any Bill that imposes or varies a tax or duty, the whole or part of the net proceeds whereof is assigned to any province, cannot be even tabled in Parliament without the prior approval of the President.”

    He pointed out that a report of World Trade Organisation (WTO), Trade Policy Review of Pakistan (March 24 & 26, 2015) highlighted that about 4,500 SROs were issued leading to a revenue loss of Rs 650 billion.

    Exemptions/concessions given through SROs were of Rs. 5500 billion from 2008 to 2013 alone, as admitted by the Chairman FBR before the Senate Standing Committee on Finance & Revenue on May 13, 2014.

    Reduction of duties and tax concessions for those possessing enormous money power by Executive by using its executive authority available in the form of SROs, has created innumerable tax distortions in tax system.

  • FBR issues draft rules for enrollment in Pakistan Single Window

    FBR issues draft rules for enrollment in Pakistan Single Window

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday notified draft rules for enrollment in Pakistan Single Window (PSW) for the facilitation of trade and business.

    The FBR issued SRO 164(I)/2021 to notify draft amendments in Customs Rules, 2001.

    The revenue body invited feedback from the stakeholders within 15 days for finalization of the proposed rules.

    According to the draft rules:

    “431A. Enrollment in Pakistan Single Window (PSW).- (1) Subject to electronic verification, the subscribers who are required to be enrolled in the Customs Computerized System by electronic means through the Pakistan Single Window (PSW) interface shall, for obtaining unique user identifier (HID), follow the process outlined hereinafter, namely:-

    (a) the subscriber shall provide the following particulars through the electronic interface of PSW:-

    National Tax Number (NTN), Free Tax Number (FTN) and Sales Tax Registration Number (STRN);

    in case of a company Securities and Exchange Commission of Pakistan (SECP)’s Registration Number or Computer-Generated Unique Identification Number (CUIN);

    Subscriber identification module (SIM) card number or by such other name registered in the name of the subscriber;

    Biometric verification from the National Database and Registration Authority’s e-Sahulat centers;

    Email address of the subscriber as appearing in IRIS; and digital bank account number duly authorized by State Bank of Pakistan.

    (b) the PSW interface shall through electronic means verify the particulars listed above which may include NTN, CUIN, and SIM card and Bank account number etc. from the concerned authorities and issue One Time Password (OTP) via registered email and SIM card number;

    (c) subscription fee shall be charged by the PSW through digital means as per clause (a) of rule 426; (d) the PSW system shall by electronic means issue UID to the eligible subscribers fulfilling the requirements as per clauses (a), (b) and (c) ;

    (e) the UID of the subscriber shall remain valid and active for a period of two years or as may be determined, however, a notice not less than fifteen days before the inactivation of the UID shall be given to the subscriber before deactivating his UID, whether through electronic or manual means. The Collector of Customs having jurisdiction may however, immediately deactivate  the UID of a subscriber for reasons to be recorded in writing;

    A subscriber whose UID got deactivated through lapse of time or persistent not use of not less than two years, shall reapply for subscription in the same manner as a new subscriber applies for UID which shall inter alia include payment of subscription fee afresh;

    The subscriber having a valid and active UID shall be entitled to avail all the privileges made available in the Subscription Module of the PSW;

    Customs agents as licensed under section 207 of the Act shall be allowed to tie onetime goods declaration in respect of persons having a valid Computerized National Identity Card Number after approval from an officer not below the rank of an Assistant Collector having jurisdiction and provision of the particulars listed in clause (a)-above; and

    Any subscribers, not appearing on the Active Taxpayers List of either Income Tax or Sales Tax, shall be allowed issuance of UID, however, during the time of their inactive status they shall not be allowed any exemptions or concessions etc., as the case may be.

    (2) The subscriber shall be responsible for the authenticity of the information provided, security of his password, data shared or retrieved from the PSW, ethical use of the system and any failure to exercise due care in the use of PSW or compromising its digital systems or conniving with any person who intend to get unauthorized access to the PSW, shall be liable to penal action under the law for the time being in force. No subscriber shall assign, sublet or allow any person to use his biometric verification, NTN, password, SIM card number or any other particulars under any circumstances whatsoever and such subscriber shall be responsible for using any of his digital particulars for the purposes of subscription only to extent relevant to the PSW interface.

    (3) In order to facilitate, educate or assist the subscribers of PSW, the Model Customs Collectorates listed below shall designate an officer not below the rank of an Assistant Collector as Assistant Collector (Facilitation) namely: –

    Model Customs Collectorate of Appraisement and Facilitation (East-Karachi)/Quetta/Lahore/Peshawar/Faisalabad;

    Model Customs Collectorate Gwadar/Hyderabad/Sialkot/Islamabad/Gilgit: Baltistan; and

    Model Customs Collectorate of Enforcement and Compliance, Multan.

    (4) This rule shall apply to all the subscribers of the Customs Computerized System through the PSW interface till such time and to such categories of subscribers as the Board may determine.”