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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.

  • Budget 2021/2022 to focus on easing tax burden: Member IR

    Budget 2021/2022 to focus on easing tax burden: Member IR

    Karachi: The upcoming federal budget will ease the burden on the industrial sector to reduce the cost of doing business to facilitate industrial and exporters, Dr. Muhammad Ashfaq, Member Inland Revenue (Operations), Federal Board of Revenue (FBR), said on Friday.

    The Member was addressing the members of Karachi Chamber of Commerce and Industry (KCCI) during his four day visit to the city.

    The Member said that the FBR was working on a policy to reduce the cost of doing business.

    He said that it was encouraging that export orders were increasing. Further, a report of the State Bank of Pakistan (SBP) pointed out a reduction in the cost of doing business.

    “The budget 2021/2022 will focus on reducing the cost of production. Further, the priority will be easing the tax burden on the industrial sector,” the Member added.

    FBR receives numerous budget suggestions every year, he said, adding that the KCCI should send essential proposals.

    The Member said that the condition of CNIC was part of the statute. He also said that audit was part of the taxation system.

    He said that the FBR would introduce a new tax policy in the next three months. The Member said that refunds would be paid when claimed.

  • Sales tax registration may be suspended on non-filing of returns for six consecutive months

    Sales tax registration may be suspended on non-filing of returns for six consecutive months

    ISLAMABAD: Federal Board of Revenue (FBR) may suspend sales tax registration of a taxpayer who fails to file returns for six consecutive months, officials said on Thursday.

    The officials said that a commissioner of Inland Revenue may suspend registration of a taxpayer, if the person is found to have issued fake invoices, evaded tax or committed tax fraud without prior notice, pending further inquiry.

    Suspension of registration can occur due to the following possibilities:

    Non-availability of the registered person at the given address;

    Refusal to allow access to business premises or refusal to furnish records to an authorized Inland Revenue Officer;

    Abnormal tax profile, such as taking excessive input tax adjustments, continuous carry-forwards, or sudden increase in turnover;

    Making substantial purchases from or making supplies to other blacklisted or suspended person;

    Non-filing of sales tax returns by a registered person for six consecutive months;

    On recommendation of a commissioner of any other jurisdiction;

    Any other reason to be specified by the Commissioner;

    Impact of Suspension

    Commissioner shall issue written order to the concerned registered person detailing the reasons for suspension. The order shall also be provided to all other Large Taxpayer Units (LTUs)/Regional Tax Offices (RTOs), the FBR‘s computer system, the STARR computer system and the Customs Wing computer system for information and necessary action as per law;

    Suspension of registered person will make them ineligible to avail input tax adjustment/refund. Similarly, no input tax adjustment/refund shall be allowed to any other registered persons on the basis of invoices issued by such suspended person (whether issued prior to or after such suspension);

    The suspended registered person will be issued a show cause notice (through registered post or courier service) within seven days of issuance of order of suspension by the Commissioner. The registered person will have an opportunity of hearing with fifteen days of the issuance of such notice clearly indicating that the will be blacklisted. In case of non-availability of the suspended person at the given address, the notice may be placed on the main notice Board of the LTO/RTO;

    Where the show cause notice is not issued within seven days of the order of suspension, the order of suspension shall become invalid;

    To become part of the Active Taxpayer List (ST), the Active Taxpayer must be a registered person who does not fall in the following categories:

    Blacklisted or whose registration is suspended or blocked;

    Failed to file return by the due date for two consecutive tax periods;

    Failed to file Income Tax Return by the due date;

    Failed to file two consecutive monthly or annual withholding tax statement.

    A non-active taxpayer may be restored to active taxpayer status:

    If the respective RTO/LTO recommends the same to FBR after conducting audit or other investigation; Competent Authority, Appellate Authority, Court or FTO orders for the restoration.

  • Member IR (Operations) holds meetings with tax officials, industry to boost revenue collection

    Member IR (Operations) holds meetings with tax officials, industry to boost revenue collection

    KARACHI: Dr. Muhammad Ashfaq, Member Inland Revenue (Operations) of the Federal Board of Revenue (FBR) has launched a round of meetings with tax officials and industrialists during his four–day visit to Karachi starting from January 14, 2021.

    FBR sources on Thursday said that the Member IR had a busy schedule, which included meeting with the tax offices and chambers/associations.

