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Tag: FBR

FBR, Pakistan’s national tax collecting agency, plays a crucial role in the country’s economy. Pakistan Revenue is committed to providing readers with the latest updates and developments regarding FBR activities.

  • FBR halts POS prize scheme

    FBR halts POS prize scheme

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday halted the issuance of prizes through computerized balloting of invoices issued by point of sale (POS) of Tier-1 retailers.

    The FBR suspended the draw that was to be held on November 15, 2022. The prize scheme was continuously held since its first draw on January 15, 2022. The FBR conducted 10 draw on 15th of every month.

    READ MORE: FBR announces prize winners of 10th POS balloting

    The FBR issued SRO No. 2042(I)/2022 to suspend the SRO 1005 of 2021 regarding POS Prize Scheme.

    The prize scheme has been suspended till January 31, 2023 to make it more inclusive and participatory for the public. All invoices verified during intervening period will be included in the next prize draw.

    “The new scheme will be launched after discussions with Tier-1 retailers, card acquirers, issuers, and other stakeholders. A new scheme would be launched very soon,” the FBR added.

    Under the suspended scheme, the FBR had encouraged people to actively participate in the balloting to win prizes after buying from POS integrated retailers.

    READ MORE: FTO directs stop unlawful recovery from taxpayers’ bank accounts

    The FBR previously issued a procedure for participating in the prize scheme.

    The revenue body said that the customers of the integrated tier-1 retailers, whose names and CNICs are notified through random computerized draw shall be entitled to prizes in respect of their purchases from the integrated tier-1 retailers.

    The customers shall verify the electronically generated invoice of integrated retailers either through the “tax asaan” application or by sending SMS to number 9966.

    The application shall notify the customer regarding the status of the invoice either as “verified” or “unverified”.

    In case of a verified invoice, the customer shall furnish one time, the following detail to the online system, namely:- Name; CNIC; and Mobile number.

    READ MORE: FBR collects Rs196 billion as income tax from salaried class

    Names and CNICs of the customers shall be included in the random computerized draw upon fulfillment of the requirement.

    In case of an unverified invoice, the customer shall report the same through the system. The Board shall conduct inquiry and take appropriate action under the relevant provisions of law.

    The computerized draw for the prizes shall be held in the first week of every month at the FBR Headquarters and the invoices of the immediately preceding month shall be entered in the draw.

    READ MORE: WHT share in direct taxes jumps to 67% despite omitting provisions

    Draw winners shall be required to perform biometric verification, at the nearest e-sahulat facility of NADRA and submit a scanned copy on the “tax assan” application. After successful biometric verification, winners shall be required to provide their IBAN through a “tax asaan” application.

    The total prize money and the denomination of the prizes shall be decided on month to month basis by the Board.

  • Tax on persons receiving dividends in Pakistan

    Tax on persons receiving dividends in Pakistan

    A tax has been imposed on persons receiving dividends in Pakistan. The tax has been levied under Section 5 of the Income Tax Ordinance, 2001.

    The Federal Board of Revenue (FBR) issued the Income Tax Ordinance, 2001 updated up to June 30, 2022 after incorporating changes made through Finance Act, 2022.

    The following is text of Section 5 of the Ordinance, 2001:

    Section 5. Tax on dividends.— (1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division III of Part I of the First Schedule, on every person who receives a dividend from a company or treated as dividend under clause (19) of section 2.

    (2) The tax imposed under sub-section (1) on a person who receives a dividend shall be computed by applying the relevant rate of tax to the gross amount of the dividend.

    (3) This section shall not apply to a dividend that is exempt from tax under this Ordinance.

    Rate of Dividend Tax

    The rate of tax imposed under section 5 on dividend received from a company shall be-

    (a) 7.5% in the case of dividends paid by Independent Power Producers where such dividend is a pass through item under an Implementation Agreement or Power Purchase Agreement or Energy Purchase Agreement and is required to be reimbursed by Central Power Purchasing (CPPA-G) or its predecessor or successor entity.

