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.

Consumers may not able to get 5pc sales tax rebate till FBR notification

ISLAMABAD: General public may not be able to avail 5 percent rebate on their purchases until a notification is issued by the Federal Board of Revenue (FBR).

Through Finance Act, 2019 a new proviso has been added wherein customers of Tier-1 retailers are entitled for pay-back up to 5 percent of sales tax involved in the sales tax invoice.

This shall encourage the customers to demand sales tax invoice from registered retailers.

“However, these provisions shall be applicable when the Board so notifies,” said the FBR in instructions to Inland Revenue offices regarding enforcing changes to sales tax laws made through Finance Act, 2019.

The FBR informed the IR about changes made to regime of Tier-1 retailers.

These changes are included option to pay 2 percent turnover tax has been withdrawn.

Provisions relating to SRO 1125(I)/2011 under which zero-rate sales tax was available, have been omitted, thus subjecting textile and leather items to normal rate except for the integrated retail outlets for which the rate shall be 14 percent as per amendment in Eighth Schedule.
Another new proviso aims at expanding the scope of real-time integration beyond textile and leather. These provisions shall become effective when the Board so notifies.

After such notification, the input tax shall be reduced by 15 percent for retailers failing to integrate Point of Sales (POSs) in the prescribed manner, as provided in the newly inserted sub-section (6) in section 8B.

July 12, 2019
FBR meeting on July 12 to speed up action against Benami properties

ISLAMABAD: In order to speed up action against Benami properties an important meeting is scheduled for July 12 (Friday) at Headquarter of Federal Board of Revenue (FBR).

The meeting will presided over by Syed Shabbar Zaidi, Chairman, FBR and all the relevant officers of Benami Zones will attend the meeting.

An office order circulated to the three Benami Zones, said that the phenomenon of Benami property was one of the major socio-economic malaise afflicting the national development, equitable distribution of resources and overall governance in the country.

“In order to combat this menace the federal government has recently activated specialized Benami Zones at Karachi, Lahore and Islamabad, constituted various enforcement and adjudication authorities and promulgated rules for effective implementation of the Benami Property (Prohibition) Act, 2017.”

The office order further said that to have initial introduction and orientation, develop understanding of the legal framework, appreciate roles and responsibilities and share knowledge on the subject for impartial, judicious and expeditious implementation of the Benami Transactions (Prohibition) Act, 2017 a meeting of all stakeholders had been scheduled on Friday July 12, 2019 at FBR HQs Islamabad.

The officers, who will attend the meeting included: Commissioners Inland Revenue as approving authority of the three Benami Zones.

Deputy Commissioners as initiating officers and Assistant Commissioners as administrators under Benami laws will also attend the meeting.

July 11, 2019
Preventive officer awarded dismissal from service for misconduct

ISLAMABAD: Federal Board of Revenue (FBR) has awarded major penalty of ‘dismissal from service’ upon Hassan Ashraf, preventive officer, posted at Model Customs Collectorate of Preventive, Karachi on the charges of misconduct.

In a notification issued on Thursday the FBR said that Hassan Ashraf was appointed as Preventive Officer (BS-16) in the Model Customs Collectorate of Preventive, Karachi and he joined his duties in the Collectorate on March 07, 2018.

According to terms and conditions of his appointment he was deputed for mandatory physical training scheduled from March 24, 2018 at Shaheed Benazir Bhutto Elite Police Training Centre, Razzakabad, Karachi.

However, he did not join the training and thereafter he is continuously absent from duty.

The above omissions / commission on part of the accused officer is tantamount to “misconduct” under rule 3(b) of the Government Servants (E&D) Rules, 1973.

Several notices/Memo/Letters were issued to him to explain the reason of his un-authorized absence from mandatory training and duty but he did not respond at all.

Therefore, the Collector, Model Customs Collectorate (Preventive), Karachi in his capacity as Authorized Officer served Show Cause Notice dated 16.11.2018 upon the accused officer.

However, the accused neither submitted his written defence reply to the Authorized Officer nor appeared for personal hearing before the Authorized Officer. Therefore he failed to defend himself against the charges of “Misconduct” on his part.

The Member (Admn)/ Authority, on the recommendations of Authorized Officer has therefore, imposed the major penalty of “Dismissal from Service” upon the accused Hassan Ashraf, Preventive Officer under Rule 4(1)(b)(iv) of the Government Servants (Efficiency & Discipline) Rules, 1973 with immediate effect.

He shall have the right of Appeal as admissible in the Civil Servants (Appeal) Rules, 1977.

July 11, 2019
FBR probes concealment in land, immovable property purchases

ISLAMABAD: Federal Board of Revenue (FBR) has obtained data of land and immovable property transactions from provincial registrar offices and started proceedings against those who concealed the actual amount to purchase the assets.

