The Pakistan Business Council (PBC) has expressed its dissatisfaction with the imposition of super tax on corporate profits, describing it as a penalty on the documented sector.
(more…)Tag: budget proposals
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PBC proposes exemption of capital gains tax on shares with 10-year holding period
The Pakistan Business Council (PBC) has submitted proposals to the Federal Board of Revenue (FBR) for the upcoming budget of 2024-2023. Among the proposals is a recommendation to exempt capital gains tax on shares with a holding period of 10 years.
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Measures proposed to tackle under-invoicing by commercial importers
The Pakistan Business Council (PBC) has proposed several measures to the Federal Board of Revenue (FBR) in order to tackle the problem of under-invoicing by commercial importers.
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PBC proposes massive tax burden on non-filers in upcoming budget
The Pakistan Business Council (PBC) has proposed increasing the burden on non-filers of income tax in the upcoming budget 2023-2024.
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Capital market seeks income tax exemption on foreign investment
Pakistan’s capital market has recommended tax exemption on income derived from foreign investments.
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PSX suggests aligning CGT on disposal of securities, immovable properties
Pakistan Stock Exchange (PSX) in its proposals for budget 2023-2024 suggested to align rates of capital gains tax on disposal of listed securities with the rates of CGT on sale of immovable property.
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FBR invites sales tax, FED proposals for budget 2023-2024
ISLAMABAD: The Federal Board of Revenue (FBR) has opened the door for proposals to amend laws related to sales tax and Federal Excise Duty (FED) as part of the upcoming budget for the fiscal year 2023-2024.
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FBR seeks proposals to eliminate exemption, concessions in income tax
ISLAMABAD: The Federal Board of Revenue (FBR) has called for proposals to eliminate exemptions and concessions under income tax laws as part of the formulation process for the budget 2023-2024.
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SRB invites proposals for budget 2023-2024
KARACHI: Sindh Revenue Board (SRB) has invited proposals for budget 2023-2024 and advised stakeholders to send their recommendations by January 27, 2023.
In a notification issued on Tuesday, the SRB said that it had invited proposals in relation to the Sindh Sales Tax on Services Act, 2011 and the Rules and Notifications issued thereunder.
The provincial revenue body said that it was in the process of formulating budgetary proposals (for the Sindh Budget 2023-2024) in relation to taxation and procedural provisions of Sindh Sales Tax on Services Act, 2011, The Sindh Sales Tax on Services Rules, 2011, the Sindh Sales Tax Special Procedures (Withholding) Rules, 2014, the Sindh Sales Tax Special Procedure (Transportation or Carriage of Petroleum Oil through Oil Tankers) Rules, 2018, the Sindh Sales Tax Special Procedure (Services provided or rendered by cab aggregator and the services provided or rendered by the owners or drivers of the motor vehicles using the cab aggregator services) Rules, 2019 and Sindh Sales Tax Special Procedure (Online Integration of Business) Rules, 2022 and other various notifications issued under the said Act, 2011.
It has been a policy of the SRB to consult all chambers, associations, groups, stakeholders and taxpayers before finalizing the budget proposals.
With this end in view, the SRB requests all persons (including the chambers of commerce and industry, business councils, trade associations, tax bars, Institute of Chartered Accountants, Institute of Cost and Management Accountants, taxpayers etc.) to send written proposals in the given format urgently so as to reach through e-mail (followed by its hard copy to be sent by post / courier) latest by Friday, January 27, 2023.
The SRB asked the stakeholders to provide proposals in the format included: name of the act/rules/notification proposed to be amended; section no., schedule no., tariff heading no., rule no., para no., involved; existing provisions/rates of tax/ proposed provisions/rates of tax; reasons and rationale for the proposal; and estimated revenue effect, (if any).
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Pakistan may increase normal sales tax rate to 18%
Pakistan is likely to increase sales tax rate to 18 per cent in the federal budget 2022-2023, which is scheduled on June 10, 2022. The existing normal sales tax rate is 17 per cent.
