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Tag: Federal Board of Revenue

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.

  • FBR invites income tax proposals for budget 2021/2022

    FBR invites income tax proposals for budget 2021/2022

    ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday invited income tax proposals for budget 2021/2022 and asked stakeholders to submit the same by February 15, 2021.

    The FBR asked the tax offices, including Large Taxpayers Offices (LTOs), Medium Tax Offices (MTOs), Corporate Tax Offices (CTOs) and Regional Tax Offices (RTOs), and trade and industries that the proposals should focus on broadening the tax base for a wide participation in revenue generation efforts.

    The FBR advised that suggestions should in the following policy areas:

    Broadening of tax base for a wider participation in revenue generation efforts;

    Taxation of real income on progressive basis;

    Phasing out of tax concessions and exemptions;

    Removal of tax distortions and anomalies;

    Facilitation of taxpayers and ease of doing business;

    Promoting equity in taxation by introducing measures where incidence of tax is higher on affluent classes.

    The stakeholders have been asked to provide proposals in a prescribed formation that should include relevant sections/clauses or rules where amendment is sought. The proposals related to any section of Income Tax Ordinance, 2001 or any rule to Income Tax Rules, 2002 should be presented along with rationale and revenue impact.

  • FBR attributes export growth to incentives, facilitation

    FBR attributes export growth to incentives, facilitation

    ISLAMABAD:  Federal Board of Revenue (FBR) on Wednesday said that the significant growth in export was mainly due to integrated strategy for duty and tax incentives and other facilitation.

    The FBR has devised an Integrated Strategy which has amply contributed to significant increase in exports of Pakistan from $1.6 billion (in August, 2020) to $2.4 billion (in December, 2020).

    Growth in exports of Pakistan in December, 2020 is up by 18.3 per cent as compared to $1.993 billion in the corresponding month last year.

    While mentioning factors that have facilitated growth in exports, FBR has stated that Import duties on 1,623 tariff lines, pertaining to basic raw material and intermediate goods were reduced to zero through the Finance Act, 2020.

    In pursuance of this strategy, additional customs duties and regulatory duties on 164 items related to textile sector, not manufactured in the country, were also removed in collaboration with all the stakeholders.

    All these measures were undertaken with the objectives of neutralizing adverse impact of COVID 19 Pandemic, especially for the exporters, and to make their products competitive vis-à-vis those of their competitors in the international market.

    Under the initiative of “Make in Pakistan”, the Duty Drawback rates for at least eight (08) sectors were revised upwards by FBR. During the whole exercise, more than 434,000 claims were disposed of and approximately 7800 exporters have benefited from this Initiative.

    Similarly, FBR has paid ninety (90) percent more refunds of Sales Tax during July-December, 2020 as compared to the corresponding period last year.

    This led to significant rise in volumes of exports in the form of increase in TEUs (i.e. Tonnage Equivalent Units) / Containers from 35,477 in July, 2020 to 62,591 in December, 2020, showing a growth of 43 percent.

    In order to tangibly contribute to exports, all the Export Facilitation Schemes were simplified / rationalized for their optimal use by the exporters.

    First of all, extension in utilization period of different export facilitation schemes was allowed for a period of one year from 01st March, 2020 to 28th February, 2021.

    Secondly, retention period for plant and machinery, under the Export Oriented Units Scheme, was reduced from 10 years to five years.

    Thirdly, for the prompt redressal of grievances, one administrative tier is reduced (under Duty and Taxes Remission for Export Scheme and Manufacturing Bond Scheme) and Regulatory Authority is created to facilitate the exporters.

    Moreover, the investors in Export Processing Zones have been facilitated in payment of duties/taxes on the disposal of machinery in the tariff area.

    These facilitation measures have led to increase in number of exports Goods Declarations (GDs) from 71,190 in July, 2020 to 79,756 in December, 2020, posting an increase of 11 percent.

