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Get the latest FBR news, tax updates, income tax, sales tax, customs, notifications, and policies from the Federal Board of Revenue.

  • FBR advised making declaration of fund source mandatory for foreign remittances

    FBR advised making declaration of fund source mandatory for foreign remittances

    KARACHI: Federal Board of Revenue (FBR) has been advised to make it mandatory the declaration of source of funds for foreign remittances.

    Association of Chartered Certified Accountants (ACCA) in its tax proposals for budget 2019/2020 recommended changes to Section 111(4) of Income Tax Ordinance, 2001 regarding foreign exchange remitted from outside Pakistan.

    The association recommended amendment:

    “to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect … and a declaration along-with evidence of the source of funds.”

    It said that this will continue to promote the inflow of foreign exchange remittances towards the country while stopping the misuse of the provision to whiten/launder black monies and de-incentivizing genuine tax paying businesses.

    “This way, the ‘non enquiry’ clause which has been extensively abused, will be abolished sans the current monetary limit while still retaining the tax relief for foreign exchange remittance.

    The ACCA further said that the minimum tax on turnover is charged irrespective of the net profit or loss.

    This often gives rise to a situation where businesses end up paying double taxes on their revenues and profits as well as loss making businesses facing additional cash-flow pressures by paying this tax.

    The current rate of 1.25 percent applicable generally except for a few sectors, should be brought down to 0.4 percent.

    The now deleted exception in case of a gross loss needs to be reinstated in line with the principles of natural justice and equity.

    This will facilitate the business eco-system contributing to a growth in GPD which can lead to increased revenue collections for the treasury.

    The association further highlighted Section 138 and 140 of the Ordinance regarding recovery of tax through attachment of bank accounts and/or property or arrest.

    It said that currently, the allowance for the commissioner to attach the property of the taxpayer before expiry of notice period on “satisfaction” of the commissioner regarding possible removal, cancellation or disposal of attachable property is misused in many cases to harass the businesses.

    This change can bring an end to this, increase taxpayers’ trust in the tax apparatus and improve the ease of doing business in the country.

    “Any such attachment of any movable/immovable property before expiry of the notice period may only be authorized by the Commissioner in the presence of objective evidence, which should be shared with the taxpayer.”

  • FBR suggested to abolish FTR for commercial importers

    FBR suggested to abolish FTR for commercial importers

    KARACHI: Federal Board of Revenue (FBR) has been suggested to abolish Final Tax Regime (FTR) for commercial importers and other segment of the economy in order to make the taxation system equitable.

    FBR sources said that suggestions had been received from business community and large business houses to eliminate the FTR and presumptive tax regime.

    The sources said that large private sector entities and chartered accountants urged the newly appointed chairman Shabbar Zaidi, who is also a chartered accountant and had represented Institute of Chartered Accountants of Pakistan (ICAP), to status of normal tax regime for commercial importers should be restored.

    The ICAP in its tax proposal for tax year 2019/2020 said that certain sectors/goods are being taxed under the presumptive/value added/ fixed/ final tax regimes.

    Pakistan Business Council (PBC) also said that the presumptive/value added/fixed/final tax regimes are taxing turnover as opposed to income. In addition, entities availing this regime are not required to file tax returns.

    “Under garb of the FTR, massive evasion of customs duties and sales tax are taking place putting the formal sector under undue pressure.”

    The informal economy has outgrown the formal economy and the major driver of this has been the FTR.

    The FBR said that the chartered accountants were strongly supporting elimination of FTR for commercial importers and recommended: “commercial importers status under Normal Tax Regime as introduced through the Finance Act, 2018 should be restored.”

    They said that the presumptive/ value added/ fixed / final tax regime should be replaced with a normal tax regime.

    Income has to be the only basis for taxation and option to exit the tax chain should not be available for whatever reason.

  • FBR recommended imposing environmental tax on industries producing polluting materials

    FBR recommended imposing environmental tax on industries producing polluting materials

    KARACHI: Federal Board of Revenue (FBR) has been suggested to impose environmental tax on industries producing non-renewable and polluting materials.

    Pakistan has a wide range of industries, which are involved in usage and production of nonrenewable, polluting materials that are extremely harmful for our environment.

    “There are many entities, AOPs and sole proprietors who are not taxed because they either do not have taxable income or, they do not intend to disclose it properly while conducting their businesses that are damaging country’s environment,” said Institute of Chartered Accountants of Pakistan (ICAP) in its tax proposals for budget 2019/2020..