    (b) 15% in mutual funds, Real Estate Investment Trusts and cases other than those mentioned in clauses (a), (c) and (d).

    (c) 0% in case of dividend received by a REIT scheme from Special Purpose Vehicle and 35% in case of dividend received by others from Special Purpose Vehicle as defined under the Real Estate Investment Trust Regulations, 2015.

    (d) 25% in case of a person receiving dividend from a company where no tax payable by such company, due to exemption of income or carry forward of business losses under Part VIII of Chapter III or claim of tax credits under Part X of Chapter III.

    Section 5A of the Ordinance, 2001 deals with taxation on undistributed profits. Following is the text of Section 5A:

    Section 5A. Tax on undistributed profits.—(1) For tax years 2017 to 2019, a tax shall be imposed at the rate of five percent of its accounting profit before tax on every public company, other than a scheduled bank or a modaraba, that derives profit for a tax year but does not distribute at least twenty percent of its after tax profits within six months of the end of the tax year through cash:

    Provided that for tax year 2017, bonus shares or cash dividends may be distributed before the due date mentioned in sub-section (2) of section 118, for filing of a return.

    (2) The provisions of sub-section (1) shall not apply to—

    (a) a company qualifying for exemption under clause (132) of Part I of the Second Schedule; and

    (b) a company in which not less than fifty percent shares are held by the Government.

    Likewise Section 5AA of the Income Tax Ordinance, 2001 deales with tax on return on investment in sukuk. Following is the text of Section 5AA:

    Section 5AA. Tax on return on investments in sukuks.—(1) Subject to this Ordinance, a tax shall be imposed, at the rate specified in Division IIIB of Part I of the First Schedule, on every person who receives a return on investment in sukuks from a special purpose vehicle, or a company.

    (2) The tax imposed under sub-section (1) on a person who receives a return on investment in sukuks shall be computed by applying the relevant rate of tax to the gross amount of the return on investment in sukuks.

    (3) This section shall not apply to a return on investment in sukuks that is exempt from tax under this Ordinance.”

    Rate of Tax on Return on investment in sukuks received from a special purpose vehicle

    The rate of tax imposed under section 5AA on return on investment in sukuks received from a special purpose vehicle shall be—

    (a) 25% in the case the sukuk-holder is a company;

    (b) 12.5% in case the sukuk-holder is an individual or an association of person, if the return on investment is more than one million; and

    (c) 10% in case the sukuk-holder is an individual and an association of person, if the return on investment is less than one million.”

  • What is super tax and who are required to pay?

    What is super tax and who are required to pay?

    Super tax is a special levy that is imposed on certain classes of taxpayers on their income in Pakistan. The collection of super tax has been made under Income Tax Ordinance, 2001.

    Through Section 4B of the Income Tax Ordinance, 2001, super tax for rehabilitation of temporarily displaced persons was introduced through Finance Act, 2015. The tax was imposed till Tax Year 2022.

    Another Section 4C of the Income Tax Ordinance, 2001, super tax on high earnings persons was introduced through Finance Act, 2022.

    READ MORE: What income is taxable in Pakistan?

    Following are the text of both the sections as per the Income Tax Ordinance, 2001 updated up to June 30, 2022, issued by the Federal Board of Revenue (FBR).

    Section 4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

    (2) For the purposes of this section, “income” shall be the sum of the following:—

    (i) profit on debt, dividend, capital gains, brokerage and commission;

    (ii) taxable income(other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

    READ MORE: FBR, SBP discuss stuck-up consignments, LC opening

    (iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

    (iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

    (3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

    (4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

    READ MORE: World Bank satisfied with progress of Pakistan Raises Revenue Program

    (5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

    (6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

    Super Tax 4B

    4C. Super tax on high earning persons.― (1) A super tax shall be imposed for tax year 2022 and onwards at the rates specified in Division IIB of Part I of the First Schedule, on income of every person:

    Provided that this section shall not apply to a banking company for tax year 2022.

