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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 sets up Finance Bill 2019 anamoly committee

    FBR sets up Finance Bill 2019 anamoly committee

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday constituted an anamoly committee comprising tax professionals to identify legal flaws in Finance Bill 2019.

    Ashfaq Tola has been nominated chairman of the committee. Hamid Atiq Sarwar, Member IR Policy, FBR has been nominated as vice chairman.

    Other members of the committee are included: Abid Shaban, Zia Awan, Muhammad Awais, Asif Haroon, Abdul Qadir Memon, Amer Javed, Iftikhar Taj and Muhammad Rafique.

    The committee shall it’s report on June 21, 2019.

  • Last date for asset declaration scheme not to be extended: Member IR

    Last date for asset declaration scheme not to be extended: Member IR

    KARACHI: Ms. Seema Shakil, Member Inland Revenue (Operations), Federal Board of Revenue (FBR) on Monday said that date for asset declaration scheme will not be extended due to obligations under IMF loan program.

    “The last date for availing asset declaration scheme is June 30, 2019. There will be no further extension in the last date as the IMF loan program will commence from July 01,” the member said at an even organized by Karachi Tax Bar Association (KTBA).

    She said that present scheme was bargained with the IMF in order to provide people declare their undisclosed cash, assets and supplies before the tax machinery launch massive crackdown.

    Ms. Seema Shakil said that the asset declaration scheme had been launched within short span of 8 to nine months considering bulk of information of Pakistanis having offshore investments received. Besides, information under OECD treaty has also been received to the authorities.

    Further, the FBR notified rules for Benami laws in February 2019 empowering authorities to take action against people having assets in some other names.

    It was demand from the stakeholders to allow such scheme before any harsh action. She said that it was unfair to take action without giving opportunity.

    On the occasion, Zeeshan Merchant, former vice president, KTBA highlighted the major points of the asset declaration scheme.

    He said that the scheme was expiring on June 30, 2019 and people were still trying to understand it.

    He urged the tax authorities to extend the last date for availing the scheme as much of the time had lapsed due to Eid holidays.

    Abdul Qadir Memon, President, Pakistan Tax Bar Association, Rehan Siddiqui, President, KTBA and other senior official of FBR were also present on the occasion.

  • FBR empowered to impose fee, service charges under Customs laws

    FBR empowered to impose fee, service charges under Customs laws

    KARACHI: Federal Board of Revenue (FBR) has been empowered to impose service charges and date of determination of rate of import duty under Customs Act 1969.

    The Finance Bill 2019 has proposed delegation of powers from federal government to the FBR, which included: levy of fee and service charges; date of determination of rate of import duty; date of determination of rate of duty for clearance through the Customs Computerized System; and date for determination of rate of duty on goods exported.

    The bill proposed delegation powers to FBR under Section 18D, 30, 30A and 31 of Customs Act, 1969.

    Presently Section 18D of Customs Act, 1969 states:

    18D. Levy of fee and service charges.- The Federal Government may, by notification in the official Gazette, subject to such conditions, limitations or restrictions as it may deem fit to impose, levy fee and service charges for examination, scanning, inspections, sealing and desealing, valuation check or in respect of any other service or control mechanism provided by any formation under the control of the Board, including ventures of public-private partnership, at such rates as may be specified in the notification.

    Presently Section 30 of Customs Act, 1969 states:

    30. Date of determination of rate of import duty.- The rate of duty applicable to any imported goods shall be the rate of duty in force;

    (a) in the case of goods cleared for home consumption under section 79, on the date on which a goods declaration is manifested under that section; and

    (b) in the case of goods cleared from a warehouse under section 104, on the date on which a goods declaration for clearance of such goods is manifested under that section:

    Provided that, where a goods declaration has been manifested in advance of the arrival of the conveyance by which the goods have been imported, the relevant date for the purposes of this section shall be the date on which the manifest of the conveyance is delivered at the port of first entry:

