KARACHI – The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called on the government to reinstate audit immunity for commercial importers in the upcoming federal budget 2020–2021.
In its formal budget proposals, the FPCCI emphasized that commercial importers who pay advance Value Added Sales Tax at the rate of 3 percent at the customs stage were previously exempted from audit under Clause 58-E(2) of the “Special Procedure for Payment of Sales Tax by Commercial Importers Rules, 2006.”
However, the FPCCI noted with concern that this exemption was not continued in the current fiscal year. As a result, despite complying with advance tax payments, many commercial importers have been selected for audit, which contradicts earlier policies designed to reduce friction between tax authorities and taxpayers.
According to the FPCCI, this reversal of policy undermines the agreement made between commercial importers and the Federal Board of Revenue (FBR). The original arrangement allowed for higher advance tax payments in exchange for relief from audit procedures, aimed at minimizing opportunities for corruption and tax evasion by limiting direct interactions between importers and tax officials.
Additionally, the business community points out that commercial importers also pay a 6 percent advance income tax under Section 148 of the Income Tax Ordinance, 2001, which serves as a full and final settlement of their tax liabilities. Yet, despite this, importers continue to receive notices for income tax audit, creating additional burdens and uncertainty.
The FPCCI has strongly recommended reinstating Clause 58-E(2), which was removed through SRO No. 592(I)/2012, to restore audit immunity. It further urged the withdrawal of all audit notices issued to compliant commercial importers under both the Income Tax Ordinance, 2001, and the Sales Tax Act, 1990.
By restoring these provisions, the FPCCI believes the government can foster a more transparent and business-friendly tax environment.