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.

PSX proposes rationalizing tax rates for listed companies

KARACHI: Pakistan Stock Exchange (PSX) has proposed rationalizing tax rates for listed companies through incentives and credits, in order to encourage documentation of economy.

The PSX in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR) said that it is generally observed that when companies opt for a listing on a stock exchange, their profits grow substantially due to effective corporate governance, better disclosures, and ability to raise capital from the market. Increased number of listed companies and higher profitability leads to higher tax revenue for the government, including incremental revenues from CGT. Hence it is important to encourage companies to get listed on PSX.

However, tax credit on enlistment under section 65C has been omitted by the Finance Act, 2021. This tax incentive was a very small carrot with no significant revenue impact. Had this section not been omitted, only 8 listed companies would have availed this tax credit which we estimate, based on their latest audited financial statements, the tax revenue impact would have been Rs. 342 million per annum.

Further, the CGT collected on these 8 symbols for the 6 months period from July 2021 to December 2021 is Rs. 237 million, and, extrapolating based on this 6 months average collection of CGT, the tax collection for the 12 months period could be Rs. 474 million, compared to the total estimated tax credits of Rs. 342 million that would have been availed by these 8 companies.

The average rate of tax in the Asian region is 19.62%; whereas, currently in Pakistan the corporate tax rate is 29%. As such it is imperative that the corporate tax rate after the tax credit is brought down reasonably to compete with the other regional and global countries.

Therefore, in order to encourage documentation and create a long term positive impact on tax revenue, there should be reduced rates of tax for listed companies compared to unlisted companies.

To encourage documentation of the economy, the corporate tax rate should be permanently lowered for listed companies, by giving tax credit of 20% of tax payable for those companies that meet the prescribed requirements including a minimum free float of 25% throughout. This will be long term positive for tax revenue.

The table below outlines the five-year summary of listings and de-listings on the Pakistan Stock Exchange:

Particulars	Number of Companies	Capital (Rs.)*
New Listings	24**	57,381 Million
De-listings	38	7, 241 Million
Delisted due to Merger	9	120, 525 Million

*As of December 31, 2021

**It includes listings of preference shares of already listed companies.

Rationale

i) It is generally observed that publically-listed companies are able to improve profitability due to effective corporate governance, better corporate disclosure and availability of additional funds.

ii) The incremental benefits arising from the preferential tax structure for listed companies will foster a business environment that encourages new listings on the stock exchange, resulting in higher trading volumes and lead to:

a) Higher tax revenue from listed companies’ income as a result of higher corporate profits.

b) Higher revenues from tax on brokers activity on new listings.

c) Higher revenue from Capital Gains Tax on disposal of newly listed securities

iii) Furthermore, with the government’s increased pace of privatization of its entities, the stock market will attract local and foreign investors and increase the market size. The average rate of tax in the Asian region is 19.62%; whereas, currently in Pakistan the corporate tax rate is 29%. As such it is imperative that the corporate tax rate after above tax credit is brought down reasonably to compete with the other regional and global countries. Following are the average worldwide corporate tax rates:

LOCATION	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
Africa	29.0	28.3	27.9	27.9	27.5	28.73	28.81	28.45	28.50	27.97
Asia	22.9	22.1	21.9	22.6	21.9	20.05	20.65	21.32	20.06	19.62
Europe	20.4	20.6	19.7	20.1	20.5	18.35	18.38	20.27	19.99	19.84
Oceania	28.6	27.0	27.0	27.0	26.0	23.67	22.00	23.75	23.75	23.75
North America	33.0	33.0	33.3	33.3	33.3	23.08	23.01	25.85	26.06	26.37
OECD	25.2	25.3	24.1	24.9	24.8	24.18	23.93	23.59	23.51	23.04
Global	24.4	23.7	23.6	23.9	23.6	22.96	23.03	24.18	23.85	23.54

Proposed Amendment

Reinstate section 65C of Income Tax Ordinance, 2001 to be read as under:

“Where a taxpayer being a company opts for enlistment in any registered stock exchange in Pakistan, a tax credit equal to twenty percent of the tax payable shall be allowed for the tax year in which the said company is enlisted and for the following years for those companies that meet the prescribed requirements including a minimum free float of 25% throughout and”.

June 3, 2022

FBR exempts sales tax on oxygen gas import

The Federal Board of Revenue (FBR) has taken a significant step by exempting sales tax on the import of oxygen gas.
(more…)

June 2, 2022
FBR’s power to allow goods without duty payment

Section 21 of Customs Act, 1969 has explained power to deliver certain goods without payment of duty and to repay duty on certain goods.