    The institute recommended that higher tax should be levied at non-renewable, polluting inputs and outputs, such as coal, automobiles, chlorine, phosphate detergents, chemical pesticides, chemical fertilizers, lead acid batteries and plastic etc.

    “As an incentive, the organizations taking measures to preserve the environment may be made eligible for a tax credit,” it further suggested.

    Pakistan is already lacking behind other developed and developing countries who are taking measures to safeguard their ecosystem.

    “Introduction of this tax and tax credit would not only increase tax revenue and encourage multiple entities to file their return of income in order to avail the tax credit, but Pakistan will also be recognized as a country, which is taking an initiative to safeguard the environment,” ICAP suggested.

  • Restriction on gold purchase by non-filers proposed

    Restriction on gold purchase by non-filers proposed

    KARACHI: Federal Board of Revenue (FBR) has been suggested to restrict non-filers of income tax returns from purchasing gold bars, jewelry and other luxury goods in order to broaden tax net.

    “In addition to the restriction on purchase of immovable property and motor vehicles by non-filers, the punishment should be made even severe by foisting a restriction or imposing an additional charge of tax, on non-filers upon purchase of other luxury goods, including gold bars and jewelry, paintings, antiques, electronics etc.”

    The suggestions were made by Institute of Chartered Accountants of Pakistan (ICAP) in its tax proposals for budget 2019/2020 in order to broaden the tax base and documentation of economy.

    The institute said that the proposed restriction would eradicate the indifference between a filer and non-filer, and giving a sense of benefit to the filers, while non- filers should be penalized heavily.

    Giving recommendations and rationales in this regard it said:

    — Increase withholding income tax and sales tax for non-filers/unregistered persons by 50 percent higher rates; ‘further tax’ on sale to unregistered person should be increased to 5 percent.

    — Extra tax on commercial and industrial utilities connection should be increased to 15 percent for unregistered person.

    — Separate teams should be made and assigned responsibilities to visit the local shops, retail outlets and services providers to verify that proper sales tax invoices are generated and persons are registered with revenue authorities, if not they should be heavily penalized and compulsorily registered.

    — All utility connections amounting to Rs2.4 million or more of non-filers should be forced to get registered by issuance of Show-Cause Notices.

    In case of noncompliance, their utility connections should be disconnected.

    — An additional charge of tax should be foisted on non-filers upon purchase of luxury goods, such as gold bars and jewelry, paintings, antiques, electronics etc.

  • Younus Dagha assigned additional charge of secretary revenue division

    Younus Dagha assigned additional charge of secretary revenue division

    ISLAMABAD: The federal government has assigned additional charge of secretary revenue division to Muhammad Younus Dagha, who is already serving as Secretary Finance.

    A notification issued on Friday by Establishment Division stated that Mohammad Younus Dagha, a BS-22 officer of Pakistan Administrative Service, presently serving as Secretary Finance Division, is assigned additional charge of the post of Secretary Revenue Division for a period of three months or till the posting of a regular incumbent; whichever is earlier, with immediate effect.

    The government a day earlier issued notification to appoint Shabbar Zaidi as the chairman of Federal Board of Revenue (FBR).

    Usually the chairman FBR is by virtue is also secretary revenue division. Since Zaidi has been picked from the private sector and he is not eligible to serve on a bureaucratic post.

    Therefore, the government assigned the additional charge to Mohammad Younus Dagha to serve as secretary revenue division.

  • No bank account freezing without informing taxpayer: FBR chairman

    No bank account freezing without informing taxpayer: FBR chairman

    ISLAMABAD: Shabbar Zaidi, the newly appointed Chairman of the Federal Board of Revenue (FBR), has made a swift impact by issuing new directives aimed at improving transparency and taxpayer relations. In his first major move after assuming office, Zaidi directed that no taxpayer’s bank account would be frozen without prior notice, ensuring that taxpayers are informed at least 24 hours in advance.

    (more…)
  • FBR imposes penalty on lady customs officer for inefficiency, misconduct

    FBR imposes penalty on lady customs officer for inefficiency, misconduct

    ISLAMABAD: Federal Board of Revenue (FBR) has imposed penalty of withholding two annual increments on lady customs official for inefficiency and misconduct.

