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  • Committee formed to hunt tax evaders in supply chain

    Committee formed to hunt tax evaders in supply chain

    ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday constituted a committee to hunt for tax evaders in supply chain i.e. manufacturers, importers, distributors, retailers etc.

    According to a FBR notification, the committee shall identify wholesalers, distributors, small, medium and large manufacturers/importers who potentially have taxable income but neither, they have been brought into the tax base of Pakistan nor being part of the tax base but are evading and suppressing taxes and invoices.

    READ MORE: Retail sector’s sales worth Rs16 trillion not in tax net: Tarin

    It will define the potential target market and quantify the size of the target market.

    The committee shall develop a business plan comprising of budget pertaining to project plan, human, IT and infrastructure resources required to bring the potential target market into the tax base, in order to generate incremental tax revenue.

    It will obtain legal and regulatory protection, facilitation and support of stakeholders in order to achieve the objective in collaboration and support of the FBR.

    READ MORE: FBR enhances tax rates on motor vehicle registration

    The committee shall have mandate to define policy and rules for a licensing framework for appointment of intermediaries who will coordinate and facilitate the integration of supply chain to capture and report all sales transactions.

    It will coordinate with various associations and trade bodies to facilitate the integration of supply chains.

    The committee shall have powers of controlling, monitoring and implementation of supply chain capture integration program in coordination with the IRS Operations.

    READ MORE: FBR increases income tax to 15% on cellular services

    It will develop a correlation between invoice and digital/electronic payments for the purpose of audit, in coordination with necessary stakeholders including but not limited to State Bank of Pakistan (SBP).

    The committee shall have mandate to leverage software to capture the entire supply chain from manufacturer, distributor, wholesaler, retailer and customers to capture transactions, withholding tax information and use the developed database to capture potential taxpayers.

    READ MORE: FBR issues new FED rates on motor vehicles

    It further have mandate to leverage data analytics to capture sales tax demand on the input/output at each stage of supply chain from manufacturer to end consumer, thereby bringing unregistered distributors, sub-distributors and retailers into the tax net.

    The committee will develop organizational structure required to deliver on the above Terms of Reference (TORs) based on size of potential target market, physical dispersion of potential target market, and committed time lines for achieving TORs.

  • Budget 2022/2023 to be presented in first week of June

    Budget 2022/2023 to be presented in first week of June

    ISLAMABAD: The government has scheduled the presentation of the budget for fiscal year 2022/2023 in the first week of June 2022, the finance ministry said on Thursday.

    The finance ministry issued budget call circular 2022/2023. According to the circular, after completion of all budget documents and summaries by end of May 2022, the budget will be presented to the cabinet and the parliament in the first week of June 2022.

    The ministry said that in compliance with the Articles of the Constitution of Pakistan, Public Finance Management Act, 2019 and Budget Manual 2020, Finance Division prepares budget for each financial year as a key policy document of the federal government.

    READ MORE: MoC invites tariff proposals for budget 2022/2023

    The budget call circular containing budget calendar, processes, instructions, forms for preparation and submission of detailed budget Actual (FY 2020-21), Revised Estimates (FY 2021-22) and Budget Estimates (FY 2022-23) relating to Receipts, Current and Development Expenditure of the Federal Government is attached herewith.

    The Medium Term Indicative Budget Ceilings (IBCs) issued by Budget Wing, Finance Division in April, 2021, for Current and Development Budget for three years i.e. 2021-22, 2022-23 and 2023-24, may be considered as base line for submission of Budget Estimates.

    READ MORE: FBR invites customs proposals for budget 2022/2023

    Receipts, Current and Development Expenditure Estimates (Forms I – III) may be provided to Budget Wing, Finance Division before 15th March, 2022 by the respective Principal Accounting Officer (PAO). The remaining information may also be provided as per schedule given in Budget Calendar.

    Foreign Exchange Budget Actual (FY 2020-21), Revised Estimates (FY 2021-22) and Budget Estimates (FY 2022-23) may also be provided as per attached FEB Forms (I-VI) in accordance with the specific instructions and general guidelines.