The Federal Board of Revenue (FBR) issued updated Customs Act, 1969 up to June 30, 2021. The act has been updated by making amendments brought through Finance Act, 2021.

Following is the text of section 21 of the Customs Act, 1969:

21. Power to deliver certain goods with-out payment of duty and to repay duty on certain goods.- Subject to such conditions, limitations or restrictions as it thinks fit to impose, the Board may, in such general cases as may be prescribed by rules or in particular cases by special order, authorize-

(a) the delivery without payment of the customs-duties chargeable thereon of goods which are imported only temporarily with a view to subsequent exportation;

(c) the repayment in whole or in part of the duties as levied under section 18 or 18A and paid on the importation of any goods which have been used in the production, manufacture, processing, repair or refitting in Pakistan of goods meant for exportation, or for supplies against international tenders, or for supply to industrial units, projects, institutions, agencies and organizations, entitled to import the same at concessionary rates:

Provided that no repayment may be granted in a case in which the amount involved is less than one hundred rupees ; and

(d) without prejudice to the provisions of clause (c), the Federal Government may, by notification in the Official Gazette, direct that drawback or repayment shall not be allowed in respect of any goods of specified description or may be allowed subject to such restrictions and conditions as may be specified in the notification.

(Disclaimer: The text of above section is only for information. Team PkRevenue.com makes all efforts to provide the correct version of the text. However, the team PkRevenue.com is not responsible for any error or omission.)

READ MORE: Govt. may exempt customs duty in emergency situation

June 2, 2022
Senior Customs officers transferred from Multan

ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday notified transfers of two senior officers of Pakistan Customs Service (PCS) posted at Multan.

According to details, the FBR transferred two BS-20 officers of PCS from Directorate of Intelligence and Investigation, Multan and Collectorate of Customs Enforcement, Multan.

READ MORE: Islamabad Customs chief transferred ahead budget

The FBR notified transfers and posting of following officers:

01. Asif Abbas (Pakistan Customs Service/BS-20) has been transferred and posted as Chief, Federal Board of Revenue (HQ), Islamabad from the post of Director, Directorate of Intelligence and Investigation, FBR, Multan.

02. Imran Ahmad Ch. (Pakistan Customs Service/BS-20) has been transferred and posted as Chief, Federal Board of Revenue (HQ), Islamabad from the post of Collector, Collectorate of Customs Enforcement, Multan.

READ MORE: FBR transfers additional collectors, directors of Customs

03. Muhammad Tahir (Pakistan Customs Service/BS-20) has been transferred and posted as Collector, Collectorate of Customs Enforcement, Multan from the post of Director, Directorate General of Intelligence and Investigation, FBR, Islamabad.

04. Yasin Murtaza (Pakistan Customs Service/BS-19) has been transferred and posted as Additional Director, Directorate of Intelligence & Investigation, FBR, Multan from the post of Additional Collector, Collectorate of Customs Enforcement, Dera Ismail Khan.

READ MORE: FBR transfers BS-20 officers of Pakistan Customs Service

The FBR said that the officers who are drawing performance allowance prior to issuance of this notification shall continue to draw this allowance on the new place of posting.

It is worth mentioning that the FBR has notified transfers and postings of senior customs officers ahead of federal budget announcement for the fiscal year 2022/2023 and a month to go to end the fiscal year 2021/2022.

READ MORE: FBR transfers IRS officers of BS-17 to BS-20

June 2, 2022
PSX suggests grandfather tax provisions for listed companies

KARACHI: Pakistan Stock Exchange (PSX) has suggested the tax authorities to introduce grandfather provisions for tax treatment of listed companies.

In its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR), the stock exchange recommended grandfather provision for tax treatment of companies, which list on the PSX.

READ MORE: PSX proposes launch of saving, investment accounts

The stock exchange said in view of strong structural reforms in the capital market, companies in Pakistan have immense potential to raise funds from the capital market. This will result in greater documentation of the economy and increased tax revenue. At the same time this will help to grow the capital markets, provide attractive investment opportunities and hence improve the savings and investment rates in Pakistan. Listed companies become part of the documented, regulated and formal corporate sector. Hence, PSX is continuously endeavoring to encourage listings.

READ MORE: Income tax audit should be once in three years

It is proposed that in order to encourage companies to list, their tax status should be grandfathered at the time of listing application i.e. no new cases for past tax returns should be opened, except for such pending cases on which proceedings have already been initiated under the Ordinance, before the date of listing application, will continue as per the provisions of law.