    The sources said that the meetings would focus on revenue collection during the first half of the current fiscal year.

    During his meeting with chambers and associations, the member would encourage the industrials to contribute towards revenue collection.

    According to the schedule, the member will kick off the visit to meet with an industrialist on Thursday evening.

    The member on Friday will meet with office bearers of Karachi Chamber of Commerce and Industry (KCCI) and Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA). On the same day, the Member will meet the senior officials of the Medium Tax Office (MTO) and Corporate Tax Office (CTO) to review the revenue collection performance.

    On Saturday, the member will hold meetings with representatives of the Pakistan Yarn Merchant Association (PYMA) and Karachi Tax Bar Association (KTBA). On the same day, the Member will also hold a meeting with office-bearers of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

    On Sunday, the Member is scheduled to meet Chief Commissioners Inland Revenue to discuss the revenue performance.

  • FBR invites income tax proposals for budget 2021/2022

    FBR invites income tax proposals for budget 2021/2022

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday invited income tax proposals for budget 2021/2022 and asked stakeholders to submit the same by February 15, 2021.

    The FBR asked the tax offices, including Large Taxpayers Offices (LTOs), Medium Tax Offices (MTOs), Corporate Tax Offices (CTOs) and Regional Tax Offices (RTOs), and trade and industries that the proposals should focus on broadening the tax base for a wide participation in revenue generation efforts.

    The FBR advised that suggestions should in the following policy areas:

    Broadening of tax base for a wider participation in revenue generation efforts;

    Taxation of real income on progressive basis;

    Phasing out of tax concessions and exemptions;

    Removal of tax distortions and anomalies;

    Facilitation of taxpayers and ease of doing business;

    Promoting equity in taxation by introducing measures where incidence of tax is higher on affluent classes.

    The stakeholders have been asked to provide proposals in a prescribed formation that should include relevant sections/clauses or rules where amendment is sought. The proposals related to any section of Income Tax Ordinance, 2001 or any rule to Income Tax Rules, 2002 should be presented along with rationale and revenue impact.

  • FBR attributes export growth to incentives, facilitation

    FBR attributes export growth to incentives, facilitation

    ISLAMABAD:  Federal Board of Revenue (FBR) on Wednesday said that the significant growth in export was mainly due to integrated strategy for duty and tax incentives and other facilitation.

    The FBR has devised an Integrated Strategy which has amply contributed to significant increase in exports of Pakistan from $1.6 billion (in August, 2020) to $2.4 billion (in December, 2020).

    Growth in exports of Pakistan in December, 2020 is up by 18.3 per cent as compared to $1.993 billion in the corresponding month last year.

    While mentioning factors that have facilitated growth in exports, FBR has stated that Import duties on 1,623 tariff lines, pertaining to basic raw material and intermediate goods were reduced to zero through the Finance Act, 2020.

    In pursuance of this strategy, additional customs duties and regulatory duties on 164 items related to textile sector, not manufactured in the country, were also removed in collaboration with all the stakeholders.

    All these measures were undertaken with the objectives of neutralizing adverse impact of COVID 19 Pandemic, especially for the exporters, and to make their products competitive vis-à-vis those of their competitors in the international market.

    Under the initiative of “Make in Pakistan”, the Duty Drawback rates for at least eight (08) sectors were revised upwards by FBR. During the whole exercise, more than 434,000 claims were disposed of and approximately 7800 exporters have benefited from this Initiative.

    Similarly, FBR has paid ninety (90) percent more refunds of Sales Tax during July-December, 2020 as compared to the corresponding period last year.

    This led to significant rise in volumes of exports in the form of increase in TEUs (i.e. Tonnage Equivalent Units) / Containers from 35,477 in July, 2020 to 62,591 in December, 2020, showing a growth of 43 percent.

    In order to tangibly contribute to exports, all the Export Facilitation Schemes were simplified / rationalized for their optimal use by the exporters.

    First of all, extension in utilization period of different export facilitation schemes was allowed for a period of one year from 01st March, 2020 to 28th February, 2021.

    Secondly, retention period for plant and machinery, under the Export Oriented Units Scheme, was reduced from 10 years to five years.