    In the same vein, total number of Exports Goods Declarations (GDs) (from 1st July, 2020 to 31st December, 2020), remained at 408,472 vis-à-vis 333,943 during 1st January, 2020, showing an increase of 18 percent.  

    To realize the objective of facilitation / promotion of exports, an automated system of filing the claim to the final sanctioning of Duty Drawback Claims for the payment of Duty Drawback Claims to the exporter was rolled out on 1st October, 2020. As a matter of fact, export Goods Declaration filed in Customs WeBOC system is being considered as the Duty Drawback Claim. State Bank of Pakistan credits the system sanctioned payments in the accounts of exporters online directly.

    In addition to the said automation initiative, Green Channel clearances of the exports GDs / Consignments were increased from 74 percent in July, 2020 to 77.3 percent in December, 2020.

    Similarly, for speedy payment of Sales Tax refunds to exporters, FASTER PLUS System has been implemented.

    FBR has also removed regulatory duty on import of cotton yarn, till 30th June, 2021, which is a basic raw material for the value-added textile industry of Pakistan.

    Being committed to the national goal of increase in exports, Federal Board of Revenue is making all out efforts to assist exporters by continuously making improvements in its laws and procedures.

  • FBR issues AML/CFT guidelines for accountants to comply with FATF conditions

    FBR issues AML/CFT guidelines for accountants to comply with FATF conditions

    KARACHI: Federal Board of Revenue (FBR) has issued guidelines for accountants related to Anti-Money Laundering (AML)/Counter Financing of Terrorism (CFT) laws to comply with conditions of Financial Action Task Force (FATF).

    The guidelines have been prepared jointly by Pakistan’s three designated AML/CFT supervisors of accountants in Pakistan, namely The Institute of Chartered Accountants of Pakistan (ICAP), the Institute of Cost and Management Accountant of Pakistan (ICMAP) and the FBR.

    Accountants are only subject to AML / CFT measures if they provide the specified activities or services as defined in the Anti Money Laundering Act (AMLA) Sections 2 (xii) (c) (d).

    All accountants, therefore, should review Section 4 in the Guidelines to determine whether they provide the specified services, and if so, what are the AML / CFT requirements, and how to implement the requirements.

    These are further explained in Sections 5 to 12 of the Guidelines.

    The Guidelines are focused on AML / CFT measures such as risk assessment, AML / CFT programme, CDD, beneficial ownership, politically exposed persons, targeted financial sanctions, Suspicious Transaction Report (STR), Currency Transaction Report (CTR) and record keeping. Those measures are further explained in the Guidelines.

    The guidelines do not add new regulatory requirements upon accountants.

    The guidelines do not address the broader criminal conduct associated with those who engaged in, or aid or abet those engaged in money laundering (ML) or terrorism financing (TF). Those criminal offences under the AMLA and other laws apply to all persons’ subject to Pakistan’s laws.

    In addition to the AMLA, the three main regulations referred to in the Guidelines are:

    The Anti-Money Laundering and Combating Financing of Terrorism Regulations for Cost and Management Accountants Reporting Firms (SRB AML / CFT Regulations for Reporting Firms)

    The Anti-Money Laundering and Combating Financing of Terrorism Regulations for Chartered Accountants Reporting Firms (SRB AML / CFT Regulations for Reporting Firms)

    The Federal Board of Revenue Anti-Money Laundering and Combating Financing of Terrorism Regulations for Designated Non-Financial Businesses and Professions (FBR AML / CFT Regulations for DNFBPs)

    AML / CFT Sanction Rules 2020 SRO NO 950(I)/2020 (AML / CFT Sanction Rules)

    Both the ICAP and ICMAP, as Self-Regulatory Bodies (SRBs), have been designated by Federal Government pursuant to AMLA (Section 6A) as AML / CFT regulatory authorities.