It is well known that a large part of Pakistan’s economy is undocumented and a significant number of companies operate in the informal sector. This will encourage such companies, particularly SMEs, to become documented and start paying taxes, without the fear that past tax returns or lack of them will be questioned. Moving forward they will be documented and paying full tax. Hence, this will be a significant revenue positive measure.

READ MORE: Cut in duty, taxes on tea import suggested to stop smuggling

Part IV of Second Schedule of the Income Tax Ordinance, 2001 shall include the following clause:

“The provision of section 122, section 176 and section 177 shall not be applicable to those taxpayers being companies which opt for enlistment on the Main or GEM Board of Pakistan Stock Exchange, except such pending cases on which the proceedings have already been initiated under the Ordinance, before the date of listing application, will continue as per the provisions of law.”

READ MORE: KCCI proposes sales tax exemption to solar panels, inverters

June 1, 2022
FBR extends date for filing details of foreigners

ISLAMABAD: The Federal Board of Revenue (FBR) has extended the last date for filing statement of information of foreign entities and individuals operating in Pakistan.

The FBR on Wednesday issued a Circular No. 01 of 2021-22 – International Taxes dated May 31, 2022.

The FBR extended the deadline for filing of statement under Section 165B of the Income Tax Ordinance, 2001 read with Rule 78L Chapter XIIA of the Income Tax Rules, 2002 up to June 15, 2022.

READ MORE: Customs Sukkur to auction huge lot of motor vehicles

Under Section 165B of the Ordinance, financial institutions, including banks are required to furnish information of non-residents.

“(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 of1947) and any regulations made under the State Bank of Pakistan Act,1956 (XXXIII of 1956) on the subject, every financial institution shall make arrangements to provide information regarding non-resident or any other reportable persons to the Board in the prescribed form and manner for the purpose of automatic exchange of information under bilateral agreement or multilateral convention.

READ MORE: SRB collects Rs132 billion as services tax in 11 months

(2) All information received under this section shall be used only for tax and related purposes and kept confidential.

(3) For the purpose of this section, the terms “reportable person” and “financial institution” shall have the meaning as provided in Chapter XIIA of the Income Tax Rules, 2002.”

The Rule 78L of the Income Tax Rules, 2002 explained the date for filing of common reporting standards reports.

READ MORE: FBR establishes IT center against cyber security attacks

The annual domestic reporting date for filing of common reporting standards reports by reporting financial institutions shall be 31st May of each year.

The common reporting standard reports shall be filed on the AEOI portal on FBR’s official website in CRS XML Schema prescribed by the Global Forum of Organization for Economic Cooperation and Development (OECD).

READ MORE: FBR collects Rs5.35 trillion in 11 months; up by 28.4%

June 1, 2022
PSX proposes launch of saving, investment accounts

KARACHI: Pakistan Stock Exchange (PSX) has urged the authorities to introduce saving and investment accounts in the upcoming budget 2022/2023.
(more…)

June 1, 2022
FBR collects Rs5.35 trillion in 11 months; up by 28.4%

ISLAMABAD: The Federal Board of Revenue (FBR) has collected Rs5.35 trillion during first 11 months of the current fiscal year 2021/2022.

The latest collection is about 28.4 per cent higher over the collection of Rs4.16 trillion during the same period last fiscal year, the FBR said on Tuesday.

READ MORE: FBR surpasses collection target for July – April FY22

The net collection for the month of May, 2022 realized Rs 490 billion represents an increase of 26.8 per cent over Rs 387 billion collected in May, 2021.

On the other hand, the gross collection of the FBR increased to Rs5.64 trillion during first eleven months of the current fiscal year as compared with Rs4.39 trillion in the corresponding months of the last fiscal year.

READ MORE: March collection up over 20% amid political unrest: FBR

The FBR released an amount of Rs30.4 billion as refunds in the month of May 2022 as compared with Rs21.1 billion refunds released in the same month of the last year, showing a growth of 44.3 per cent.

Similarly, refunds worth Rs 295.5 billion disbursed during first eleven months of the current fiscal year as compared with Rs224.2 billion in the same period of the last fiscal year, showing an increase of 32 per cent.

READ MORE: FBR posts 30% revenue collection growth in 8MFY22

Needless to add that the ongoing unprecedented and constant growth trajectory in revenue collection has been achieved despite massive tax relief given by the government on various essential items to common man.

For the first time ever in the country’s history, Sales Tax on all POL products has been reduced to zero which cost FBR Rs. 45 billion in May, 2022. It is also worth sharing that FBR has introduced a number of innovative interventions both at policy and operational level with a view to maximize revenue potential through digitization, transparency, and taxpayers’ facilitation.

