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Tag: commercial importers

  • Proposal of final tax regime for commercial importers rejected

    Proposal of final tax regime for commercial importers rejected

    KARACHI: The National Assembly of Pakistan has rejected a proposal to grant final tax regime for commercial importers.

    The proposal was made part of Finance Bill, 2022 under which the government proposed to bring commercial importers under the ambit of final tax regime.

    READ MORE: Mechanism revamped for tax dispute resolution

    Previously, PTI government after consultation with manufacturers and other stakeholders brought the importers into minimum tax regime through Finance Act, 2019.

    The importers were brought into the minimum tax regime after arguments that the importers were misusing the tax incentives as the final tax regime was not subject to audit and returns. The importers are required to file a statement only under the FTR.

    The Finance Bill, 2022 proposed to make amendment in sub-section 7 of Section 148 of the Income Tax Ordinance, 2001 to substitute the word ‘minimum’ with the word ‘final’.

    However, the national assembly rejected the proposal of final tax regime for commercial importers is withdrawn. Consequently, commercial importers will remain under minimum tax regime.

    READ MORE: Simplified tax regime for shopkeepers implemented

    Tax experts at PwC A. F. Ferguson & Co. said that previously, in case of goods imported by an industrial undertaking for own use, the advance tax on imports did not constitute minimum tax if the same were subjected to advance tax collection at 1 per cent or 2 per cent.

    There were various items which were in the nature of raw material but were subjected to standard rate of 5.5 per cent.

    READ MORE: Pakistan withdraws tax amnesties for industrial promotion

    The tax authorities were misinterpreting these provisions to deny the adjustability of tax collected at 5.5 per cent.

    This regime has been amended and now the advance tax on raw materials imported by an industrial undertaking for own use will not be minimum tax irrespective of the applicable rate.

    However, advance tax on import of following items will be treated as minimum tax in respect of income arising from such imports:- a) Edible oil; b) Packaging material; c) Paper and paper board; or d) Plastics.

    READ MORE: Pakistan expands tax exemptions under foreign treaties

  • Under-invoicing by commercial importers destroying industry: PBC

    Under-invoicing by commercial importers destroying industry: PBC

    KARACHI: The Pakistan Business Council (PBC) has informed the higher authorities that the massive under-invoicing, especially by commercial importers, is destroying domestic industry.

    In its proposals for budget 2021/2022 the PBC pointed out that across the board massive under invoicing and dumping of imported products has been increasing.

    Information regarding values at which various custom check posts clear import consignments is not publicly available.

    This encourages unscrupulous importers to under-declare the value of consignments to evade government revenues.

    Values at which import shipments are cleared through PRAL or CARE need to be publicly available.

    The Government of Pakistan must insist of Electronic Data Interchange (EDI), for both Free Trade Agreement (FTA) and non-FTA imports from China & other major trading partners China & other major trading partners.

    In future the requirement of EDI should be made compulsory for imports from FTA / PTA & major trading partner countries.

    The rate of withholding tax on imports for commercial importers should be at least 2 percent higher than what it currently is and the Withholding tax should be considered as an adjustable advance tax.

    Valuation Ruling should be issued in consultation with Brand owners, i.e., who have valid registration of the brands under relevant intellectual property laws.

  • 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.

  • Commercial importers demand abolishing CNIC condition, FTR restoration

    Commercial importers demand abolishing CNIC condition, FTR restoration

    KARACHI: Commercial importers have demanded the government of abolishing condition of Computerized National Identity Card (CNIC) and restoring Final Tax Regime (FTR) in order to save businesses from adverse impact of COVID-19.

    Amin Yousuf Balgamwala, Chairman Pakistan Chemical Dyes and Merchants Association (PCDMA) and former Director of Karachi Stock Exchange has appealed to Prime Minister Imran Khan to restore FTR and SRO 1125 in the upcoming budget 2020/2021 in the best economic interest of the country so that trade and industry can be saved from complete destruction due to ongoing COVID-19 pandemic.

    In an appeal to Prime Minister, Balgamwala said that the business of commercial importers has been ruined as a result of corona lockdown and severe economic crisis.

    For the prevention of this pandemic all over the world including Pakistan were announced a lockdown to save the lives of masses.

    Due to closure of industries and markets, the capital of commercial importers was stuck and now the situation has reached such a stage that commercial importers do not even have the funds to revive the import of raw material.

    “If import of raw material would be stopped then it will be very difficult to supply raw material to export-oriented industries accordingly their requirement especially textile sector, which is the backbone of Pakistan economy, as country economy is already suffering from serious crises so if there is a shortage of raw materials, the production activities of the export-oriented industries  including textile sector will also be hampered which will have a very negative impact on the country’s exports,” he pointed out.