    (2) For the purposes of this section, “income” shall be the sum of the following:—

    (i) profit on debt, dividend, capital gains, brokerage and commission;

    (ii) taxable income (other than brought forward depreciation and brought forward business losses) under section 9 of the Ordinance, excluding amounts specified in clause (i);

    (iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

    (iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business losses under Fourth, Fifth and Seventh Schedules.

    READ MORE: FBR Member PR holds meetings to create return filing awareness

    (3) The tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

    (4) Where the tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the tax payable, and shall serve upon the person, a notice of demand specifying the tax payable and within the time specified under section 137 of the Ordinance.

    (5) Where the tax is not paid by a person liable to pay it, the Commissioner shall recover the tax payable under sub-section (1) and the provisions of Part IV, X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of tax as these apply to the collection of tax under the Ordinance.

    (6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

    Super Tax 4V

  • Direct tax collection up 41% in four months of current fiscal year: FBR

    Direct tax collection up 41% in four months of current fiscal year: FBR

    Direct tax collection registered an increase of 41 per cent during first four months (July – October) 2022-2023, Federal Board of Revenue (FBR) said on Saturday.

    The FBR strongly rebutted the news report regarding income tax collection. It clarified that the present policy of FBR and the Federal government is also based on direct tax dominated system i.e. the principle of equity where tax contribution is proportional to “ability to pay”.

    READ MORE: What income is taxable in Pakistan?

    As a result, direct taxes collection continue to register steady growth and during the first four months of the current year direct taxes/income tax have risen to Rs886 billion which is 41 per cent higher than the direct tax inflows during the same period last year.

    It is also mentioned that there is a shift in the tax mix and the ratio of direct tax to indirect tax is also increasing. Resultantly, during first four months of the current year, percentage contribution of direct taxes in overall revenue has increased to more than 41 per cent for the first time in a decade, as against 36-39 per cent in the past few years as has also been quoted by the authors.

    READ MORE: FBR, SBP discuss stuck-up consignments, LC opening

    Although, FBR does not agree with the notion that withholding taxes are collected in indirect mode, FBR, during the last few years, has adopted the policy of reducing withholding tax provisions and introducing measures which directly target the rich.

    Even, during the current year’s budget, maximum amendments were introduced regarding direct taxes. These amendments were aimed at taxing affluent and wealthy class by including provisions such as super tax, CVT on foreign assets, deemed rental income on the assets of the rich and higher rates for companies earning high profits such as banks.

    READ MORE: World Bank satisfied with progress of Pakistan Raises Revenue Program

    These provisions alone have a revenue impact of approximately Rs250 billion. At the same time certain withholding tax provisions were eliminated and consequently, the percentage contribution of withholding taxes in direct taxes has also been reduced to 65.8 per cent during first four months from 67.15 per cent during corresponding period of the previous year.

    Authors have also pointed out towards declining tax-to-GDP ratio. Although, tax-to-GDP ratio is lower than what is desired, it is clarified that the current ratio is due to rebasing of GDP from 2005-06 figures to 2015-16 figures, thus adversely impacting it.

    READ MORE: FBR Member PR holds meetings to create return filing awareness

    With base year 2005-06, tax-to-GDP ratio would have been higher by at least 2 percentage points. To further improve the ratio, FBR is continuously striving to increase the tax base with the help of IT/automation and third party data.

    In this regard Directorate General of Broadening of Tax Base was made functional during last month along with establishment of Directorate General of Digital Invoicing and Analysis.

  • Company registration rises to 180,996: SEC Pakistan

    Company registration rises to 180,996: SEC Pakistan

    ISLAMABAD: Securities and Exchange Commission of Pakistan (SECP) has said that total company registration has increased to 180,996 by end of October 2022.

    According to a statement the SECP registered 2,361 new companies in October 2022. “This shows an increase of 17 per cent as compared to corresponding period last month. The total number of registered companies now stands at 180,966,” the SECP added.