FBR sources said that the data had been obtained on the basis of withholding tax deduction by the property registrars. The sources said that the FBR was probing the lower values declared by the purchasers against the fair market values.

The FBR is also probing those people who have such immovable properties where filing of income tax returns is mandatory.

As per Section 114 of Income Tax Ordinance, 2001 following persons are required to annual income tax returns:

— owns immovable property with a land area of two hundred and fifty square yards or more or owns any flat located in areas falling within the municipal limits existing immediately before the commencement of Local Government laws in the provinces; or areas in a Cantonment; or the Islamabad Capital Territory;

— owns immovable property with a land area of five hundred square yards or more located in a rating area;

— owns a flat having covered area of two thousand square feet or more located in a rating area.

The sources said the FBR has been allowed to investigate transactions of past six years.

The sources said that the FBR through Finance Act, 2018 notified Directorate General of Immovable Property for determination of fair market values and authorized this directorate with immense powers.

The Directorate-General may, subject to the provisions and conditions as may be prescribed, initiate proceedings for the acquisition of property for the reasons to believe that any immovable property of a fair market value has been transferred by a person, hereinafter referred to as the transferor, to another person, hereinafter referred to as the transferee, for a consideration which is less than the fair market value of the immovable property and that the consideration for such transfer as agreed to between the transferor and transferee has been understated in the instrument of transfer for the purposes of ─

(a) the avoidance or reduction of withholding tax obligations under this Ordinance;

(b) concealment of unexplained amount referred to in sub- section (1) of section 111 representing investment in immovable property; or

(c) avoidance or reduction of capital gains tax under section 37.

The sources said that the FBR had extended the filing of income tax returns for tax year 2018 up to August 2, 2019 to facilitate persons to file their returns, especially in those cases where immovable properties had been purchased but not declared.

July 11, 2019
FBR proposes reducing retaining period of imported plant, machinery by export units for disposal at zero percent duty, taxes

ISLAMABAD: Federal Board of Revenue (FBR) has proposed to relax the condition of disposal of plant and machinery by export units at zero percent of duty and taxes to five years as compared with prevailing 10 years.

The FBR on Wednesday issued SRO 747(I)/2019 to proposed amendments in the Export Oriented Units and Small and Medium Enterprises Rules, 2008.

Through proposed amendment the FBR allowed the retaining imported goods including plant and machinery for a maximum period of five years as against prevailing ten years.

The FBR through SRO 327(I)/2008 notified “The Export Oriented Units and Small and Medium Enterprises Rules, 2008” to facilitate the exporters and promote the exports.

The FBR proposed that there will be no duty or tax if items imported by export oriented unit is sold or otherwise disposed of after five years from the date of importation. The existing retaining period is ten years.

The FBR proposed that there will be full duty and tax if sold or otherwise disposed of before the expiration of three years from the date of importation. The existing period of attracting full duty and taxes is five years.

It is proposed that there will be 75 percent duty and taxes if sold or otherwise disposed of after three and before four years from the date of importation. The existing period for this category is ‘after five and before seven and half years’ from the date of importation.

The FBR also proposed to impose 50 percent of duty and taxes if sold or otherwise disposed of after four and before five years from the date of importation. The existing time period for this category is ‘after seven and half years and before ten years.’

In the latest SRO the FBR also proposed to amend the word ‘Collector’ with the Regulatory Authority. The FBR also defined the regulatory authority is the additional collector of customs designated by the collector of customs as the regulatory authority in relation to an export oriented unit, in whose jurisdiction the place of business or manufacturing unit of the export oriented unit applicant, duly registered under the Sales Tax Act, 1990, is situated.

July 11, 2019
FBR directs customs to ensure retail price print on imported goods

KARACHI: Federal Board of Revenue (FBR) has directed customs authorities to ensure printing of retail prices on imported goods for collection of sales tax while clearance of consignments.

The Inland Revenue Policy Wing issued directives on Wednesday to Inland Revenue and Customs for the implementation of changes brought in to Sales Tax Act, 1990 through Finance Act, 2019.

It said that the locally manufactured goods specified in Third Schedule are already chargeable to sales tax on the basis of retail price.

Now, through amendment in section 3(2)(a) of Sales Tax Act, 1990, retail price taxation has also been made applicable to imported goods.

The importers are required to print the retail price in the manner prescribed in the aforesaid clause and such goods shall be assessed on the basis of declared retail price and not on the basis of customs value under section 25 of the Customs Act, 1969.

“All Model Customs Collectorates (MCCs) are requested to ensure that the declared retail prices are duly printed in the prescribed manner and that the sales tax is charged on the basis of such declared retail price,” the FBR said.