    To avoid repetition and any perceived favouritism, and purely for the purposes of the Guidelines, the two professional bodies will be referred to as “SRBs” and their AML / CFT regulations collectively referred to as the “SRB AML / CFT Regulations for Reporting Firms”. Except for the name of the SRB, the two regulations are identical.

    The FBR AML / CFT Regulations for DNFBPs are very similar to the SRB AML / CFT Regulations for Reporting Firms. However, they are not identical in terms of numbering and there are sector specific requirements covering other DNFBPs that are not applicable to accountants (accountants licensed by ICAP and ICMAP). For these reasons, they are referred separately in the Guidelines.

    The FATF Recommendations of specific concerns to accountants are those covering DNFBPs. DNFBPs include the following:

     Casinos

     Real estate agents

     Dealers in precious metals and stones

     Trust and company service providers

     Lawyers, notaries, other independent legal professionals and accountants – when they prepare for or carry out transactions for their customer concerning the following activities:

    — buying and selling of real estate;

    — managing of customer money, securities or other assets;

    — management of bank, savings or securities accounts;

    — organization of contributions for the creation, operation or management of companies;

    — creation, operation or management of legal persons or arrangements, and buying and selling of business entities.

    FBR explains accountant as sole practitioners, partners or employed professionals within professional firms when they prepare for or carry out transactions for their client concerning the following activities:

    Accountancy services – when carryout monetary transactions for their customers concerning the following activities:

    (I) managing, operating, buying and selling of real estate, legal persons and legal arrangements and preparing documents therefore;

    (II) managing of client money, securities or other assets;

    (III) managing bank, savings or securities accounts; or

    (IV) organizing contributions for the creation, operation or management of companies

    Trust and company formation services – when they carry out monetary transactions or services for a client concerning the following activities:

    (I) acting as a formation agent of legal persons;

    (II) acting as or arranging for another person to act as a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal persons;

    (III) providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other legal person or arrangement;

    (IV) acting as or arranging for another person to act as a trustee of a trust or performing the equivalent function for another form of legal arrangement; or

    (V) acting as or arranging for another person to act as a nominee shareholder for another person.

  • Defaulting sales tax payment may liable to three-year jail

    Defaulting sales tax payment may liable to three-year jail

    ISLAMABAD: A person fails to pay sales tax within due date or to comply with recovery order is liable to certain fine and penalty under Sales Tax Act, 1990, officials in Federal Board of Revenue (FBR) said on Tuesday.

    Any person who fails to deposit the amount of tax due or any part thereof in the time or manner laid down under Sections 3, 6, 7 and 48 of this Act or rules or orders made there under:

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

    “Provided that, if the amount of tax or any part thereof is paid within ten days from the due date, the defaulter shall pay a penalty of five hundred rupees for each day of default:

    “Provided further that no penalty shall be imposed when any miscalculation is made for the first time during a year:

    “Provided further that if the amount of tax due is not paid even after the expiry of a period of sixty days of issuance of the notice for such payments by an officer of Inland Revenue, not below the rank of Assistant Commissioner Inland Revenue, the defaulter shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to amount equal to the amount of tax involved, or with both. “

  • Rules notified for taxpayers profile update

    Rules notified for taxpayers profile update

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday notified rules for making it mandatory for taxpayers to update their profiles through IRIS portal.

    The FBR issued SRO 13(I)/2021 dated January 08, 2021 to amend Income Tax Rules, 2002. Through the SRO the FBR notified online format for taxpayers to update profile.

    Previously, the FBR issued SRO 1341(I)/2020 on December 16, 2020 for notifying draft rules related to taxpayers profile update.

    A new rule 34B has been proposed for taxpayer’s profile. The FBR said that this rule shall apply for the purpose of section 114A of the Income Tax Ordinance, 2001, which provides for the furnishing of a taxpayer’s profile.

    A taxpayer’s profile shall be filed electronically on the prescribed format and manner as provided on IRIS web portal.

    The taxpayer’s profile shall be verified in the manner specified on IRIS web portal.