    READ MORE: SECP’s company registration goes up to 169,919 till May 2022

    Foreign investment has been reported in 77 new companies. These companies have foreign investors from Afghanistan, Austria, Australia, Bangladesh, China, Denmark, Iran, Italy, Jordan, Korea (South), Lebanon, Lithuania, Norway, Saudi Arabia, Singapore, Yemen, Tunisia, Turkey, the UAE, the UK and the US.

    Total capitalization (paid-up-capital) with regard to newly incorporated companies for the current month stood Rs3 billion.

    READ MORE: SECP, FBR integration brings 2,365 companies under tax net

    In October, about 60 per cent companies were registered as private limited companies, while 37 per cent were registered as single member companies. About three per cent were registered as public unlisted companies, not profit associations, foreign companies and limited liability partnership (LLP). Nearly 99.8 per cent companies were registered online.

    READ MORE: RDA: SECP exempts banks from obtaining license

    The real estate development and construction sector took the lead with incorporation of 432, information technology with 355, trading with 279, services with 234, food and beverages with 93, e-commerce with 92, tourism with 84, education with 83, corporate agricultural farming with 72, marketing and advertisement with 56, engineering with 45, power generation with 44 and 814 companies were registered in other sectors.

    READ MORE: SEC Pakistan amends regulations to facilitate startups

    As a result of integration of SECP with the Federal Board of Revenue (FBR) ad various provincial department, 1,969 companies were registered with the FBR for generation of National Tax Number (NTN), 81 companies with Employees Old-age Benefit Institution (EOBI), 47 companies with PESSI/SESSI ad 57 companies with excise and taxation department.

  • What income is taxable in Pakistan?

    What income is taxable in Pakistan?

    Federal Board of Revenue (FBR) has defined taxable income in Pakistan under Income Tax Ordinance, 2001 updated up to June 30, 2022, after incorporating changes made through Finance Act, 2022.

    (more…)
  • FBR, SBP discuss stuck-up consignments, LC opening

    FBR, SBP discuss stuck-up consignments, LC opening

    Islamabad: In a collaborative effort to address challenges related to stuck-up consignments and the opening of Letters of Credit (LCs), the Federal Board of Revenue (FBR) and the State Bank of Pakistan (SBP) engaged in discussions on Friday.

    (more…)
  • World Bank satisfied with progress of Pakistan Raises Revenue Program

    World Bank satisfied with progress of Pakistan Raises Revenue Program

    The World Bank has commended the Federal Board of Revenue (FBR) for the successful implementation of the Pakistan Raises Revenue Program (PRRP), aimed at fostering sustainable growth in domestic revenue.

    (more…)
  • FBR Member PR holds meetings to create return filing awareness

    FBR Member PR holds meetings to create return filing awareness

    KARACHI: Sardar Ali Khawaja, Member Public Relations, Federal Board of Revenue (FBR) has held meetings with heads of corporate entities, businessmen and government authorities to create awareness about filing of income tax return.

    On directions of Special Assistant to Prime Minister on Revenue Mr. Tariq Mehmood Pasha and Chairman FBR Asim Ahmad, Member Public Relations (FBR), Sardar Ali Khawaja visited Karachi and met senior management of various big organizations and institutions to impress upon the importance of filing tax returns before the extended due date of November 30, 2022.

    READ MORE: FBR chairman heads compliance risk management committee

    The visit was undertaken as part of FBR’s goodwill gesture and intensive awareness and facilitation drive to urge eligible taxpayers across the country to file their income tax returns within the due date.

    During his visit, Member PR met Amir Ghaziani, CFO, K-Electric Limited, Arif Akmal Saifee, CFO, United Bank Limited, Abdul Wahid Sethi, CFO, National Bank of Pakistan Limited and Muhammad Mureed Rahimoon, Secretary University Board/Higher Education/Colleges, Government of Sindh at their respective office premises.

    READ MORE: FBR approves setting up directorate for risk profiling of main sectors

    During the series of meetings, Member PR listened to the issues and problems related to taxation faced by the tax paying entities and assured of all possible cooperation for their resolution.