According to Budget Preview 2022/2023 issued on Thursday, analysts at Arif Habib Limited said the government is considering to raise an additional Rs400 billion – Rs450 billion during next fiscal year 2022/2023.
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For this purpose, the analysts said, the government plans to raise revenue from the following measures:
- Increase in general sales tax (GST) from 17 per cent to 18 per cent
- Increase in GST on fertilizer products from 2 per cent to 17 per cent
- Increase in corporate tax rate / windfall levy by 3 per cent
- Incremental super tax of 3 per cent on commercial banks
- Increase in personal income tax
- Increase in federal excise duty (FED) by Rs 500/ ton on cement
- Increase in FED on tobacco
- Increase in Customs Duty from 2 per cent to 6 per cent on edible oil imports
- FBR’s administrative measures
- Imposition of additional taxes on real estate.
The analysts said that the fiscal policy should remain supportive of the economy in the short term, with targeted measures to collect tax and reduce expenditure, backed by credible medium –term fiscal consolidation plan.
READ MORE: New tax measures likely in budget 2022-2023
“However, in short term, need of the hour is taking tough fiscal measures given the tight fiscal situation.”
Pakistan achieved total revenue growth of 18 per cent during the first nine months (July – March) 2021/2022 to Rs5.4 trillion up from Rs4.6 trillion in the corresponding months of the last fiscal year, which comes out to be 9.2 per cent of the GDP against 9 per cent in the same period last year.
The analysts said that the total tax revenue collection was up by 33 per cent year on year (YoY) to Rs4.82 trillion while non-tax revenue of Rs1.05 trillion, displayed a decline of 14 per cent YoY.
READ MORE: Pakistan Budget 2022-2023 – estimates
The government expects the tax revenue collection to settle at Rs 7.9 trillion for FY23b, a jump of 19 per cent YoY compared to tax revenue of pKR 6.6 billion for FY22E. Likewise, to ensure prudent fiscal management, IMF also proposed stringent FBR tax revenue target of Rs 7.26 trillion compared to Rs 6.1 trillion for FY22E, which is much needed given the overall fiscal situation of the economy. Also, from the government’s standpoint, in order to ensure growth moderation, the analyts believe that the government will not shy away from putting additional major tax burden on the different economic classes of the community and might take some non-populous taxation measures in order to ensure the same.
The government is planning to raise an enormous total tax collection target of Rs 7.9 trillion through new taxes worth Rs 400-450 billion, additional taxes on higher income salary bracket, raising Rs 4.7 trillion through indirect tax measures, and the rest is likely to be collected from administrative measures and by bringing more people under the tax net. They believe direct tax collection will likely increase due to broadening tax base as government would be targeting to increase the number of income tax filers in the upcoming year.
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Indirect tax contributes around 60 per cent to the overall tax revenue coming in mainly from three major heads including Custom Duty, Sales tax and Federal Excise Duty which contributed around 25 per cent, 67 per cent and 8 per cent, respectively to the total indirect tax collection during 9MFY22. Share of sales tax and custom duty increased in 9MFY22 due to surge in imports of various commodities amid an uptick in aggregate demand of the economy. Going forward, indirect tax contribution is likely to increase by almost 20 per cent (Rs 4.7 trillion) in FY23B due to higher sales tax while higher import bill is likely to earn more tax revenue from custom duties.
Government expects non-tax revenue collection to increase by 12 per cent to Rs 1.6 trillion in FY23 with Petroleum Development Levy (PDL) expected to settle at around Rs 500 billion. The analysts at Arif Habib Limited believe the collection in lieu of PDL is likely to be higher YoY in FY23 with an assumption that government increases it by Rs – 22/litre on MS and HSD. Currently PDL stands at Rs 125 billion during 9MFY22. Another constituent that is likely to support the overall non-tax revenue is expected to be State Bank’s profits. They expect it will be more than last year’s number mainly due to higher interest rates during July – March 2021/2022.