    Through Finance Act, 2020 a new section 114A was inserted to Income Tax Ordinance, 2001 for making it mandatory for taxpayers to update their profile.

    Following is the text of Section 114A:

    Section 114A: Taxpayer’s profile.

    (1) Subject to this Ordinance, the following persons shall furnish a profile, namely:-

    (a) every person applying for registration under section 181;

    (b) every person deriving income chargeable to tax under the head, “Income from business”;

    (c) every person whose income is subject to final taxation;

    (d) any non-profit organization as defined in clause (36) of section 2;

    (e) any trust or welfare institution; or

    (f) any other person prescribed by the Board.

    (2) A taxpayer’s profile-

    (a) shall be in the prescribed form and shall be accompanied by such annexures, statements or documents as may be prescribed;

    (b) shall fully state, in the specified form and manner, the relevant particulars of –

    (i) bank accounts;

    (ii) utility connections;

    (iii) business premises including all manufacturing, storage or retail outlets operated or leased by the taxpayer;

    (iv) types of businesses; and

    (v) such other information as may be prescribed;

    (c) shall be signed by the person being an individual, or the person’s representative where section 172 applies; and

    (d) shall be filed electronically on the web prescribed by the Board.

    (3) A taxpayer’s profile shall be furnished,-

    (a) on or before the 31st day of December, 2020 in case of a person registered under section 181 before the 30th day of September, 2020; and

    (b) within ninety days registration in case of a person not registered under section 181 before the 30th day of September, 2020.

    (4) A taxpayer’s profile shall be updated within ninety days of change in any of the relevant particulars of information as mentioned in clause (b) of sub-section (2).

    The FBR on December 30, 2020 extended the last date for updating taxpayers profile up to March 31, 2021.

  • Taxpayers urged to use electronic payment facility

    Taxpayers urged to use electronic payment facility

    ISLAMABAD: Federal Board of Revenue (FBR) has urged the taxpayers to avail electronic mode of payment for duty and taxes. The e-payment facility has been introduced for convenient and hassle free payment, said a statement issued on Monday.

    In continuation of FBR reforms and modernization drive, E-Payment facility for payment of all FBR taxes as well as some provincial taxes has been introduced for convenient and hassle free payment.

    On the one hand, traders can electronically pay all import duties and taxes through Customs computerized system WeBOC at ports and border stations across Pakistan.

    While on the other hand, taxpayers can also electronically pay income tax, sales tax and Federal Excise duty sitting in their homes.

    E-Payment system provides round the clock facility to taxpayers and traders to make online payment of customs duties and other FBR taxes as well as provincial cess and stamp duty.

    The facility is available through internet and mobile banking by using more than 15000 ATMs of 16000 Over the Counters (OTC) bank branches of commercial banks spreading across the country.

    The taxpayers’ confidence and interest in E-payment is growing fast and it can be gauged from the fact that the proportion of number of E-payments of Income Tax, Sales Tax and Federal Excise Duty has increased from 6.26 percent of total payments during July to December 2019 to 40.5 percent during same period of 2020.

    Similarly the proportion of amount deposited in these E-payments has increased from 13.55 percent of total payments to 76.5 percent during the comparative periods.

    E-payment facility has greatly helped the traders and other taxpayers’ during the COVID pandemic since all transactions can be completed without physical interaction.

    Currently 18.6 percent of import duties and taxes are being collected by Pakistan Customs through E-Payment system. More than 80,000 consignments consisting of nearly 22 percent of total imports were cleared in WeBOC through E-Payment in the last 6 months.

    Apart from major Customs stations including Karachi, Lahore, Islamabad and Peshawar, the facility is also being availed by importers in remote areas like Taftan and Khunjerab.

    FBR urges the traders and other taxpayers to utilize E-Payment facility as it reduces their cost of doing business and contributes significantly towards improving the ease of doing business.