    READ MORE: SRB invites proposals for Budget 2022-2023

  • FBR issues new FED rates on motor vehicles

    FBR issues new FED rates on motor vehicles

    ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday issued new rates of Federal Excise Duty (FED) on imported and locally assembled motor vehicles.

    The FBR revised upward the FED rates after the implementation of Finance (Supplementary) Act, 2022. In this regard the FBR issued Circular No. 06 of 2022.

    Through S. No. 55, 55B, 55C and 55D of Table-1 of the First Schedule to the Federal Excise Act, 2005, the rates of FED on imported, locally manufactured motorcars/SUVs, imported and locally manufactured double cabin are provided respectively.

    READ MORE: Banks to share business account details to FBR

    In order to rationalize the existing rates of FED on vehicles, the following increase in the various slabs has been made:

    Imported motor cars, SUVs and other motor vehicles:

    (a) of cylinder capacity up to 1000cc the FED rate has been kept unchanged at 2.5 per cent ad valorem.

    (b) Of cylinder capacity from 1001cc to 1799cc the FED rate has been increased to 10 per cent ad valorem from 5 per cent.

    (c) Of cylinder capacity 1800cc to 3000cc the FED rate has been increased to 30 per cent ad valorem from 25 per cent.

    READ MORE: Debt, credit card machines must for POS retailers: FBR

    (d) Of cylinder capacity exceeding 3001cc the FED rate has been increased to 40 per cent ad valorem from 30 per cent

    Locally manufactured or assembled motor cars, SUVs:

    (a) Of cylinder capacity up to 1300cc has been rationalized at 2.5 per cent. Previously, the FED was zero per cent on up to 1000cc and was 2.5 per cent on 1001cc to 2000cc.

    (b) Of cylinder capacity from 1301cc to 2000cc the FED rate has been increased to 5 per cent ad valorem from 2.5 per cent.

    (c) Of cylinder capacity 2001cc and above the FED rate has been enhanced to 10 per cent ad valorem from 5 per cent.

    READ MORE: FBR slashes sales tax rates on petrol, HSD

    Imported double cabin (4X4) pickup vehicles, the FED has been increased to 30 per cent ad valorem from 25 per cent.

    Locally manufactured double cabin (4X4) pickup vehicles except the vehicles booked on or before June 30, 2020 subject to the restriction or conditions specified by the FBR, the FED has been increased to 10 per cent ad valorem from 7.5 per cent.

  • Banks to share business account details to FBR

    Banks to share business account details to FBR

    KARACHI: It has been made mandatory for banks to provide details of business accounts every month to the Federal Board of Revenue (FBR), official sources said on Wednesday.

    This is the additional information to be submitted by the banks along with details already mandatory for the financial institutions.

    READ MORE: Digital payments defined through Finance Supplementary Act 2022

    To make the requirement mandatory, Section 165A of the Income Tax Ordinance, 2001 has amended through Finance (Supplementary) Act, 2022.

    A new clause (f) has been inserted to the Section 165A under which the banks shall provide a list of persons containing particulars of their business accounts opened or re-designated during each preceding calendar month.

    READ MORE: Digital tax monitoring yields Rs32.43bn from sugar sector

    The Section 165A of the Income Tax Ordinance, 2001 deals with furnishing of information by banks:

    “(1) Notwithstanding anything contained in any law for the time being in force including but not limited to the Banking Companies Ordinance, 1962 (LVII of 1962), the Protection of Economic Reforms Act, 1992 (XII of 1992), the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the regulations made under the State Bank of Pakistan Act, 1956 (XXXIII of 1956), if any, on the subject every banking company shall make arrangements to provide to the Board in the prescribed form and manner,—

    READ MORE: Finance (Supplementary) Bill gets presidential approval

    (a) a list of persons containing particulars of cash withdrawals exceeding fifty thousand Rupees in a day and tax deductions thereon, aggregating to Rupees one million or more during each preceding calendar month;

    (b) a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month;

    (c) a list of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month;

    (d) a list of persons receiving profit on debt and tax deductions thereon during preceding financial year.

    (e) omitted

    (2) Each banking company shall also make arrangements to nominate a senior officer at the head office to coordinate with the Board for provision of any information and documents in addition to those listed in sub-section (1), as may be required by the Board.