    PCDMA chairman questioned pursuing a pick and choose strategy by the government and said that it is a matter of concern for the business community but the government should understand the delicacy of the current extraordinary situation and provide relief to all sectors of economy.

    “Whether it is the export sector or the import sector, the government should provide relief across-the-board without any discrimination so that the businesses and industries affected by the COVID-19 pandemic can get stand up again on their feet,” he opined.

    Amin Balgamwala demanded the Prime Minister to abolish the CNIC condition on sale of goods to unregistered persons and said that if immediate relief was not given to commercial importers, they would be forced to close their business. In addition to reinstating SRO 1125, chairman PCDMA also demanded to restore a fixed tax regime (FTR), which is the only way to save trade and industry from collapse.

    He also requested to keep petrol pumps open 24 hours a day for uninterrupted supply of raw materials to the industries and appealed to the Prime Minister to allow business 6 days a week also so as to offset the losses caused by the corona lockdown.

  • Karachi Chamber seeks fair tax treatment for commercial importers

    Karachi Chamber seeks fair tax treatment for commercial importers

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has sought fair treatment on collection of withholding tax for commercial importers on import of industrial raw material.

    KCCI in its budget proposals submitted to the Federal Board of Revenue (FBR), said that under Section 148(1) of Income Tax Ordinance, 2001, 6 percent withholding income tax is levied on import of industrial raw materials, whereas manufacturers are exempt from such withholding tax at import stage under Section 159 read with Rule 72B (PART IV OF SECOND SCHDULE OF Income Tax Ordinance, 2001).

    The exemption has created disparity of 7 percent between commercial importers and manufacturers in total incidence of taxes (when 3 percent further tax are included).

    This anomaly has led to rampant misuse and evasion of taxes through over-import by manufacturers for trading purpose, fake registrations by commercial importers and corruption in tax offices for issuance of exemption certificates U/S 159 (1).

    The KCCI said that most of the commercial importers of Raw Materials have now registered as manufacturers to avoid high rate of WHT, 3 percent value addition tax and further tax of 3 percent.

    Nearly 90 percent of all industrial raw material is now imported under the category of manufacturers, while the industry also imports raw materials for trading.

    Loss of revenue is at over Rs.80 billion on total raw material import of Rs.3,250 billion in Pakistan.

    The KCCI proposed that the rate of withholding tax on import of raw materials should be equal for both commercial importers and manufacturers and fixed at 3percent on import stage.

    Further, exemption under Rule 72B (PART IV OF SECOND SCHDULE OF ITO) on raw materials imported by manufacturers should be withdrawn and disparity in WHT may be removed.

    The rate of withholding tax on commercial importers is very high and should be reduced to 1.5 percent to qualify as minimum tax as is the case for industry and large import houses.

    The chamber said that the measure will help broaden tax base, prevent misuse of exemption by fake registration as manufacturers.

    Besides, this will help in substantial Increase in revenue collection through rationalization.

    The KCCI said that the commercial importers of raw materials are a major support to SMEs and recover taxes on behalf of the government.

    Therefore, rationalization will revive the commercial import, support SMEs and prevent misuse of exemption.

  • FPCCI recommends audit exemption for commercial importers

    FPCCI recommends audit exemption for commercial importers

    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.

    (more…)
  • Commercial importers, traders require filing annual returns, maintain complete record

    Commercial importers, traders require filing annual returns, maintain complete record

    KARACHI: Commercial importers and individual traders are required to file income tax return and maintain complete records of transactions, a tax analyst said.

    Murtaza Qurban, Executive Manager, EY Ford Rhodes highlighted the application of minimum tax on commercial importers and individual traders in an event recently organized by Karachi Tax Bar Association (KTBA).

    He said that commercial importers / traders are now required to prepare financial statements / accounts. Further filing of return of income is also mandatory instead of statement under section 115 of Income Tax Ordinance, 2001.

    Maintenance of proper and complete records (earlier no expense was being claimed therefore there was no risk of disallowance of expenses), he said.

    The tax authorities may raise questions regarding transfer pricing (earlier tax paid on assessed value of goods was final tax – largely applicable on multinationals). While, payment of advance tax under section 147 in respect will also applicable, he added.

    H e said that the Finance Act, 2019, however, again introduced amendments through which tax collection at import stage is made minimum tax instead of final tax. As a result of this change, Commercial Importers are now required to compute their financial results for comparison of tax on profits with minimum tax.

    He said that sale by commercial Importer would still not be subject to withholding tax in terms of section 153(5) where tax at import stage has already been collected.
    Two regimes of minimum tax would be applicable:

    Under section 113

    Under section 148

    If minimum tax liability under 148 > minimum tax liability under 113 > tax liability under Normal Tax Regime. Carry forward of minimum tax under 113 would be available, he questioned.