    The FBR said that disciplinary proceedings under Government Servants (Efficiency & Discipline) Rules, 1973 were initiated against Ms. Razia Sultana Bhutto, Principal Appraiser (under suspension), Model Customs Collectorate of Appraisement (West), Karachi through charge sheet dated September 29, 2017 by the Collectorate for various acts of omission and commission, constituting “Inefficiency”, “Misconduct” and “Corruption”.

    Ammar Ahmad Mir, Deputy Collector, Model Customs Collectorate of Appraisement-West, Karachi was appointed as Inquiry Officer to conduct inquiry into the charges. According to inquiry report dated February 01, 2018 submitted by the inquiry officer, the charges of “Inefficiency” & “Misconduct” were partially established against the accused, however, the Collector /Authorized Officer “exonerated” her from the charges vide Collectorate order dated 06.04.2018.

    The Authority/ Member (Admn), FBR observed that the exoneration of the accused officer was made without any justification, in view of the gravity of charges established against her during the inquiry.

    Therefore, in exercise of powers conferred under Rule-6-A of the Government Servants (E&D) Rules, 1973, the Member (Admn), FBR in his capacity as Authority decided to impose penalty on the accused.

    However, before imposing the penalty, the accused officer was served a Show Cause Notice dated February 21, 2019 as provided under sub-rule-2 of Rule 6-A of the Government Servants (E&D) Rules, 1973.

    The Member (Admn) being the Authority in this case, after having considered all aspects of the case, and in exercise of powers under the Government Servants (E&D) Rules, 1973 has set-aside the office order dated 06.04.2018 of exoneration and imposed the minor penalty of “With-holding of two annual increments” (falling on December 01, 2019 & 2020) upon Ms. Razia Sultana Bhutto, Principal Appraiser under rule 4(1)(a)(ii) of the Government Servants (E&D) Rules, 1973 with immediate effect.

    The official is re-instated into service with immediate effect and the intervening period of her suspension w.e.f March 14, 2017 till re-instatement shall be treated as leave of kind due and admissible under the rules.

  • FBR sets up directorate to initiate legal action in suspicious transactions, stop currency smuggling

    FBR sets up directorate to initiate legal action in suspicious transactions, stop currency smuggling

    ISLAMABAD: Federal Board of Revenue (FBR) has established Directorate of Cross Border Currency Movement (CBCM) to stop individual and trade based money laundering and initiate legal action in suspicious transactions.

    The directorate shall be function under administrative control of the Directorate General of Intelligence and Investigation, Customs, a notification said on Thursday.

    According to its scope and objectives, a database of currency seizures would be maintained and updated at the directorate. Further each Model Customs Collectorate (MCC) and regional directorate of I&I shall report information about currency seizures made within their jurisdiction on fortnightly basis to the directorate.

    The FBR said that the directorate would share the data of currency seizures with the FBR and Financial Monitoring Unit (FMU) on monthly basis or as when required.

    The FBR said that the directorate shall maintain and update database containing information of Suspicious Transaction Reports (STRs) received from the FMU. “The aforesaid data shall be shared with FBR and FMU on monthly basis or as when required,” it said.

    The directorate will require to disseminate the STRs to the concerned regional directorate of I&I for inquiry and investigation. “Each regional directorate shall maintain record of STRs received and appoint officers to carry out investigation in light of the approved plan. “Progress on the investigation conducted in each case shall be communicated to the directorate for onward submission to the FMU,” it added.

    The directorate will also responsible to devise a mechanism for information sharing with other law enforcement agencies (LEAs) on real time as well as on routine basis. The directorate shall also cooperate with LEAs in areas of mutual interest.

    The directorate has been authorized to institute cases of money laundering. “Nominated or appointed investigation officers shall instituted money laundering cases emanating from STRs or currency seizures or from other sources, by filing complaints/applications in the respective competent courts through public prosecutors appointed under AML Act, 2010.”

    The FBR said that investigation and prosecution of the cases would be conducted in accordance with the procedure laid down in AML Act, 2010 Customs Act, 1969 and Cr.P.C 1898.

