In a move that could have significant implications for exporters, the Federal Board of Revenue (FBR) is contemplating the prohibition of drawback against goods exported to specified foreign territories.
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The Federal Board of Revenue is Pakistan’s apex tax agency, overseeing tax collection and policies. Pakistan Revenue is committed to providing timely updates on the Federal Board of Revenue to its readers.
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New rates of FED on local, imported motor vehicles
ISLAMABAD: The federal government has proposed enhancement in federal excise duty (FED) on imported and locally assembled vehicles through mini-budget.
The government on December 30, 2021 presented Finance (Supplementary) Bill, 2021 to take tax measures to generate additional revenue for improve fiscal situation of the country. One of the major revenue measure is increasing the FED on imported and locally manufactured motor vehicles.
READ MORE: Mini-budget: FBR to generate Rs4.5bn through tax rate increase on cellular services
Sources said that the Federal Board of Revenue (FBR) had estimated to generate additional Rs6.5 billion through the changes.
According to the changes proposed, the FED on imported completely built unit (CBU) up to 1,000 CC the rate shall be unchanged at 2.5 per cent ad valorem.
READ MORE: Mini-budget: income tax rates proposed for foreign TV dramas
However, CBU imported vehicles between 1001CC to 1799CC the FED has been proposed to enhance to 10 per cent from 5 per cent.
Similarly, the CBU imported motor vehicles between 1800CC to 3000CC the FED has been increased to 30 per cent from 25 per cent.
Likewise, the motor vehicles above 3000CC, the FED has been enhanced to 40 per cent from 30 per cent.
READ MORE: Tax exemptions worth Rs343 billion withdrawn through mini-budget
The FED on locally manufactured motor vehicles has been kept unchanged at zero per cent for engine capacity up to 1000CC.
However, motor vehicles with engine capacity between 1000CC to 2000CC and exceeding 2000CC, the FED has been enhanced to 5 per cent from 2.5 per cent and enhanced to 10 per cent from 5 per cent, respectively.
The Federal Board of Revenue (FBR) said that the FED has been announced to increase to 30 per cent from existing rate of 25 per cent on import of double cabin (4X4) pick-up vehicles.
Similarly, the FED on locally manufactured double cabin (4X4) has been increased to 10 per cent from existing rate of 7.5 per cent.
READ MORE: Mini-budget: Advance tax on motor vehicles doubles
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Pak-Afghan 2nd round talks on DTA concludes
ISLAMABAD: Pakistan and Afghanistan have concluded the second round of talks on double taxation agreement (DTA).
According to a statement issued on Saturday said that Afghanistan Revenue Department (ARD) and Federal Board of Revenue (FBR) concluded second round of negotiations on Double Taxation Agreement (DTA) between Pakistan and Afghanistan.
READ MORE: Power of the Board and Commissioner to call for records
The four-member delegation of Afghanistan Revenue Department (ARD) were on visit to Pakistan, which commenced from December 27, 2021.
The inaugural session was presided over by Qaiser Iqbal, Director General (International Taxes), FBR who welcomed the delegates and hoped that the proposed DTA between the two brotherly countries would go a long way in fostering economic relationships and would also contribute to the development of both the countries.
The negotiations were conducted in the most cordial and friendly atmosphere. Both the delegations discussed all the outstanding issues of the first round of negotiations held in Islamabad from 28th to 30th March, 2016. Both the sides presented and appreciated each other’s respective positions.
However, it was agreed that the un-resolved issues would be discussed and finalized in the third round of negotiations to be held in Kabul, Afghanistan on mutually agreed dates.
The Afghan delegation was led by Esmatullah Salimi, Revenue Audit Director, ARD and included Abdul Wali Noori, Technical Deputy Director-General, ARD, Nida Mohammad Seddiqi, Legal Services Director, ARD and Najeebullah Ahmadzai, Advisor to MoF, while the Pakistan delegation was headed by Qaiser Iqbal, Director General (International Taxes), FBR and included Barrister Nowsherwan Khan, Chief (International Taxes) and Ms. Hira Nazir, Secretary (Tax Treaties & Conventions), FBR.
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FBR collects Rs2.92 trillion in first half of FY22
The Federal Board of Revenue (FBR) has achieved a significant milestone by provisionally collecting Rs2.92 trillion during the first half (July – December) of the fiscal year 2021/2022 (FY22), surpassing the half-year target of Rs2.63 trillion by an impressive Rs287 billion.
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Mini-budget: FBR to generate Rs4.5bn through tax rate increase on cellular services
ISLAMABAD: The Federal Board of Revenue (FBR) may generate additional Rs4.5 billion as advance income tax from cellular services as tax rate has been increased through mini-budget.
The government has increased the withholding tax rates on cellular services to 15 per cent from existing 10 per cent in the mini-budget announced on December 30, 2021.
The increase in advance tax rates on cellular services to generate Rs4.5 billion.
The changes in the withholding tax regime on usage of internet and mobile phones services have been brought through the Finance (Supplementary) Bill, 2021.
The FBR said that through the Finance Act, 2021 federal excise duty (FED) was levied on telecom services. However, telecom companies challenged the duty and got a favourable decision.
“A marginal increase in adjustable advance tax has been proposed from 10 per cent to 15 per cent to make up for revenue loss from telecos,” the FBR added.
The rate of tax has been proposed to increase to 15 per cent from existing 10 per cent for tax year 2022 and eight per cent onwards of the amount of the bill or sales price of internet prepaid card or prepaid telephone card or sale of units through any electronic medium or whatever form from subscriber of internet, mobile telephone and pre-paid internet or telephone card.