Twelve new serial numbers have been added to Third Schedule through Finance Act, 2019 such as electric and gas appliances, motorcycles, auto-rickshaws biscuits, tiles etc.

The FBR directed Large Taxpayers Units (LTUs) / Regional Tax Offices (RTOs) / MCCs should ensure application accordingly.

The FBR defined the value of supply, which has been amended to provide for application of retail price taxation to imported goods, and also to incorporate provisions from rescinded rules and STGOs.

These modifications are enumerated below:

Amendment in clause (d) to exclude imported Third Schedule items from purview of application of ‘customs value’ determined under section 25 of the Customs Act, 1969. These items are to be assessed on the basis of declared retail price. Further such price is also required to be printed on imported goods as stipulated in clause (a) of section 3(2) of the Sales Tax Act, 1990.

(ii) Substitution of clause (f) in section 2(46) pertains to value of supply in case of toll manufacturing, which has defined to be the charges received in lieu of value addition carried out on goods;

(iii) Newly added clause (h) defines value to be energy purchase price in case of supply by IPPs; and

(iv) Another new clause (i) transposes the provisions relating to exclusion of late payment surcharge from value, in case of supply of electricity and gas by the distribution companies, from the rescinded Sales Tax Special Procedures Rules, 2007.

July 10, 2019
No compromise on documentation; PM refuses to withdraw CNIC condition

KARACHI: Prime Minister Imran Khan on Wednesday showed firm resolve to document the economy and flatly refused demands of business community to withdraw condition of CNIC on sales above Rs50,000.

Representatives of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce and Industry (KCCI) met the prime minister at the Governor House. The entire prime minister’s team of finance and commerce was also present at the meeting.

The business community urged the prime minister to withdraw the condition of CNIC at the time of sales, which was introduced through Finance Act, 2019.

Sources said that the Prime Minister had refused the demand and told the business community that the businesses had to be documented. The prime minister said requirement of CNIC / information on above Rs50,000 sales was quite justified.

The prime minister said that he wanted to see Pakistan grow on Turkish model. He further said that the government wanted to take along the business community on journey to growth.

Prime Minister Imran Khan told the business community that he had arrived Karachi to resolve problems of trade and industry. He said that the government wanted to ease in doing business.

Our priority to eradicate poverty and accelerate economic growth, he added.

After the meeting business community has expressed disappointment.

Mirza Ikhtiar Baig, senior FPCCI leader, while talking to media said that the apex body had presented all the problems at the meeting that are hampering the economic growth.

The prime minister has been informed about protests by small associations. He said that the FPCCI had urged the prime minister to restore zero rated for export sector.

He said that the interest rate by State Bank was on the rise and it would make difficult for industry to continue the production activities. On the other hand the FBR had also not withdrawn several levies on the export sector.

The prime minister has been informed that reforms should bring in phases.

Another meeting was held with export sector in which the prime minister listened to their problems. However, the export sector was also not happy to resolve their issues at the meeting.

July 10, 2019
FBR delegates powers to IR officers for International Tax Operations directorate

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday authorized officers of Inland Revenue to exercise powers and perform functions for the newly established Directorate General of International Tax Operations.

The FBR designated Chief Commissioner / Commissioner of Inland Revenue to perform as Director General of International Tax Operations. The director general shall have jurisdiction over persons or classes of persons carrying on business or residing in areas, within the territorial jurisdiction of Pakistan.

Similarly, the commissioner of Inland Revenue has been designated as director of International Tax Operations to have jurisdiction over .all persons or classes of persons carrying on business, falling within the jurisdiction of regional tax offices and large tax units.

The FBR also designated assistant and deputy directors of International Tax Operations.

Through Finance Act, 2017 Directorate General of International Tax Operations was established by amending Section 230E of Income Tax Ordinance, 2001.

The section stated:

(l) The Directorate General of international Tax Operations shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.

(2) The Board may, by notification in the official Gazette,

(a) specify the functions and jurisdiction of the Directorate General and its officers; and

(b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.

(3) The functions and powers of the Directorate General of International Tax Operations shall include but not limited to-

(a) receive and send information from other jurisdictions under spontaneous, automatic and on demand exchange of information under exchange of information agreements;

(b) levy and recover tax by passing an assessment order under section I23(1A) in case of undeclared off-shore assets and incomes;

(c) receive, transmit and exchange country reports to the jurisdictions that are parties to international by country agreements with Pakistan; and

(d) conduct transfer pricing audit in cases selected for such audit by the Director General of international Tax Operations.

(4) The Board may, by notification in the official Gazette, specify the criteria for selection of the taxpayer for transfer pricing audit.