    Provided further that, in respect of goods for the clearance of which a goods declaration for clearance has been manifested under section 104, and the duty is not paid within seven days of the goods declaration being manifested, the rate of duty applicable shall be the rate of duty on the date on which the duty is actually paid:

    Provided further that in case of the goods illegally removed from the warehouse, the rate of duty shall be the rate prevalent either on the date of in-bonding or detection of case or date of payment of the duty and taxes, whichever is higher:

    Provided further that in case of exercising option for redemption of fine in lieu of confiscation of the goods seized during anti-smuggling operations, the rate of duty shall be the rate prevalent either on the date of seizure or date of payment of duty and taxes, whichever is higher:

    Provided further that the Federal Government may, by notification in the official Gazette, for any goods or class of goods, specify any other date for the determination of rate of duty.

    Explanation:- For the purpose of this section “manifested” means that when a machine number is allocated to goods declaration and is registered in Customs record.

    Presently Section 30A of Customs Act, 1969 states:

    30A. Date of determination of rate of duty for clearance through the Customs Computerized System.- Subject to the provisions of section 155A, the rate of duty applicable to any imported or exported goods if cleared through the Customs Computerized System, shall be the rate of duty in force on;-

    (a) the date of payment of duty;

    (b) in case the goods are not chargeable to duty, the date on which the goods declaration is filed with Customs.

    Provided that where a goods declaration has been filed in advance of the arrival of the conveyance by which the goods have been imported, the relevant date for the purposes of this section shall be the date on which the manifest of the conveyance is filed at the customs-station of first entry:

    Provided further that the Federal Government may, by notification in the official Gazette, specify any other date for the determination of rate of duty in respect of any goods or class of goods.

    Presently Section 31 of Customs Act, 1969 states:

    31. Date for determination of rate of duty on goods exported.- The rate and amount of duty applicable to any goods exported shall be the rate and amount chargeable at the time of the delivery of the goods declaration under section 131:

    Provided that where the export of any goods is permitted without a goods declaration or in anticipation of the delivery of such a declaration, the rate and amount of duty applicable shall be the rate and amount chargeable on the date on which loading of the goods on the outgoing conveyance commences:

    Provided further that the Federal Government may, by notification in the official Gazette, for any goods or class of goods, specify any other date for determination of the rate of duty.

  • Commissioners IR empowered to conduct audit of taxpayers every year

    Commissioners IR empowered to conduct audit of taxpayers every year

    KARACHI: Commissioners of Inland Revenue have been empowered to conduct audit of a registered taxpayer every year after removal of restriction through Finance Bill 2019.

    Through Finance Act, 2018 a restriction was imposed on offices of the Federal Board of Revenue (FBR) under which they would conduct audit of taxpayers once in every three years.

    However, the Finance Bill 2019 proposed to delete the proviso which was introduced through Finance Act last year.

    Experts at EY Ford Rhodes Chartered Accountants said that certain taxpayers challenged the audit proceedings under Section 25 where sales tax audit had already been conducted during any of the last three years on the premise that the amendment introduced through the Finance Act, 2018 was procedural change in law and was applicable retrospectively.

    Recently, the Honorable Lahore High Court has adjudged the matter in favor of the taxpayer. It appears that the proposed deletion of the third proviso to Section 25 will neutralize the judgment of the Honorable Lahore High Court.

  • Finance Bill 2019: Money withheld of persons not appearing on ATL to be treated as unexplained

    Finance Bill 2019: Money withheld of persons not appearing on ATL to be treated as unexplained

    ISLAMABAD: The government has taken harsh stance against persons having taxable income but not on the tax roll.

    In this regard the law has been introduced under which persons not appearing on the Active Taxpayers List (ATL) and their amount withheld on transactions will be treated as unexplained.

    Commissioners of Inland Revenue, Federal Board of Revenue (FBR) have been empowered to make assessment of income of such persons and issue notices.