    While investigating money laundering cases in general and currency cases in particular, investigating officer shall focus on the following aspects:

    a. The personal and / or family association with any religious / political/ social organization or groups, travel history, past criminal record, professional history, etc. of the accused / arrested persons shall be investigated. The motive/linkages of each currency smuggling case with any of the associated offence such as trade- based money laundering, capital flight, Hundi/Hawala, etc. shall also be covered in such investigation.

    b. Whether there is any linkage of terror financing related to trans-national terrorist networks or UN designated entities and individuals detected in the cases the officers will be required to report to the directorate.

    c. Whether there are possibilities of involvement of any foreign networks other than trans-national terrorist networks, the officers should approach Chief International Customs – FBR for seeking information about the foreign linkages of the investigation.

    d. the investigation officers are also required to find source of funding for cash smuggling and the end user of the smuggling proceeds.

  • Notification issued to appoint Shabbar Zaidi as FBR chairman

    Notification issued to appoint Shabbar Zaidi as FBR chairman

    ISLAMABAD: The federal government has appointed Syed Muhammad Shabbar Zaidi as chairman of Federal Board of Revenue (FBR) for the period of two years.

    The establishment division on Thursday issued a notification in this regard.

    The notification said that Shabbar Zaidi has been appointed on honorary basis / pro bono basis, for a period of two years with immediate effect and until further orders.

    Shabbar Zaidi is 26th chairman of the FBR. Zaidi will replace Muhammad Jehanzeb Khan, who was serving as FBR chairman since August 29, 2018.

    Following is the list of FBR chairmen:


     

    1)Mr. Mohammad Jehanzeb Khan29.08.2018  —-
    2)Ms. Rukhsana Yasmin02.07.2018 29.08.2018
    3)Mr. Tariq Mahmood Pasha04.07.2017 02.07.2018
    4)Dr. Muhamad Irshad19.01.2017 30.06.2017
    5)Mr. Nisar Muhammad Khan17.11.2015 18.01.2017
    6)Mr. Tariq Bajwa02-07-2013 17.11.2015
    7)Mr.Ansar Javed10-04-2013 30-06-2013
    8)Mr. Ali Arshad Hakeem10-07-2012 09-04-2013
    9)Mr. Mumtaz Haider Rizvi21.01.2012 10-07-2012
    10)Mr. Salman Siddique24.12.2010 21.01.2012
    11)Mr. Sohail Ahmad18.05.2009 24.12.2010
    12)Mr. Moinuddin Khan02.01.1998 06.11.1998
    13)Mr. Hafeezullah Ishaq11.11.1996 02.01.1998
    14)Mr. Shamim Ahmed28.08.1996 11.11.1996
    15)Mr. Alvi Abdul Rahim13.07.1995 28.08.1996
    16) Mr. Sajjad Hasan24.07.1991 03.10.1991
    17)Mr. Ahadullah Akmal16.08.1990 24.07.1991
    18)Mr. Ghulam Yazdani Khan22.01.1989 11.08.1990
    19)Syed Aitezazuddin Ahmed20.08.1988 02.01.1989
    20)Mr. I.A. Imtiazi11.08.1985 20.08.1988
    21) Mr. Fazlur Rahman Khan14.12.1980 11.08.1985
    22)Mr. N.M. Qureshi12.11.1975 14.12.1980
    23)Mr. M. Zulfiqar01.10.1974 12.11.1975
    24)Mr. Riaz Ahmad17.11.1973 30.09.1974
    25) Mr. M. Zulfiqar11.10.1971 17.11.1973
  • Sales Tax Act 1990: treatment of tax paid by person required to get registration

    Sales Tax Act 1990: treatment of tax paid by person required to get registration

    KARACHI: A person, who is required to be get registration, paid sales tax on goods purchased from a registered person shall be treated as input tax.

    According to updated Sales Tax Act, 1990 issued by Federal Board of Revenue (FBR), the Section 59 explained the treatment of tax paid shall be input tax for a person who purchased goods from a registered person.

    Section 59: Tax paid on stocks acquired before registration

    The tax paid on goods purchased by a person who is subsequently required to be registered under section 14 due to new liabilities or levies or gets voluntary registration under this Act or the rules made thereunder, shall be treated as input tax, provided that such goods were purchased by him from a registered person against an invoice issued under section 23 during a period of thirty days before making an application for registration and constitute his verifiable unsold stock on the date of compulsory registration or on the date of application for registration or for voluntary registration:

    Provided that where a person imports goods, the tax paid by him thereon during a period of ninety days before making an application for registration shall be treated as an input tax subject to the condition that he holds the bill of entry relating to such goods and also that these are verifiable unsold or un-consumed stocks on the date of compulsory registration or on the date of application for registration or for voluntary registration.