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.

Tax Amendment Ordinance: exemption, incentives announced for foreign investment in debt securities

ISLAMABAD: The government has announced a comprehensive package of tax incentive and exemptions to attract foreign investment into debt securities.

The Federal Board of Revenue (FBR) issued salient features on Wednesday to explain amendments to Income Tax Ordinance, 2001 brought through Tax Laws (Second Amendment) Ordinance, 2019.

The FBR said that the existing foreign exchange framework of the country allows non-residents to invest in debt securities and Government securities through Special Convertible Rupee Accounts (SCRA’s) maintained with banks in Pakistan.

There is no restriction on repatriation of funds from SCRA’s which incentivizes investment in the local debt market by non-resident investors.

Several amendments for encouraging investment in the local debt market and simplifying the tax regime for non-resident companies have been introduced which are summarized hereunder:-

(i) Capital gains emanating from the disposal of debt instruments and government securities (including treasury bills and Pakistan Investment Bonds) to non-resident companies (not having a permanent establishment in Pakistan)who have made investments in such debt instruments/securities exclusively through a Special Convertible Rupee Account (SCRA) maintained with a bank in Pakistan shall be subject to withholding tax @ 10 percent by banks/financial institutions which shall constitute final discharge of tax liability.

(ii) Enhanced rate of withholding tax for persons not appearing on the active taxpayers list under the Tenth Schedule to the Ordinance shall not apply to capital gains and profit on debt earned by non-resident companies, not having a permanent establishment in Pakistan, which invest in local debt instruments/securities through SCRA maintained with a bank in Pakistan.

(iii) Special Convertible Rupee Accounts (SCRA) being maintained by non-resident companies having no permanent establishment in Pakistan shall be exempt from collection of advance tax on banking transactions otherwise than through cash under section 236P of the Ordinance.

(iv) A non-resident company having no permanent establishment in Pakistan investing debt instruments and government securities through SCRA shall not be required to pay advance tax under section 147 of the Income Tax Ordinance, 2001 in respect of capital gains arising to it.

(v) Requirement for filing a statement of final taxation under section 115(4) of the Income Tax Ordinance, 2001 and registration under section 181 of the Ordinance shall not apply to a non-resident company having no permanent establishment in Pakistan solely by reason of Capital Gain or Profit on Debt earned from investments indebt securities and Government securities through Special Convertible Rupee Account maintained with a banking company or financial institution in Pakistan.

January 2, 2020
Tax Amendment Ordinance: consumer goods to be confiscated on failure to print retail price

ISLAMABAD: Tax officials have been empowered to confiscate goods where importer / manufacturer failed to mandatory print the retail price on consumer goods.

The government introduced Tax Laws (Second Amendment) Ordinance, 2019 on Wednesday through promulgated through presidential ordinance.

Federal Board of Revenue (FBR) issued salient features of the ordinance and stated that penalty had been proposed through the ordinance for person failed to comply with mandatory requirement of printing retail price on imported goods falling under Third Schedule of Sales Tax Act, 1990.

According to the amendment, any person, being a manufacturer or importer of an item which is subject to tax on the basis of retail price, who fails to print the retail price in the manner as stipulated under the Act.

“Such person shall pay a penalty of ten thousand rupees or five percent of the amount of tax involved, whichever is higher:

Further, such goods shall also be liable to confiscation. However, the adjudication authority, after such confiscation, may allow redemption of such goods on payment of fine which shall not be less than twenty percent of the total retail price of such goods.”

January 2, 2020

Tax Amendment Ordinance: revised sales tax rates on imported mobile phones

ISLAMABAD: The government has massively reduced sales tax on imported mobile phone valuing up to $100 to Rs200 from Rs1,320 through amendment to Sales Tax Act, 1990 through Tax Laws (Second Amendment) Ordinance, 2019.

The FBR notified the revised rates of sales tax on imported mobile phones. The amendment has been made to Ninth Schedule of the Sales Tax Act, 1990.

The updated NINTH SCHEDULE of the Sales Tax Act, 1990 to prescribe sales tax rates on mobile phones.