Explanation- For the removal of doubt, it is clarified that transfer pricing audit refers to the audit for determination of transfer price at arm’s length in transactions between associates and is independent tax audit under section 177 and 2l4C which is audit of the income tax affairs of the taxpayer.

July 9, 2019
FBR to launch crackdown against non-compliant professionals

KARACHI: Federal Board of Revenue (FBR) will initiate action against professionals including lawyers, doctors and chartered accountants, who are not on the Active Taxpayers List (ATL).

Sources in FBR told PkRevenue.com that Section 114 of Income Tax Ordinance, 2001 explained persons or companies required to file their income tax returns.

The FBR sources said that on the directives of the government the tax machinery had launched massive drive against undocumented economy and tax evasion.

The sources said that professionals had also come under the FBR radar under the ongoing drive.

They said that return filing is a mandatory for a resident person registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.

The sources said that many professionals are working in the undocumented economy and receiving fees without issuing invoices.

Sources in Regional Tax Office (RTO)-II Karachi told that recently survey teams had pointed out many businessmen, doctors, chartered accountants, cost accountants, lawyers and other professionals were not paying taxes as per their income.

The sources said that in some cases investigation had been conducted where professionals were taking huge sum of amount from companies as benefits, besides frequently going abroad.

Some FBR officials told that they had filed suits regarding against decisions of the board and lawyers hired for the cases demanded payment in cash instead banking transactions.

The sources said that the filing of income tax returns has been extended up to August 02, 2019 for all the categories of individuals and companies.

After the expiry of date the FBR will launch mega drive against the non-compliant professionals, the sources added.

July 9, 2019
FBR not to reduce GST below 17 percent on petroleum products

KARACHI: Federal Board of Revenue (FBR) to maintain general sales tax at 17 percent on all petroleum products in coming months as agreed by the Pakistani authorities with the International Monetary Fund (IMF).

Pakistan has committed with the IMF for taking many steps for curbing powers of authorities in issuing statutory regulatory orders (SROs), eliminating exemptions and maintaining GST on petroleum products at 17 percent.

Through SRO 700(I)/2019 dated June 30, 2019, the FBR notified sales tax at 17 percent on supply of all petroleum products for the month of July 2019. The petroleum products are included: petrol, high speed diesel, kerosene oil and light speed diesel oil.

The Letter of Intent (LoI) presented by Pakistan for IMF loan program, the country assured the fund of eliminate the legal authorization for the executive to grant tax exemptions/concessions through Statutory Regulatory Orders (SROs) without prior National Assembly approval.

“We understand that the use of SRO needs to be subject to greater scrutiny and limited discretion. To that end, we have adopted the necessary revisions and amendments to the various relevant tax ordinances to further limit or eliminate the use of SROs to genuine emergencies, in line with best international practices,” according to the LoI.

The authorities have also assured the Fund of refraining from issuing any SRO reducing the GST rate below 17 percent on petroleum products.

For Modernize the Public Finance Management Framework, Pakistan has adopted an organic budget law that will minimize variance in budget authorizations during the year, which shall also require ex-post parliamentary approval, restrict virements, expand the content of annual budget statements, define accounting standards, and provide the legal basis for a well-defined cash management system and establishment of a treasury single account (TSA).

For Enforcing fiscal discipline, this will include strengthening the enforcement mechanism of the FRDLA through aligning the annual report presented by the Minister of Finance (MoF) to the National Assembly with the content and analysis prescribed in the Act. “Also, we will expand the capacity of the MoF for macro-fiscal work. Moreover, proper identification and monitoring of fiscal risks from SOEs, PPPs, IPPs and development projects will be strengthened through the establishment of a fiscal risk unit in the MoF, which will work in coordination with the PPP Authority.

“We are aware that PPP projects, while bringing great benefits, can also be the source of important risks. Thus, we are committed to strengthening the PPP legal framework. To this end, we are conducting a legal analysis of the current system to determine if amendments to the PPP law are required or, alternatively, whether enacting secondary legislation is sufficient, drawing on the expertise of our development partners.

“We will also make sure that proposed financial vehicles such as the Pakistan Infrastructure Bank is created in line with best international governance standards.”

Pakistani authorities informed the Fund about creating a Treasury office that would conduct sound commitment controls and cash management, closely coordinating with the debt management unit.

“We will strengthen the debt management office and will ensure greater coordination across the different relevant units. Elements of this strategy will include centralizing the issuance and management of public debt and developing a new Medium-Term Debt Strategy. To support our consolidation efforts and reduce our financing requirements, we will lengthen the maturity profile of public debt and will introduce new market instruments to widen the investors’ base, also transparently accounting for all borrowing and contingent liabilities.

“We will ensure that any collateralized public external debt or external arrears would be properly accounted.”

July 9, 2019