The FBR collects the advance tax on telephone and internet users under Section 236 of Income Tax Ordinance, 2001.
According to the ordinance:
“Telephone and internet users.- (1) Advance tax at the rates specified in Division V Part IV of the First Schedule shall be collected on the amount of – (a) telephone bill of a subscriber; (b) prepaid cards for telephones; (c) sale of units through any electronic medium or whatever form ; and (d) internet bill of a subscriber; and (e) prepaid cards for internet.
(2) The person preparing the telephone or internet bill shall charge advance tax under sub-section (1) in the manner telephone or internet charges are charged.
(3) The person issuing or selling prepaid cards for telephones or the internet shall collect advance tax under sub-section (1) from the purchasers at the time of issuance or sale of cards.
(3A) The person issuing or selling units through any electronic medium or whatever form shall collect advance tax under sub-section (1) from the purchaser at the time of issuance of sale of units.
(4) Advance tax under this section shall not be collected from the Government, a foreign diplomat, a diplomatic mission in Pakistan, or a person who produces a certificate from the Commissioner that his income during the tax year is exempt from tax.”
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Mini-budget: income tax rates proposed for foreign TV dramas
ISLAMABAD: The government on Thursday presented a mini-budget and introduced income tax rates for foreign produced TV dramas.
The changes have been proposed through the Finance (Supplementary) Bill, 2021 presented before the parliament. Sources in the Federal Board of Revenue (FBR) said that the imposition of tax on foreign TV dramas would general sizeable revenue.
READ MORE: Mini-budget: Advance tax on motor vehicles doubles
The proposed advance tax rates on foreign TV serials, dramas and advertise are:
— On foreign-produced TV serials @ Rs.1 million per episode
— On foreign-produced TV dramas @ Rs.3 million per production
— On advertisement starring foreign actors @ Rs.0.5 million per second
READ MORE: Tax exemptions worth Rs343 billion withdrawn through mini-budget
In order to apply the tax rates, a new Section 236CA to Income Tax Ordinance, 2001 has been proposed through Finance (Supplementary) Bill, 2021.
Following is the text of the proposed section:
“236CA. Advance tax on TV plays and advertisements. – (1) Any licensing authority certifying any foreign TV drama serial or a play dubbed in Urdu or any other language, for screening and viewing on any landing rights channel, shall collect advance tax at the rates specified in Division XA of Part IV of the First Schedule.
READ MORE: Text of Finance (Supplementary) Bill, 2021
(2) Any licensing authority certifying any commercial for advertisement starring foreign actor, for screening and viewing on any landing rights channel shall collect advance tax at the rates specified in Division XA of Part IV of the First Schedule.
(3) The tax required to be collected under this section shall be minimum tax in respect of income arising from such drama serial or play or advertisement referred to in sub-section (1) or (2) of this section.”
READ MORE: Annual collection of capital gain tax falls by 26%
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Mini-budget: Advance tax on motor vehicles doubles
In a bid to curb the practice of on-money transactions on motor vehicles and boost advance tax revenues, the government has introduced significant changes in the Finance (Supplementary) Bill, 2021, commonly referred to as the mini-budget.
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Annual collection of capital gain tax falls by 26%
Official data reveals a significant decline of 26% in the annual collection of Capital Gain Tax (CGT) from the disposal of securities during the fiscal year 2020/2021.
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FBR deputes officials at jewelry shop for tax monitoring
ISLAMABAD: The Federal Board of Revenue (FBR) has deputed officials of Inland Revenue (IR) at a jewelry shop on suspects of underreporting and non-compliance of integration.
The FBR invoked Section 40B of the Sales Tax Act, 1990, and deputed tax officials at a retail outlet of a leading jeweler in Lahore.
The FBR issued orders for action under section 40B of the Sales Tax Act, 1990 on DAMAS Jewelers, Lahore which is a large retail outlet of gems and jewelry, located on MM Alam Road, Lahore.
READ MORE: Point of sale machines allowed tax credit
The retail outlet was required to integrate with the POS system but despite repeated reminders, it didn’t integrate its business with the Point of Sale System (POS) of FBR. It was prima facie involved in underreporting of the sales, causing substantial loss to the national exchequer.
It is important to mention that FBR has decided to impose Section 40B at retail outlets of Tier-1 retailers which either haven’t integrated with POS system or continue to flout the law by engaging in fraudulent sales despite opting for integration. The law must be implemented by all means possible.
READ MORE: Metro Pakistan integrates point of sale with FBR
Therefore, a team of the Zone-II, Regional Tax Office, Lahore reached the business premises of the Registered Person on 25-12-2021 for action U/S 40B, and started the real-time monitoring of its Sales.FBR will continue with such actions to ensure that the POS integration of all Tier-1 retailers is ensured in letter and spirit.
This innovative digital initiative aims at monitoring real-time sales and thereby making sure that the tax collected from buyers on the point of sales is deposited in the state exchequer.
READ MORE: Persons may be appointed for filing e-return
It is pertinent to mention that FBR has launched a comprehensive campaign on both electronic and print media to educate customers about the scope and significance of the POS system and a lucrative prize scheme worth Rs.53 Million. The lucky 1007 winners will be given away prizes every month through a computer ballot to be held on 15th of every month at FBR Headquarters, Islamabad.
The first lucky draw will be conducted on January 15, 2022.
READ MORE: FBR announces first POS prize scheme draw on Jan 15
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Drawback into use between import and re-export
Section 63 of the Sales Tax Act, 1990, sheds light on the provision of drawback in the form of sales tax repayment for goods that have been utilized between their importation and subsequent re-exportation.
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