The Table:

S.No.	Description/ Specification of goods	Sales Tax on import or local supply	Sales tax chargeable at the time of registration (IMEI number by CMOs)	Sales tax on supply (payable at the time of supply by CMOs)
1.	Subscriber Identification Module (SIM) Cards			Rs250
2	Cellular mobile phones or satellite phones to be charged on the basis of import value per set, or equivalent value in rupees in case of supply by the manufacturer, at the rate as indicated against each category:–
	A. Not exceeding US$ 30	Rs130	Rs130
	B. Exceeding US$ 30 but not exceeding US$ 100	Rs200	Rs200
	C. Exceeding US$ 100 but not exceeding US$ 200	Rs1,680	Rs1,680
	D. Exceeding US$ 200 but not exceeding US$ 350	Rs1,740	Rs1,740
	E. Exceeding US$ 350 but not exceeding US$ 500	Rs5,400	Rs5,400
	F. Exceeding US$ 500	Rs9,270	Rs9,270

LIABILITY, PROCEDURE AND CONDITIONS

(i) In case of the goods specified against S.No 1of the Table, the liability to charge, collect and pay tax shall be on the Cellular Mobile Operator (CMO) at the time of supply. In case of the goods specified against S.No 2, the liability to pay sales tax at the time of import shall be on the importer, and the liability to charge, collect and pay sales tax payable on supplies shall be on the Cellular Mobile Operator at the time of registering International Mobile Equipment Identity (IMEI) number in his system.

(ii) The Cellular Mobile Operators shall, if not already registered, obtain registration under the Sales Tax Act, 1990.

(iii) No IMEI shall be registered in his system by a Cellular mobile Operator without charging and collecting the sales tax as specified in the Table.
(iv) The Cellular Mobile Operator shall deposit the sales tax so collected through his monthly tax return in the manner prescribed in section 26 of the Sales Tax Act, 1990, and rules made thereunder.

(v) The Cellular Mobile Operator shall maintain proper records of all IMEI numbers registered for a period of six years, and such records shall be produced for inspection, audit or verification, as and when required, by an authorized officer of Inland Revenue.

(vi) The Pakistan Telecommunication Authority shall provide data regarding IMEI numbers registered with other Cellular Mobile Operators to prevent double taxation on the same IMEI number in case of switching by a subscriber from one operator to another, and to provide data regarding registration of IMEI numbers to the Board on monthly basis.

(via) The sales tax as indicated in column (3) of the Table above shall be paid by the importer, in case of imports and by the manufacturer, in case of locally manufactured cellular mobile phones.

(vii) No adjustment of input tax shall be admissible to the Cellular Mobile Operator or any purchaser of cellular mobile phone against the sales tax charged and paid in terms of this Schedule.

(viii) The tax specified in column (4) of the Table shall be charged, collected and paid with effect from such date as may be specified by the Board and the sales tax specified in column(3) shall stand withdrawn from the date so specified.

The FBR said that notwithstanding anything contained in any other law for the time being in force, the levy, collection and payment of sales tax under Notification No. S.R.O. 460(I)/2013, dated the 30th May, 2013, shall be deemed to always have been lawfully and validly, levied, collected and paid.

January 2, 2020

Tax Amendment Ordinance: highlights of changes in customs law

ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued salient features of to highlight amendments to Customs Act, 1969 made through Tax Law (Second Amendment) Ordinance, 2019.

Following are the salient features of changes made to customs law:

1. After section 3CC, the following new section is proposed to be inserted:-

“3CCC. Directorate General of Law and Prosecution. – The Directorate General of Law and Prosecution is being proposed for the reason that in all the Collectorates and Directorates there are a number of cases which are framed for evasion of duty/taxes but owing to excessive work load and lack of expertise on the prosecution side the cases are not properly defended at subsequent legal fora. The Directorate General of Law and Prosecution will be established with specific power to handle legal issue and equipped with staff expert in handling legal issues.

2. The penal clause 47A of section 156(1) provides for fix penalty @ Rs.5000/- for initial five days and thereafter @ Rs.10000/- per day upto a maximum limit of Rs.100000/- in case GD is filed after ten days of the date of arrival of goods into Pakistan.

This clause was inserted to realize stuck up Government revenue as importer will suitably discharge their liabilities to avoid their penalties. However, bonafide person need to be excluded from this penal clause.

However, the intent of the proposed amendment is to exclude the goods imported or received as gift by individuals without NTN or STRN through courier or air cargo, diplomatic cargo and imports made by government agencies.

3. Changes are being proposed in section 156 to penalize persons carrying foreign currency. Previously, a person carrying foreign currency beyond the permissible amount of $10000 was being prosecuted.

It is now being proposed by means of varying slabs being taken by passengers ,ranging from $10000- $200000 and above and accordingly proposing varying degrees of penalties from a mere fine and then imprisonment upto fourteen years depending on the amount of currency apprehended by the authorities.