    A budget commentary issued by EY Ford Rhodes Chartered Accountants said that the concept of filers and non-filers was introduced in the Ordinance through the Finance Act, 2014.

    Through this concept a distinction was created between person who duly filed their tax returns and the remaining persons who were considered non-filers.

    The basic intention of the legislature was to obtain documentation and compel the non-filers to become registered tax filers.

    Over the years, major distinction was introduced in the rates of tax withholding under various sections of the Ordinance to make the non-filers suffer heavy withholding of tax so that they may be compelled to ultimately come within the tax net and file proper declaration of their tax returns with FBR.

    However, over the last five years, it has been observed that the percentage of increase in tax filers has not been significant and the numbers of tax filers is still quite low as compared to other comparable economies.

    The present government has been talking about broadening of the tax base more strongly and the Prime Minister himself has on many occasions indicated his strong desire to significantly broaden the tax base.

    It is now proposed to enact a separate schedule in the Ordinance to deal with persons who are not on the ATL i.e. who are not in the tax net and are not filing their declaration so far.

    In this connection, Section 100BA has been proposed which governs the collection or deduction of advance income tax, computation of income and tax payable by such persons.

    The Tenth Schedule generally provides that where ever tax is required to be deducted or collected under any provisions of the Ordinance from a person whose name is not appearing in the ATL, the rate of withholding will be doubled in case of deduction or collection from such persons.

    However, the schedule provides exception in case of the following payments –

    (1) Salary;

    (2) Payment to non-residents other than on account of royalty, fees for technical service, insurance premium

    (3) Payment to a Permanent Establishment in Pakistan of a non-resident person other than on account of providing services or contract or any general payment to a non-resident.

    (4) Payment on account of exports

    (5) Tax deductions from payment of rent

    (6) Tax deductions from withdrawal of balance from pension funds

    (7) Tax collection from cash withdrawal from a bank

    (8) Tax collection on banking transactions

    (9) Collection of tax by NCCPL

    (10) Collection of tax on domestic or commercial electricity consumption

    (11) Tax collection from steel melters

    (12) Purchase of air tickets

    (13) Functions and gatherings

    (14) Cable operators

    (15) Educational institutions

    (16) Dealers and commission agents

    (17) Purchase of international air tickets

    (18) Non-cash banking transactions

    (19) Payment for use of machinery and equipment

    (20) Remittance of education related expenses

    (21) Extractions of minerals

    (22) Tobacco

    The Schedule seeks to provide a mechanism where a withholding agent is satisfied that the person not appearing in the ATL is not required to be a tax filer and hence the deduction of tax should not be attracted from payments to such persons.

    In such a situation, the payer would be required to furnish an application to the Commissioner in writing electronically providing the details of the person from whom he intends not to collect tax, giving details about the payee and the nature of payment and the basis on which he is not liable to be a tax filer.

    The Commissioner on such application would decide the matter within 30 days and direct the payer accordingly.

    Assessment of such person

    — The Schedule requires the Commissioner to undertake a provisional assessment of the person from whom tax has been withheld under the Schedule but he has failed to file the return of income within the prescribed time or extended time.

    — The provisional assessment is proposed to be carried out within 60 days of the due date of filing of return. The income of such person in such a case shall be imputed on the basis of tax that has been withheld at source and shall be treated as un-explained income.

    — Once the provisional assessment has been finalized and served on such person, he can file a return of income within 45 days of the service of the provisional order. In which case the provisional assessment shall stands abated.

    — If a return of income is not filed within 45 days of service of order of provisional assessment, then such assessment is to be treated as final assessment order. In such a case the Commissioner is also proposed to be empowered to pass an order within 30 days of finalization of assessment for imposition of penalty on account of non-furnishing of return and concealment of income.

    — The Schedule also seeks to empower the Commissioner to amend an assessment on the basis of definite information from an audit or otherwise.