    It also expedites the clearance of goods, enhances transparency in the duty payment mechanism and ensures timely revenue reconciliation. Acknowledging E-payment as a major step towards trade facilitation, World Trade Organization’s Trade Facilitation Agreement also promotes the use of electronic payment methods amongst the traders.

    FBR has launched an awareness campaign to enhance the use of E-payment facility. In this regard, a number of seminars have been conducted to educate trade bodies and Customs Agents about the benefits of E-Payment. The traders can also take benefit of the FAQs section relating to E-payment available on the WeBOC web page.

  • Income tax return filing touches new peak at 3.03 million

    Income tax return filing touches new peak at 3.03 million

    ISLAMABAD: Income tax return filing hit record high at 3.03 million for tax year 2019, according to weekly Active Taxpayers List (ATL) updated on Monday.

    The FBR issued the weekly ATL – 2019 updated on the basis of returns filed up to January 10, 2021.

    The ATL-2019 will remain applicable till February 28, 2021 as the FBR will issue new ATL for tax year 2020 on March 01, 2021.

    The return filers including salaried persons, business individuals, Association of Persons (AOPs) and companies can check their names on the ATL by visiting How to check ATL status?

    The filing of income tax return is mandatory for persons driving taxable income or specified under Section 114 of Income Tax Ordinance, 2001.

    The appearance of names on the ATL is only possible after filing income tax returns within due date. In case persons are not on the ATL then the rate of withholding tax shall be increased by 100 percent on various transactions.

    Persons fail to file their returns by due date but file after the date will also not qualify to enlist their name on the ATL until fine is not paid to the Federal Board of Revenue (FBR).

    A taxpayer should check his/her status on the ATL before making transactions in order to avail reduced rate of tax rates.

  • FBR launches mega crackdown against illegal petrol pumps

    FBR launches mega crackdown against illegal petrol pumps

    ISLAMABAD: Federal Board of Revenue (FBR) has launched massive crackdown against illegal petrol pumps from Monday (January 11, 2021) on the directives of Prime Minister Imran Khan.

    Prime Minister Imran Khan in a recent meeting directed the FBR and relevant authorities to initiate harsh action illegal petrol pumps selling smuggled petroleum products.

    The FBR in this regard wrote letters to Chief Secretaries of all the provinces, chairman Oil and Gas Regulatory Authority (OGRA), Inspector General of all the provinces and chief collectors of Pakistan Customs about initiating the crackdown from January 11, 2021.

    The FBR is going to launch action including on-ground checking and scrutiny of requisite documentary enforcement team during operation with the help of Pakistan Customs, District Administration, Police etc.

    A FBR notification said that during the course of operation the enforcement teams would enquire from the owner/manager of the retail outlet to present following documents:

    1. Oil Marketing Companies (OMC) authorization/dealership
    2. Form-K

    In case of non-production of requisite documents, following further steps shall be taken by the team:

    1. Failure to produce both these documents shall render the outlets ‘illegal and unauthorized’ and the POL products present there shall be deemed to have been smuggled or illegally acquired as per The Customs Act, 1969, The OGRA Ordinance, 2002 and Rules made thereunder.
    2. Inventorization of POL will be carried out as per details given in para 6.
    3. Customs officials shall serve the owner/manager of the POL outlet notices under Section 3(kk) and Section 26 of the Customs Act, 1969 to bring forth any legal document establishing the legality of the sale outlet within 7 days.
    4. In case, no one is available at the premises, the notices shall be posted on the doors/walls of the office/building.
    5. After service of notice under Section 2(kk), the POL products will be deemed ‘detained’ pending production of requisite documents by the owner, if any and its verification by customs.
    6. The illegal POL outlet will be sealed by District Administration as per para 5(c) and Police force shall be deployed immediately to safeguard the detained goods and premises till the finalization of the proceedings.

    In case, the process of documentary scrutiny or in the absence of any lawful document, confirms that the petrol pumps, outlet is illegal, the district administration shall seal the premises of the petrol pump under Section 43A of Pakistan Petroleum (Refining, Blending and Marketing) Rules, 1971 made by Minister of Petroleum.