    The Heads of Finance of the Organizations committed to get their employees, receiving annual taxable salary, to file their income tax returns for tax year 2022 within the due date. Member PR expressed gratitude on the positive response and assurances by the companies to facilitate their employees to file their returns in time.

    Separately, Member PR also held meeting with trade bodies and counsels of taxpayers having jurisdiction at Regional Tax Office II Karachi. Touqeer Memon, Chief Commissioner RTO II Karachi and senior officials also attended the meeting.

    READ MORE: National Tax Council discusses GST harmonization

    Representatives of various Trade bodies including Federal B Area Small and Medium Enterprises, Towel Manufacturers Association of Karachi, State Bank of Pakistan, K Electric Limited, FPCCI, Association of Pakistan Paper and Packages and a number of tax consultants attended the meeting.

    Member PR stressed upon them to file tax returns to fulfil their national obligation and responsibility and thus contribute to the growth of the country’s economy.

    READ MORE: Definitions under Pakistan Income Tax Laws updated up to June 30, 2022

    The trade bodies also apprised about the issues related to Iris and claims of tax credits. Member PR assured that FBR will continue to extend facilitation for redressal of their issues.

  • FBR chairman heads compliance risk management committee

    FBR chairman heads compliance risk management committee

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday constituted a Compliance Risk Management Committee (CRMC), which will head by the FBR Chairman.

    According to a notification issued to constitute the committee stated that CRMC comprising of the following officer by designation:

    READ MORE: FBR approves setting up directorate for risk profiling of main sectors

    01. Chairman, FBR: Chairman of the Committee

    02. Member (Inland Revenue – Operations): Member of the Committee

    03. Member (Inland Revenue – Policy): Member of the Committee

    04. Member (Audit & Accounting): Member of the Committee

    05. Member (IT): Member of the Committee

    06. Directorate General (Compliance Risk Management): Secretary of the Committee

    07. Chief Commissioner of Inland Revenue Field Formation: Co-opted Members

    READ MORE: National Tax Council discusses GST harmonization

    A day earlier, the FBR approved establishment of Directorate General of Compliance Risk Management to develop risk profiles of the main segments and sectors.

    Previously, the FBR issued SRO 1796(I)/2022 to specify the functions, jurisdiction and power of the directorate and its officers.

    According to the SRO, the following shall be the functions of the Directorate General of Compliance Risk Management, namely:

    READ MORE: Definitions under Pakistan Income Tax Laws updated up to June 30, 2022

    (a) develop risk profile on the main segments and sectors related to the four pillar’s of compliance (registration, filing, reporting and payment) to be included in the risk register. This would be required at least quarterly and annually;

    (b) creation and updation of the risk register;

    (c) data collection (both internal and external sources) through an integrated system with Information Technology Wing of FBR for the purpose of creation of an indigenous data bank;

    (d) environmental scanning, research and studies of approved compliance topics;

    (e) collection of risk evaluation reports from risk owners (field formations) based upon taxpayer’s segment at all four compliance level (registration, filing correct reporting, payment and collection) on a quarterly and annual basis and update of risk portal;

    (f) collection of third party data;

    READ MORE: No tax amnesty, no tax rate cut under IMF program: FBR chief

    (g) planning risk treatment or mitigate strategies, developing compliance improvement plan(s), assisting field units in case selection exercise;

    (h) periodic measurement of risk management performance against the key risk indicators, risk identification analysis, tax gap analysis through scientific and analytical tools;

    (i) operation of data analysis centers by utilizing services of data analysts and data scientists;

    (j) development and implementation of CRM policy, frameworks and its practical implementation, design, develop and maintain the structured CRM methodologies and procedures e.g. design of a risk policy and processes based on CRM framework at FBR;

    (k) management of general administration finance, human resources, budget;

    (l) to assign any responsibility or function to Inland Revenue field formation;

    (m) to coordinate with any of Wing of Directorate General for the purpose of CRM; and

    (n) hiring of sectoral or business experts for assistance in sectoral studies, analysis of business trends and identification of sectoral risks.