    Consequent to the proposed enactment of the Schedule, to withdraw concept of filers and non-filers from various provisions of the Ordinance, several amendments have been proposed in various withholding provisions to remove reference to Filer and non-Filer.

    Similarly the restrictions introduced on purchase of immovable property and moveable property on Non-filers in Section 227C are also proposed to be abolished.

  • Finance Bill 2019: Law prohibits FBR officials from taking action against amnesty declarants

    Finance Bill 2019: Law prohibits FBR officials from taking action against amnesty declarants

    ISLAMABAD – The Federal Board of Revenue (FBR) has formally restricted its officials from initiating any proceedings against individuals who availed the Tax Amnesty Scheme under the Assets Declaration Act, 2019.

    (more…)
  • Customs initiates examining exporters to check under-invoicing, mis-declaration

    Customs initiates examining exporters to check under-invoicing, mis-declaration

    KARACHI: Pakistan Customs has initiated examination of exporters’ profiles to check mis-declaration and under-invoicing for plugging revenue leakages.

    A statement said on Friday that the chairman of Federal Board of Revenue (FBR) Shabbar Zaidi had directed to identify the extent of mis-invoicing in export declarations in order to ascertain the suspected items or sectors and destinations for such mis-declaration, and to categorize exporters on the basis of risk profiling by segregating compliant exporters from those engaged in mis-invoicing.

    The Customs Operations wing has tasked the Director General Customs Valuation to submit a report in this regard.

    It has been further directed to develop a risk based system to intercept this trend without compromising export facilitation. Punitive action shall be taken against unscrupulous exporters under the proposed Section 32 C of the Customs Act, 1969 and the allied laws.

    This initiative has arisen in the backdrop of reports indicating mis-invoicing in exports, which includes under-invoicing resulting in loss of remittance of forex and over-invoicing used to transfer excessive funds abroad.

    Under-invoicing could be used also possibly as a mechanism for trade-based money laundering. One of the suspected methods used in under-invoicing in exports is through the medium of via port cargo.

    Export cargoes are mis-declared by under-invoicing the values of export commodities, and shipped to a via port wherein new declaration with actual values are re-shipped for a final destination.

    As a consequence, lesser amount of foreign exchange is remitted to Pakistan and a major portion of export proceeds is retained in the other country.

  • World Bank approves $518 million for Pakistan’s efforts to raise domestic revenue

    World Bank approves $518 million for Pakistan’s efforts to raise domestic revenue

    ISLAMABAD: The World Bank on Friday approved a package of $518 million for two projects in support of Pakistan’s ambitious efforts to raise revenue and reduce compliance cost with a goal of providing better services to the people.

    The $400 million Pakistan Raises Revenue Project will support the Federal Board of Revenue’s (FBR) focus to create a sustainable increase in Pakistan’s domestic tax revenue. The project will assist in simplifying the tax regime and strengthening tax and customs administration. It will also support the FBR with technology and digital infrastructure and technical skills. This will enable more effective use of taxpayer information and more targeted compliance. The Government has set improving tax revenue with low compliance costs as a high priority.

    “Revenue mobilization plays an essential role in Pakistan’s fiscal sustainability,” said Muhammad Waheed, Task Team Leader of the Project. “The project will target raising the tax-to-GDP ratio to 17 percent by financial year 2023-2024 and widening the tax net from the current 1.2 million to at least 3.5 million active taxpayers.”

    Pakistan’s revenue performance has improved significantly from tax policy measures in recent years, rising from 9.5 percent of GDP in financial year 2011-2012 to 12.9 percent in financial year 2017-2018. This is still lower than the level needed by developing countries, of at least 15 percent of GDP, to fund basic government functions and provide services to people.

    “Creating fiscal space through revenue mobilization is critical to reduce the country’s budget deficit, enabling people of Pakistan to benefit from better public investments and services,” said Illango Patchamuthu, World Bank Country Director for Pakistan.