    In case, if the premises of illegal outlet has been closed or found abandoned but it has been used previously as illegal petrol station, the same shall be sealed and the owner/manager shall be proceeded against by District Administration for violation of The Petroleum Act, 1934, the OGRA Ordinance, 2002 and Rules made thereunder.

  • Three years imprisonment for sales tax registration failure

    Three years imprisonment for sales tax registration failure

    ISLAMABAD: A person who makes taxable supplies but fails to get sales tax registration shall be liable to pay fine and penalties besides the person is also liable to imprisonment up to three years.

    Sources in the Federal Board of Revenue (FBR) said that the tax offices had launched operations to identify persons making taxable supplies but are not in the sales tax net.

    The sources said that under Sales Tax Act, 1990, any person who is required to apply for registration under the Act fails to make an application for registration before making taxable supplies:

    “Such person shall pay a penalty of Rs10,000 or five percent of the amount of tax involved, whichever is higher;

    “Provided that such person who is required to get himself registered under this Act, fails to get registered within sixty days of the commencement of taxable activity, he shall, further be liable, upon conviction by a Special Judge, to imprisonment for a term which may extend to three years, or with fine which may extend to an amount equal to amount of tax involved, or with both.”

    Section 14 of the Sales Tax Act, 1990 requires a person to get registration under this Act, who is making taxable services.

    Following is the tax of the Section 14:

    Section 14: Registration

    (1) Every person engaged in making taxable supplies in Pakistan, including zero-rated supplies, in the course or furtherance of any taxable activity carried on by him, falling in any of the following categories, if not already registered, is required to be registered under this Act, namely:-

    (a) a manufacturer who is not running a cottage industry;

    (b) a retailer who is liable to pay sales tax under the Act or rules made thereunder, excluding such retailer required to pay sales tax through his electricity bill under sub-section (9) of section 3;

    (c) an importer;

    (d) an exporter who intends to obtain sales tax refund against his zero-rated supplies;

    (e) a wholesaler, dealer or distributor; and

    (f) a person who is required, under any other Federal law or Provincial law, to be registered for the purpose of any duty or tax collected or paid as if it were a levy of sales tax to be collected under the Act.

    (2) Persons not engaged in making taxable supplies in Pakistan, if required to be registered for making imports or exports, or under any provisions of the Act, or any other Federal law, may apply for registration.

    (3) The registration under this Act shall be regulated in such manner as the Board may, by notification in the official Gazette, prescribe.

  • Committee to review tax structure for stock market

    Committee to review tax structure for stock market

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday set up a consultative committee to review tax structure for stock market.

    The FBR constituted the consultative committee on capital markets tax reforms, which comprising following members:

    Member Inland Revenue Policy, FBR as chairman

    Shauzab Ali, Commissioner Securities Market Division, SECP as Member

    Farrukh H. Khan, Chief Executive Officer, PSX as Member

    Ahmed Ali Mitha, Chief Financial Officer, PSX as Member

    Chief (Income Tax Policy), FBR as Secretary.

    According to the terms of reference for the committee, it shall act as a forum till budget making exercise for the year 2021/2022, to review tax policies and suggest specific short-term and medium to long term measures for the development of debt and equity market, commodity futures, mutual funds, REITs, corporate and insurance sector, amongst others.

    Broadly it will review and recommend all measures that impinge upon the capital markets and its stakeholders.

    The committee may invite proposals from relevant stakeholders, deliberate and finalize tax reforms in the aforementioned areas.

    The proposals shall be categorized into immediate, medium term and long-term reforms and shall accordingly be prioritized.

    First report of the committee shall be submitted to the FBR within 20 days of its constitution.

    The FBR said that necessary amendments to the tax laws shall be initiated in consultation with the committee for implementation of the agreed proposals.