READ MORE: FBR collects Rs2.92 trillion in first half of FY22

This has not only resulted in ensuring transparency, taxpayers’ facilitation, and the ease of doing business but also translated in a healthy and steady growth in revenue collection.

Likewise, the incumbent top leadership of FBR has launched a new culture of clean taxation with a clear focus on collecting only the fair tax and not holding up refunds which are due to be paid.

This has not only fast-tracked the process of bridging the trust-deficit between FBR and Taxpayers but also ensured the much-needed cash liquidity for business community. That’s precisely why FBR continues to surpass its assigned revenue targets despite challenges and price stabilization measures adopted by the government.

READ MORE: FBR eyes Rs6 trillion collection in current fiscal year

May 31, 2022
FBR establishes IT center against cyber security attacks

ISLAMABAD: The Federal Board of Revenue (FBR) has established a Security Operation Center (SOC) in order to prevent cyber security attacks on its IT system.

FBR Chairman Asim Ahmad inaugurated the SOC on Tuesday.

SOC is a state-of-the-art center designed for prevention, detection, and incident response against cyber security attacks on the FBR IT network.

This most modern digital intervention has been made operational round-the-clock (24x7x365). It is powered by the world’s leading automated solutions and tools for cyber security incident monitoring, inspection for malware and ransomware attacks, data backup/recovery solutions, software vulnerabilities scanning, IT infrastructure penetration testing, and performance monitoring. It is pertinent to mention that these multiple security controls have already been implemented at FBR with sophisticated firewalls, intrusion detection systems, security orchestration and response capability, email threats security, database security, web browser security and end-user security awareness.

Dr. Ashfaq Ahmad Tunio, Member-IT FBR and Sardar Umar, Secretary IT FBR, briefed the Chairman FBR about its key features and functions.

He informed that within a short span of 4-5 months, nine different world- class security technology solutions have been procured and implemented or are nearing implementation.

This robust and high-tech defense-in-depth architecture is a watershed initiative which has inbuilt monitoring mechanisms within the SOC. This has significantly uplifted the security posture of the data and IT network of FBR, he further explained.

Kamran Meer, the Chief Information Security Officer (CISO)FBR further briefed that a roadmap has been created to implement various other security technology solutions in the coming months to attain a truly world-class posture for FBR in accordance with international best practices, within an overarching Information Security Governance, Risk and Compliance (GRC) framework.

He also reiterated that the occurrence of cyber attacks was a norm in heavily IT-enabled organizations such as FBR and the most effective approach to cyber defense was to establish a strong program where cyber risk assessments, risk mitigations, SOC operations and rapid incident response were conducted in repetitive cycles 24x7x365 with oversight and support for resources provided by the highest levels of management.

While commending the outstanding work done by Member IT and his team, Chairman FBR appreciated the digital intervention as a much-needed facility to firewall the repository of high value data of taxpayers. He expressed his unflinching resolve to further upgrade IT infrastructure of FBR in line with the global best practices. He also hoped that all the Field Formations of FBR will soon be connected with this centralised Security Operations Center(SOC) to implement similar security regime in letter and spirit.

May 31, 2022
LTO Karachi collects Rs1.4 trillion July – May

KARACHI: Large Taxpayers Office (LTO) Karachi has collected Rs1.4 trillion during first 11 months (July – May) of fiscal year 2021/2022, showing a 41 per cent growth over the corresponding period last year.

According to a statement issued on Tuesday, the LTO Karachi collected Rs1.4 trillion during first 11 months of the current fiscal year as compared with Rs992 billion in the corresponding months of the last fiscal year, showing a sharp increase of 41 per cent.

READ MORE: LTO Karachi posts 41% collection growth in 10 months

The LTO Karachi is the largest revenue collection arm of the Federal Board of Revenue (FBR). It collects around 35 per cent of the revenue collection collected at national level.

The LTO Karachi also surpassed the assigned target of revenue collection for the period of July – May 2021/2022.

READ MORE: LTO Karachi surpasses Rs1 trillion mark in 8MFY22

The tax office has been assigned Rs1.28 trillion as collection target for the period under review. It collected Rs1.4 trillion to surpass the target by Rs117 billion.

The LTO Karachi also surpassed the monthly target for May 2022. The tax office collected a huge amount of Rs130 billion in the month of May 2022 as against the assigned target of Rs125 billion.

READ MORE: LTO Karachi facilitates Tier-1 retailers in POS integration

May 31, 2022