    The $118 million Khyber Pakhtunkhwa Revenue Mobilization and Public Resource Management Project will support the Government of Khyber Pakhtunkhwa to increase its capacity for revenue collection and the management of the province’s resources. The project is anchored in the provincial government’s Public Financial Management Strategy (2017-2020) and will strengthen the government’s Public Financial Management system.

    While the government of Khyber Pakhtunkhwa has made progress in revenue mobilization and management of public finances, its revenues remain low. Enhancing the tax revenue could increase its capacity to provide better services to residents. It will also reduce its dependence on federal transfers, which accounted for 86 percent of provincial revenue in the financial year 2016-2017.

    “Mobilizing domestic revenue is crucial to improving human development outcomes in Khyber Pakhtunkhwa,” said Raymond Muhula, Task Team Leader of the Project. “This project will support the government’s priority to increase its own source revenue and to better manage its resources.”

  • FBR asks police to provide agreements of rented properties

    FBR asks police to provide agreements of rented properties

    KARACHI: Federal Board of Revenue (FBR) has issued notices to police stations to acquire information about rented residential and commercial properties located in Karachi.

    The notices have been sent to Station House Officers (SHOs) under Section 176 of the Income Tax Ordinance, 2001 to provide the information of rented houses and commercial premises.

    The FBR asked the SHOs to provide information of rented agreements including address of premises, rental agreement and type of properties such as commercial or residential, according to a copy of notice made available to PkRevenue.com.

    The notices have been sent by Broadening of Tax Base (BTB) Wing of Regional Tax Office (RTO)-II Karachi stating that in terms of Section 176 of the Income Tax Ordinance, 2001, the SHOs are required to furnish such information as may be required by the commissioner Inland Revenue or an authorized person relevant to any tax leviable under the Ordinance.

    It further said that as per Section 3 of the Sindh Information of Temporary Residents Act, 2015, the property dealer, landlord and tenant, shall, within 48 hours from the time of delivery of possession of the rented property premises to the tenant, provide information about the tenant to the policy through the fastest means of communication.

    The RTO-II asked police to provide required information by June 17, 2019. The tax office also warned of imposing penalty for non-compliance.

  • FBR warns of harsh action against undeclared assets from July 01

    FBR warns of harsh action against undeclared assets from July 01

    ISLAMABAD: Federal Board of Revenue (FBR) on Thursday warned people of harsh action for possessing undeclared assets from July 01, 2019.

    The revenue body said that those people having undeclared cash, assets and expenditures should declare by availing tax amnesty scheme.

    FBR reiterates that the closing date for Assets Declaration Scheme is 30th June, 2019.

    Therefore, it is advised to the persons intending to avail this scheme to ensure that the following reliable data relating to undeclared and undisclosed assets and expenditure is available with FBR:

    a) Data of industrial and commercial gas and electricity consumers from various DISCOs and gas distribution companies has been procured to identify the persons who are chargeable to tax but have not been paying their due taxes.

    b) That there is complete cooperation between the banks and the FBR on the availability of data relating to withholding taxes and other relevant information especially related to non-filers.

    c) That FBR in collaboration with NADRA is providing access to the concerned persons (confidentially) for the transactions undertaken in the past in order to let the people know the transactions undertaken by them. This data will be available through secure channels from NADRA on demand subject to certain fee.

    d) That it is planned that bearer certificates such as bearer prize bonds will be converted into registered prize bonds over a period of time as specified by the State Bank of Pakistan in coming months.

    e) FBR is in contact with the land record authorities and relevant District Collectors with regard to shops and establishments for identifying the business establishments within their respective areas.

    f) That administrative setup is being placed for operation of the Benami Law and it is expected to be fully operational from July 1, 2019.

    In the light of the aforesaid points, it is advised that the concessions and benefits laid down in the Scheme be availed.

    Furthermore in the Finance Bill 2019 it has been further reassured that no proceedings will be initiated against persons who declare their assets under the Assets Declaration Scheme and complete confidentiality shall be maintained with respect to assets declared in the scheme.