    Thirdly, for the prompt redressal of grievances, one administrative tier is reduced (under Duty and Taxes Remission for Export Scheme and Manufacturing Bond Scheme) and Regulatory Authority is created to facilitate the exporters.

    Moreover, the investors in Export Processing Zones have been facilitated in payment of duties/taxes on the disposal of machinery in the tariff area.

    These facilitation measures have led to increase in number of exports Goods Declarations (GDs) from 71,190 in July, 2020 to 79,756 in December, 2020, posting an increase of 11 percent.

    In the same vein, total number of Exports Goods Declarations (GDs) (from 1st July, 2020 to 31st December, 2020), remained at 408,472 vis-à-vis 333,943 during 1st January, 2020, showing an increase of 18 percent.  

    To realize the objective of facilitation / promotion of exports, an automated system of filing the claim to the final sanctioning of Duty Drawback Claims for the payment of Duty Drawback Claims to the exporter was rolled out on 1st October, 2020. As a matter of fact, export Goods Declaration filed in Customs WeBOC system is being considered as the Duty Drawback Claim. State Bank of Pakistan credits the system sanctioned payments in the accounts of exporters online directly.

    In addition to the said automation initiative, Green Channel clearances of the exports GDs / Consignments were increased from 74 percent in July, 2020 to 77.3 percent in December, 2020.

    Similarly, for speedy payment of Sales Tax refunds to exporters, FASTER PLUS System has been implemented.

    FBR has also removed regulatory duty on import of cotton yarn, till 30th June, 2021, which is a basic raw material for the value-added textile industry of Pakistan.

    Being committed to the national goal of increase in exports, Federal Board of Revenue is making all out efforts to assist exporters by continuously making improvements in its laws and procedures.

  • Procedure for importers registration for customs clearance

    Procedure for importers registration for customs clearance

    KARACHI: Commercial and non-commercial importers are required to get registered with Pakistan’s online WeBOC system for clearance of consignments.

    In order to access the online Customs portal WeBOC, the person would first have to register themselves with Federal Board of Revenue (FBR).

    WEBOC EXTERNAL USER REGISTRATION FORM

    NTN Number *

    STRN *

    Business Name *

    Business Address *

    Contact Person Name *

    Contact Person CNIC *

    Phone Number 1 *

    Phone Number 2

    Fax Number

    Cell Number *

    Contact Person Email id *

    Bank Name

    Branch City

    Branch Name

    Account Number

    License Number

    Collectorate

    Warehouse (In case of Warehouse )

    Shipping Line Type (In case of Shipping Line )

    Location (In case of Terminal Operator)

    Documents Requires incase of Sub Type :

    Commercial

    1. Copies of CNIC’s of Proprietor

    2. Copy of NTN duly verifiable form www.fbr.gov.pk

    3. Copy of STRN duly verifiable from www.fbr.gov.pk

    Non-Commercial

    1. Copies of CNIC’s of Partners

    2. Copy of NTN duly verifiable form www.fbr.gov.pk

    3. Copy of STRN duly verifiable from www.fbr.gov.pk

    4. Copy of Current Airway Bill

    Embassy

    1. Copies of CNIC’s/Passport of the authorized person

    2. Copy of NTN duly verifiable form www.fbr.gov.pk

    3. Authority letter from Head of Embassy

    Trust

    1. Copies of CNIC’s of Managing Trustee and other trustee

    2. Copy of NTN duly verifiable form www.fbr.gov.pk

    3. Copy of Trust Deed

    Government Department

    1. Copies of CNIC’s of directors

    2. Copy of NTN duly verifiable form www.fbr.gov.pk

    3. Copy of STRN duly verifiable from www.fbr.gov.pk

    Undertaking as per format on judicial paper of Rs100/-

    PROCEDURE FOR REGISTRATION

    1. Submission of application to Deputy/Assistant Collector WeBOC User-ID Section, along with supportive/required documents

    2. Personal appearance of applicant before Deputy / Assistant Collector User-ID Section with original CNIC.

    3. Process of taking digital picture and thumb impression of the applicant upon personal appearance.

    4. Visit of the Business premises (wherever required)

    5. Acceptance/Rejection of Application.

    6. Creation of User-ID in case of acceptance of application

    7. Issuance of Login-ID and automatic sending of computer generated password to the applicant through email.

  • FBR issues AML/CFT guidelines for accountants to comply with FATF conditions

    FBR issues AML/CFT guidelines for accountants to comply with FATF conditions

    KARACHI: Federal Board of Revenue (FBR) has issued guidelines for accountants related to Anti-Money Laundering (AML)/Counter Financing of Terrorism (CFT) laws to comply with conditions of Financial Action Task Force (FATF).