    (3) The banking companies and their officers shall not be liable to any civil, criminal or disciplinary proceedings against them for furnishing information required under this Ordinance.

    READ MORE: Supplementary bill aimed at documenting economy: Tarin

    (4) Subject to section 216, all information received under this section shall be used only for tax purposes and kept confidential.

    Tax experts at PwC A. F. Ferguson & Co. said that the change is in-line with the requirement for declaration of the business bank account under the provisions of section 114A introduced through the Finance Act, 2021 and is a step towards documentation of the economy.

  • Debt, credit card machines must for POS retailers: FBR

    Debt, credit card machines must for POS retailers: FBR

    ISLAMABAD: The Federal Board of Revenue (FBR) on Wednesday said retailers, who integrated Point of Sale (POS), must have facility of debt and credit card machines to facilitate their customers in making payments.

    The FBR issued Circular No. 05 of 2022 regarding implementation of Rule 150ZEB(II) of the Sales Tax Rules, 2006.

    READ MORE: Who are Tier-1 retailers under Sales Tax Act?

    The revenue body said that all Tier-1 retailers are expected to maintain the highest standards of documentation, reporting and transparency.

    In their endeavors to achieve such high standards, they are integrated with FBR’s IT system for real-time reporting of their economic transactions.

    READ MORE: FBR issues list of 608 Tier-1 non-compliant retailers

    It has transpired that many integrated Tier-1 retailers are indulged in making cash transactions, which is not only against the overall scheme of things, but also the intended objectives.

    In this connection, it is pertinent to note that Rule 150ZEB(II) of the Sales Tax Rules, 2006, mandates that each Tier-1 Retailer “must have the facility of debit and credit card machines installed at each notified outlet and the sales through debit or credit cards shall not be ordinarily refused.”

    READ MORE: Tier-1 retailers given deadline for integration

    “Accordingly, all integratable Tier-1 Retailers are liable to have debt/credit card machine installed at their outlets and IRS field formations to ensure implementation the rules in this respect,” the FBR added.

  • FBR slashes sales tax rates on petrol, HSD

    FBR slashes sales tax rates on petrol, HSD

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday slashed sales tax rates on petrol and high speed diesel (HSD) in order to reduce the impact of high oil prices at consumer end.

    The FBR issued SRO 88(I)/2022 dated January 18, 2022 to notify changes the sales tax rates on supply of petroleum products.

    The sales tax on supply of petrol has been reduced to 2.5 per cent ad valorem from 4.77 per cent. Similarly, the rate of sales tax on supply of high speed diesel has been reduced to 5.44 per cent from 9.08 per cent.

    The FBR kept unchanged the sales tax rates on kerosene and light diesel oil at 8.30 per cent and 2.70 per cent, respectively.

    The revenue body previously issued SRO 01(I)/2022 dated January 3, 2022 to change the rate of sales tax on petroleum products.

    Earlier on January 15, 2022, the government announced to increase prices of all petroleum products for next fortnight.

    READ MORE: Pakistan’s petrol price rises to record high at Rs147.83

    According to the notification, the price of petrol has been increased by Rs3.01 to Rs147.83 per liter from Rs144.82.

    The price of high speed diesel (HSD) has been increased by Rs3 to rs144.62 per liter from Rs141.62.

    The rate of kerosene has been enhanced by Rs3 to Rs116.48 per liter from Rs113.48.

    The price of light diesel oil has been increased by Rs 3.33 toRs114.54 per liter from Rs111.21.

    According to a notification issued by the Finance Division on January 15, 2022, the decision to enhance domestic prices of petroleum products because the international oil price had registered 6.2 per cent during the last week. Presently, at the highest level since last year.

    READ MORE: Prices of all POL products increased to wish New Year

    The existing sales tax rate and petroleum levy on various petroleum products are much below the budgeted targets.

    The finance ministry said that against the recommendations of Oil and Gas Regulatory Authority (OGRA) for increase of Rs5.52 per liter in petrol and Rs6.19/liter in high speed diesel prices, the Prime Minister had directed to absorb at the international prices through further cut in sales tax from last fortnight.