Similarly, slabs for smuggling of Gold, platinum and Silver has been proposed along with their varying degrees of fine and imprisonment depending on the quantum of precious metals.

4. Owing to surge in smuggling activities and knowing that smugglers as well equipped, it is being proposed that section 164 may be suitably amended empowering Customs officials to fire in the Line of Duty.

5. Currently, section 185A specifies the provisions for cognizance of offences by special Judges. It is proposed that a time period of six months may be fixed for the finalization of proceedings in criminal cases because cases keep on lingering without any outcome for years. No time limitation in decision of the case also accords time to the investigating officers to submit final challan without a time limit which aspect weakens the case as the time passed by.

6. Section 194 of the Customs Act, 1969 provides for the constitution of a Customs Appellate Tribunal by the Federal Government which is competent to adjudicate upon appeals filed against orders passed by the Collector (Appeals).

The said section specifies various pre-requisites for appointment as a judicial or technical member and empowers the Federal Government to appoint Chairman of the Customs Appellate Tribunal.

In order to complement revenue collection efforts by FBR, streamline the affairs of the Tribunal(s), bring about greater transparency in the manner of appointment of judicial and technical members of the Tribunal(s) and to impart greater efficiency in the working of the Tribunal for ensuring maximum disposal of cases it is proposed that in addition to the prerequisite as already mentioned, the qualification of Judicial Members may also be prescribed under rules made by the Prime Minister.

Furthermore the constitution and functioning of benches and procedure of the Appellate Tribunal may be regulated by rules approved by the Prime Minister.

January 2, 2020
Tax Amendment Ordinance: Salient features of changes introduced to income tax law

ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday issued salient features of amendment to Income Tax Ordinance, 2001 made through Tax Law (Second Amendment) Ordinance, 2019.
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January 1, 2020
Customs officials empowered using firearms in the line of duty

ISLAMABAD: The government has authorized customs officials to use firearms in the line of duty to prevent smuggling and other illegal activities.

In this regard a new sub-section 3 has been inserted to Customs Act, 1969 through Tax Laws (Second Amendment) Ordinance, 2019.

Federal Board of Revenue (FBR) on Wednesday issued ‘Tax Laws (Second Amendment) Ordinance, 2019’ have been promulgated through the presidential order.

The new sub-section shall be read as follow:

“(3) For the execution of the above, the officers or officials shall be empowered to use all necessary force including use of firearms subject to Section 97 of the Pakistan Penal Code, 1860 in the line of duty.”

Under Section 164 of the Customs Act, 1969, the customs officials were empowered to stop and search conveyances.

The Section 164 is read as:

164. Power to stop and search conveyances.- (1) Where the appropriate officer has reason to believe that within the territories of Pakistan(including territorial waters) any conveyance has been, is being or is about to be, used in the smuggling of any goods or in the carriage of any smuggled goods, he may at any time stop any such conveyance or, in the case of an aircraft, compel it to land, and –

(a) rummage and search any part of the conveyance;

(b) examine and search any goods thereon; and

(c) break open the lock of any door, fixture or package for making search.

(2) Where in the circumstances referred to in sub-section (1)-

(a) it becomes necessary to stop any vessel or compel any aircraft to land, it shall be lawful of any vessel or aircraft in the service of the Government while flying her proper flag or bearing flag marks and any authority authorized in this behalf by the Federal Government to summon such vessel to stop or the aircraft to land, by means of an international signal, code or other recognized means, and thereupon such vessel shall forthwith stop or such aircraft shall forthwith land, and if it fails to do so chase may be given thereto by any vessel or aircraft as aforesaid and if after a gun is fired as a signal, the vessel fails to stop or the aircraft fails to land, it may be fired upon;

(b) it becomes necessary to stop any conveyance other than a vessel or aircraft, the appropriate officer may use or cause to be used all lawful means for stopping it or preventing its escape including, if all other means fail, firing upon it.

The new sub-section shall be included:

“(3) For the execution of the above, the officers or officials shall be empowered to use all necessary force including use of firearms subject to Section 97 of the Pakistan Penal Code, 1860 in the line of duty.”

January 1, 2020
Tax Amendment Ordinance: 14-year jail, penalty of ten time of value for currency smuggling

ISLAMABAD: The government has introduced very harsh penalties for offence of currency smuggling. The government enhanced the jail term to 14 years for currency smuggling above $200,000 besides ten time of value of the currency would be recovered as penalty.