    Alternative Corporate Tax would also be applicable. Thereafter, carryforward under ACT will be available, if ACT under section 113C is > minimum tax under section 148, he further questioned?

    Similar to the implications as discussed above, contractors and service providers would also be required to prepare financial statements / accounts and file return of income.

    However, one major problem that is being faced is that since tax deductible under section 153(1)(b) and (c) is minimum tax, whether it would be computed on actual receipts or its accrual would also entail such income to be offered under MTR. Specially in case of companies, where accrual method of accounting is mandatorily followed, he said.

    If tax under MTR is worked out on accrual basis, actual receipts would also be subjected to withholding of tax, which would not be refundable being minimum tax. In other words, such tax may be lapsed if income in subsequent year is less than the prior year, he added.

  • ECC allows import of controlled chemicals through commercial importers

    ECC allows import of controlled chemicals through commercial importers

    The Economic Coordination Committee (ECC) of the Cabinet, under the chairmanship of Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh, has permitted the import of controlled chemicals through commercial importers. This decision, made on Wednesday, is aimed at easing the availability of essential chemicals for various industrial applications.

    (more…)
  • FBR to examine transaction records of commercial importers: CCIR

    FBR to examine transaction records of commercial importers: CCIR

    KARACHI: Federal Board of Revenue (FBR) will examine transaction records of commercial importers as they are no more under Final Tax Regime (FBR), Badaruddin Ahmed Qureshi, Chief Commissioner Inland Revenue (CCIR), Regional Tax Office (RTO)-II Karachi said.

    He was addressing a seminar on ‘Minimum Tax Implications After the Finance Act, 2019’ organized by Karachi Tax Bar Association (KTBA) on Thursday.

    The chief commissioner said that minimum tax was introduced through Finance Act, 2019 with objectives of documentation of economy and realizing actual potential of tax revenue.

    He said that previously commercial importers were liable to discharge their liability under the FTR and further they were not required to provide any record.

    However, with the introduction of minimum tax the commercial importers will required to provide details of all their goods declaration filed for clearance of their consignments.

    Previously, the FTR was available to persons such as commercial importers, commercial suppliers of goods, contractors, persons deriving brokerage or commission income and persons earning income from CNG stations.

    The tax collected or deducted from these persons has now been made as minimum tax liability except for exporters, persons winning prizes and sellers of petroleum products.
    The chief commissioner said that the taxpayers brought into the minimum tax regime would file their income tax returns and wealth statement for tax year 2020 in September this year.

    Murtaza Qurban, Executive Manager, EY Ford Rhodes, highlighted the changes related to minimum tax brought through the Finance Act, 2019.

    Tax required to be collected on import of goods that are sold in the same condition as they were when imported was treated as final tax.

    The Finance Act, 2018 brought a substantive conceptual shift whereby such tax collection was made “minimum tax”.

    The Finance Supplementary (Second Amendment) Act, 2019 restored the original position whereby tax collected at import stage from commercial importers was again treated as final discharge of tax liability.

    The Finance Act, 2019, however, again introduced amendments through which tax collection at import stage is made “minimum tax” instead of “final tax”.

    As a result of this change, Commercial Importers are now required to compute their financial results for comparison of tax on profits with minimum tax.

    Pursuant to the above amendments, Commercial Importers are now required to file a return of income instead of a statement in terms of section 115 of the Ordinance.

  • FBR asks customs to provide clearance details of commercial importers

    FBR asks customs to provide clearance details of commercial importers

    KARACHI: Federal Board of Revenue (FBR) has directed customs authorities to provide details of commercial importers who made clearance during first half of current fiscal year.

    The FBR sources on Thursday said that the collector of customs is required to collect income advance tax at the rate specified as withholding agent from commercial importers.

    Under the law withholding agents are required to provide details of persons whose tax was deducted.

    The sources said that the customs authorities as per the law to provide details of all those persons whose tax had been deducted at clearance stage on January 31, 2020.

    The sources said that transactions made by commercial importers were very important for broadening of tax base.

    Previously, the tax deducted at import stage was final tax and commercial importers were escaped from many questioning.

    Through Finance Act, 2018, a minimum tax regime was introduced for commercial importers but due to strong lobby the amendment was withdrawn through Supplementary (Second Amendment) Act, 2019.

    Through Finance Act, 2019 the minimum tax was reintroduced for commercial importers and ship breakers for tax collected at import stage.

    The intention of legislature to promote documentation of economy by abolishing final tax regime is a positive step.

    However, the policy should be implemented consistently to avoid unnecessary confusion, which affects the decision making of the business community.

    FBR sources said that it was estimated huge amount of undocumented money was involved in payment of imports. The sources said that the commercial importers would file complete income tax returns and declaration of assets for tax year 2020.

    They further said that the FBR and its field offices now can select cases of commercial importers for conducting audit and ask source of money for making payments against imports.