    “The finance ministry will take Rs2.6 billion revenue hit due to reduced sales tax rates,” it added.

    Therefore, the government has decided to make partial increase in the prices of the petroleum products in order to provide relief to the end consumers.

  • FBR to re-notify property values on February 01

    FBR to re-notify property values on February 01

    ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday said it will re-notify the valuation of immovable properties on February 01, 2022. The FBR further said that the valuation issued on December 01, 2021 will remain in abeyance till January 31, 2022.

    (more…)
  • Rupee declines by 26 paisas to dollar on import demand

    Rupee declines by 26 paisas to dollar on import demand

    KARACHI: The Pak Rupee (PKR) declined by 26 paisas against the US dollar on Tuesday due to higher foreign currency demand for import payment.

    The local unite ended at Rs176.18 to the dollar from last day’s closing of Rs175.92 in the interbank foreign exchange market.

    READ MORE: Rupee recovers 15 paisas against dollar in interbank

    Currency experts said that the market witnessed higher dollar demand since start of the day. The reports of surge in international oil prices increased the dollar demand.

    The international oil prices witnessed significant rise and recorded $87.50 per barrel during the trading.

    READ MORE: SBP warns banks of penal action for delaying transaction alerts

    Pakistan is one of the major importers of petroleum products. The oil import grew by 113 per cent to $10.18 billion during first half 2021/2022 as compared with $4.77 billion in the corresponding half of the last fiscal year.

    The experts said that the falling foreign exchange reserves were also a major threat for rupee’s stability in days ahead.

    READ MORE: NBP directed to pay Rs0.5 million to fraud victim

    The foreign exchange reserves of the country fell by $118 million to $23.901 billion by the week ended January 07, 2022 as compared with $24.019 billion by the week ended December 31, 2021.

    The official reserves of the SBP declined by $88 million to $17.598 billion by the week ended January 07, 2022 as compared with $17.686 billion a week ago.

    READ MORE: SBP shortens period to 120 days for bringing export earnings

  • Pakistan’s textile exports jump to record high at $9.4bn

    Pakistan’s textile exports jump to record high at $9.4bn

    KARACHI: Pakistan’s textile exports recorded all time high to $9.4 billion during first half (July – December) of 2021/2022.

    As per the data reported by Pakistan Bureau of Statistics (PBS) on Tuesday, Pakistan textile exports witnessed a record first half (July-December) exports of $9.4 billion in 2021/2022, up by 26 per cent YoY.

    READ MORE: Textile exporters urge allowing cotton import from India

    In Pak Rupee (PKR terms), the same has clocked in at Rs1,587 billion, up 30 per cent YoY (more than $ terms due to 4 per cent currency devaluation as compared to 1HFY21), analysts at Topline Securities said.

    During the first half of the current fiscal year, major export driver was significant increase in value-added exports where knitwear segment contributed the most as it increased by 35 per cent YoY to $2.5 billion followed by Ready-made garments (+23 per cent YoY to $1.8 billion) and Bedwear (+19 per cent YoY to $1.7 billion) exports, respectively.

    READ MORE: Value added textile exporters demand 50 percent reduction in withholding tax

    On MoM basis, Pakistan textile exports clocked in at $1.6 billion (down by 6 per cent) in Dec 2021, mainly driven by low volumetric sales in all segments excluding raw cotton on account of recent hike in Omicron cases world wide specially in Europe & USA.

    READ MORE: Gul Ahmed Textile declares 4-time increase in net profit during nine months

    Compared to last year, Pakistan textile exports are up by 16 per cent YoY (28 per cent YoY up in PKR terms) in Dec-21 led by significant recovery witnessed in value-added segments, largely in knitwear (+29 per cent YoY) and Ready-made (+22 per cent YoY). Low base, increased volumetric growth in Knitwear and improved pricing led to higher exports.

    The analysts expect textile exports to remain robust in ongoing fiscal year (FY22) and expect it to clock in at $18-18.5 billion. Though, slowdown in European economies and lockdowns due to Omicron remain key risk for the sector.

    READ MORE: Value-added textile demands allowing cotton yarn import from India