    The guidelines have been prepared jointly by Pakistan’s three designated AML/CFT supervisors of accountants in Pakistan, namely The Institute of Chartered Accountants of Pakistan (ICAP), the Institute of Cost and Management Accountant of Pakistan (ICMAP) and the FBR.

    Accountants are only subject to AML / CFT measures if they provide the specified activities or services as defined in the Anti Money Laundering Act (AMLA) Sections 2 (xii) (c) (d).

    All accountants, therefore, should review Section 4 in the Guidelines to determine whether they provide the specified services, and if so, what are the AML / CFT requirements, and how to implement the requirements.

    These are further explained in Sections 5 to 12 of the Guidelines.

    The Guidelines are focused on AML / CFT measures such as risk assessment, AML / CFT programme, CDD, beneficial ownership, politically exposed persons, targeted financial sanctions, Suspicious Transaction Report (STR), Currency Transaction Report (CTR) and record keeping. Those measures are further explained in the Guidelines.

    The guidelines do not add new regulatory requirements upon accountants.

    The guidelines do not address the broader criminal conduct associated with those who engaged in, or aid or abet those engaged in money laundering (ML) or terrorism financing (TF). Those criminal offences under the AMLA and other laws apply to all persons’ subject to Pakistan’s laws.

    In addition to the AMLA, the three main regulations referred to in the Guidelines are:

    The Anti-Money Laundering and Combating Financing of Terrorism Regulations for Cost and Management Accountants Reporting Firms (SRB AML / CFT Regulations for Reporting Firms)

    The Anti-Money Laundering and Combating Financing of Terrorism Regulations for Chartered Accountants Reporting Firms (SRB AML / CFT Regulations for Reporting Firms)

    The Federal Board of Revenue Anti-Money Laundering and Combating Financing of Terrorism Regulations for Designated Non-Financial Businesses and Professions (FBR AML / CFT Regulations for DNFBPs)

    AML / CFT Sanction Rules 2020 SRO NO 950(I)/2020 (AML / CFT Sanction Rules)

    Both the ICAP and ICMAP, as Self-Regulatory Bodies (SRBs), have been designated by Federal Government pursuant to AMLA (Section 6A) as AML / CFT regulatory authorities.

    To avoid repetition and any perceived favouritism, and purely for the purposes of the Guidelines, the two professional bodies will be referred to as “SRBs” and their AML / CFT regulations collectively referred to as the “SRB AML / CFT Regulations for Reporting Firms”. Except for the name of the SRB, the two regulations are identical.

    The FBR AML / CFT Regulations for DNFBPs are very similar to the SRB AML / CFT Regulations for Reporting Firms. However, they are not identical in terms of numbering and there are sector specific requirements covering other DNFBPs that are not applicable to accountants (accountants licensed by ICAP and ICMAP). For these reasons, they are referred separately in the Guidelines.

    The FATF Recommendations of specific concerns to accountants are those covering DNFBPs. DNFBPs include the following:

     Casinos

     Real estate agents

     Dealers in precious metals and stones

     Trust and company service providers

     Lawyers, notaries, other independent legal professionals and accountants – when they prepare for or carry out transactions for their customer concerning the following activities:

    — buying and selling of real estate;

    — managing of customer money, securities or other assets;

    — management of bank, savings or securities accounts;

    — organization of contributions for the creation, operation or management of companies;

    — creation, operation or management of legal persons or arrangements, and buying and selling of business entities.

    FBR explains accountant as sole practitioners, partners or employed professionals within professional firms when they prepare for or carry out transactions for their client concerning the following activities:

    Accountancy services – when carryout monetary transactions for their customers concerning the following activities:

    (I) managing, operating, buying and selling of real estate, legal persons and legal arrangements and preparing documents therefore;

    (II) managing of client money, securities or other assets;

    (III) managing bank, savings or securities accounts; or

    (IV) organizing contributions for the creation, operation or management of companies

    Trust and company formation services – when they carry out monetary transactions or services for a client concerning the following activities:

    (I) acting as a formation agent of legal persons;

    (II) acting as or arranging for another person to act as a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;

    (III) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;

    (IV) acting as or arranging for another person to act as a trustee of a trust or performing the equivalent function for another form of legal arrangement; or

    (V) acting as or arranging for another person to act as a nominee shareholder for another person.