Federal Board of Revenue (FBR) on Wednesday issued ‘Tax Laws (Second Amendment) Ordinance, 2019’ have been promulgated through the presidential order.

The following are the penal action for offences/smuggling introduced through the ordinance by amending Customs Act, 1969:

(a) If the amount of the currency over and above the permissible limit is up to $10,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding the value of the excess amount of the currency.

(b) If the amount of the currency over and above the permissible limit is up to $10,001 to $20,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding two times the value of the excess amount of the currency.

(c) If the amount of the currency over and above the permissible limit is $20,001 to $50,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding three times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding two years.

(d) If the amount of the currency over and above the permissible limit is $50,001 to $100,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding four times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding seven years.

(e) If the amount of the currency over and above the permissible limit is $100,001 to $200,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding five times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding ten years. Provided further that the sentence of the imprisonment shall not be less than three years.

(f) If the amount of the currency over and above the permissible limit exceeds $200,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding ten times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding fourteen years. Provided further that the sentence of the imprisonment shall not be less than five years.

January 1, 2020
FBR drafts rules for risk based customs clearance

ISLAMABAD: Federal Board of Revenue (FBR) has drafted Risk Management System Rules for customs clearance of cargo to comply with Trade Facilitation Agreement (TFA) of World Trade Organization (WTO).
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January 1, 2020
FBR implements duty exemption/concession under 2nd Phase Pak-China FTA

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday issued concessionary rates for 6,786 tariff lines for goods imported under Second Phase of Free Trade Agreement (FTA) between Pakistan and China.

The notified rates will be effective from January 01, 2020 for next 15 years i.e. December 31, 2034.

The FBR issued SRO 1640(I)/2019 to implement the revised customs duties for goods imported from China.

The SRO said:

“S.R.O.1640(I)/2019.- In exercise of the powers conferred by section 19 of the Customs Act,1969 (IV of 1969), and in supersession of Notification No. S.R.O. 659(I)/2007,dated the 30th, June, 2007, the Federal Government is pleased to exempt, with effect from the first day of January, 2020, unless specified otherwise, the import into Pakistan from Peoples Republic of China of the goods specified in column (3) of the Table below, falling under the Heading and sub-Heading numbers of the First Schedule to the said Act as specified in column (2) of the said Table, from so much of the customs duty specified in the First Schedule as on the 1st January , 2020 to the said Act as in excess of the rates specified in columns (4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17) or (18) of the Table with effect from the corresponding date:

“Provided that the goods are manufactured or produced and imported in conformity with the Rules of Determination of Origin of Goods and the operational certification procedures for the Rules of Origin notified by the Ministry of Commerce vide No. S.R.O. 1286(I)/ 2005, dated the 24th December, 2005 read with the Import Policy Order, 2016:-

The second phase of China-Pakistan FTA came into effect earlier this month, allowing Pakistani manufacturers and traders to export more than 300 new products to the Chinese market for zero duty charges.

The two neighboring countries have already completed all legal procedures and formalities to start implementation of the agreement.

Pakistan and China signed a protocol for implementation of the agreement during the last visit of Prime Minister Imran Khan to China.

Pakistan is already enjoying zero duty on export of 724 products to China under the first FTA signed between the two countries in 2006.

The major products on which tariff has been eliminated are textiles, garments, seafood, meat, other animal products, prepared food, leather, chemicals, plastics, oilseeds, footwear as well as engineering goods including tractors, auto parts, and home appliance machinery.

January 1, 2020
FBR extends return filing date up to January 31

ISLAMABAD: Federal Board of Revenue (FBR) granted fifth extension for filing income tax return for tax year 2019 up to January 31, 2020.

The FBR issued Income Tax Circular No. 18 of 2019 for extension in date of filing income tax returns/statements for tax year 2019.

The FBR said that the date of filing of return of total income / statements of final taxation for individuals and associations of persons for the tax year 2019 which was due on September 30, 2019 and extended up to December 31, 2019 has been extended up to January 31, 2020.

The FBR further said that the date of filing of return of total income/statements of final taxation for companies for the tax year 2019, which was due on September 30, 2019 and extended up to December 31, 2019, in respect of those companies who have paid 90 percent of the admitted tax liability on or before September 30, 2019, has been allowed further extension up to January 31, 2020.

The date of filing of return of total income/statements of final taxation for companies for tax year 2019, which was due on December 31, 2019 has also been extended up to January 31, 2020.

December 31, 2019