  • Defaulting sales tax payment may liable to three-year jail

    Defaulting sales tax payment may liable to three-year jail

    ISLAMABAD: A person fails to pay sales tax within due date or to comply with recovery order is liable to certain fine and penalty under Sales Tax Act, 1990, officials in Federal Board of Revenue (FBR) said on Tuesday.

    Any person who fails to deposit the amount of tax due or any part thereof in the time or manner laid down under Sections 3, 6, 7 and 48 of this Act or rules or orders made there under:

    “Such person shall pay a penalty of ten thousand rupees or five per cent of the amount of the tax involved, whichever is higher:

    “Provided that, if the amount of tax or any part thereof is paid within ten days from the due date, the defaulter shall pay a penalty of five hundred rupees for each day of default:

    “Provided further that no penalty shall be imposed when any miscalculation is made for the first time during a year:

    “Provided further that if the amount of tax due is not paid even after the expiry of a period of sixty days of issuance of the notice for such payments by an officer of Inland Revenue, not below the rank of Assistant Commissioner Inland Revenue, the defaulter shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to amount equal to the amount of tax involved, or with both. “

  • Pakistan Customs announces auction of huge lot of motor vehicles on Jan 14

    Pakistan Customs announces auction of huge lot of motor vehicles on Jan 14

    ISLAMABAD: Pakistan Customs has announced auction of huge lot of seized motor vehicles on January 14, 2021 at Customs House Airport road, Quetta.

    (more…)
  • SBP assures no limit to e-payment for duty, taxes

    SBP assures no limit to e-payment for duty, taxes

    KARACHI: State Bank of Pakistan (SBP) has assured that there will be no limit to electronic payment for duty and taxes.

    The SBP assured this at a meeting with office bearers of Karachi Customs Agents Association (KCAA), a statement said on Monday.

    The KCAA said that from January 20, 2021 the collection of custom duties and taxes of more than one million rupees will be collected through e-payment. The e-payment system shall provide round the clock facility to the taxpayers for their payments.

    It said that on the request of KCAA, a comprehensive joint meeting has been conducted by the SBP through video link on Zoom Cloud headed by the Director Finance Department of State Bank of Pakistan and attended by more than 60 Regional Heads of all designated Banks and KCAA’s delegation was held on January 07, 2021 at 3:00 PM, wherein the issues pertaining to banking sectors were discussed.

    In order to facilitate the trade and taxpayers the following decisions were taken by the competent authorities of SBP in the said meeting.

    It was decided that for the payment of Custom Duties and Taxes, any amount can be paid through cheque in any branch of same bank alongwith PSID instead of following the process for issuance of Pay Order.

    However in case any variation, the excess/additional amount of taxes will be collected through cash or in case the taxes amount is less than of the cheque amount, the excess amount will be deposited in the account of taxpayers just like PD Account.

    The KCAA highlighted that few banks have different limits for account holders and they do not allow payment of duty and taxes of more than their assigned / authorized limits through the module of e-payment.

    It was agreed by the State Bank of Pakistan that no capping /limit will be fixed in future, the taxpayers and stakeholders can paid their customs duties and taxes without having any limits.

    KCAA also pointed out that Corporate Customers do not have ATM Cards, Mobile Apps and Internet Banking, hence they are unable to pay On-Line payment for duty and taxes. Particularly the corporate sector does not even have access for On-Line Banking and they have to make payments through conventional method of submitting pay orders or cheques.

    Corporate Sector who are willing to make e-payment for duty and taxes should have 24 / 7 module for facilitation of payments. In this regard it was decided by the SBP that in near future all such facilities will be provided to the corporate sectors. Few Bank like Standard Chartered, Samba Bank etc already providing net Banking to corporate sectors

    It has been observed that while custom duties and taxes paid through E-Payment the acknowledgement of payment challan are delayed for 2 to 3 days.

    Now the matter has been resolved, the acknowledgment payment challan will be generated on real time basis.