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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 starts consultations for implementing track, trace system

    FBR starts consultations for implementing track, trace system

    ISLAMABAD: Federal Board f Revenue (FBR) has launched consultations with various sectors for implementing track and trace system to prevent revenue leakages.

    A FBR statement said that to prevent leakage of revenue, under-reporting of production and sales, and to ensure proper payment of FED and Sales Tax on the manufacture and sale of specified goods/ products, the FBR has decided to implement a Track and Trace System for specified goods/ products i.e. Cement, Sugar, Fertilizer and Beverages imported into or manufactured in Pakistan.

    Project Office of Federal Board of Revenue (FBR), confirmed that they have finalized all bidding documents relating to issuance of license of Electronic Monitoring of Production/ Sales and Track and Trace System of the four major sectors Sugar, Cement, Fertilizer and Beverages, the Press Release stated.

    Instructions for Licensing (IFL) and related documents will be published in January, 2020 after consulting all major sectors/ Stakeholders. In order to arrive at the best possible solution, FBR plans to hold meetings with all stakeholders for their input, suggestions and recommendations.

    First meeting in this regard was held on 2nd December, 2019 with Cement manufactures. Second meeting with the Fertilizer manufacturers was held on 5th December, 2019 and third meeting is scheduled on 12th December, 2019.

  • LTU Karachi detects mega tax evasion of Rs18 billion by a company

    LTU Karachi detects mega tax evasion of Rs18 billion by a company

    KARACHI: Large Taxpayers Unit (LTU) Karachi has detected mega tax evasion to the tune of Rs18 billion by a company.

    The unit, which is the largest revenue contributor towards total Federal Board of Revenue (FBR)’s total collection, issued a statement on Monday saying that it had detected evasion of sales tax to the tune of Rs18 billion.

    “This discovery was made, when a taxpayer’s sales tax returns were scrutinized in depth revealing huge anomalies in declared sales.”

    The LTU Karachi further said that the taxpayer had been served with the statutory notice under the relevant provisions of Sales Tax Act, 1990.

    The unit further hoped to recover the evaded amount following the service of the notice and other legal formalities.

    The LTU Karachi has jurisdiction over companies having huge turnover and paying significant amount as tax revenue.

    The statement did not disclose the name of the taxpayer but the evaded amount shows the company might be belonged to one of those sectors on which the economy relied upon.

    The LTU Karachi has jurisdictions over companies active in sectors including: oil market companies, exploration and production companies, banks, insurance, sugar, textile, cement etc.

    The statement also pointed out another big case of illegal/unauthorized brought forward losses by a company in order to reduce the income tax liability.

    The LTU Karachi detected huge tax evasion by the taxpayer, who claimed unauthorized/illegal brought forward losses to the tune of Rs21 billion.

    “This revelation was made, when taxpayer’s past assessment record was probed in detail, whereby it transpired that against actual assessed losses of Rs10 billion, the taxpayer claimed losses to the tune of Rs21 billion resulting into over claim of losses to the tune of Rs11 billion.”

    This disclosure would result into huge tax payments by the taxpayer during current and future tax years, the statement added.

  • FBR threatens terminating tax treaty with UAE

    FBR threatens terminating tax treaty with UAE

    ISLAMABAD: Federal Board of Revenue (FBR) has threatened to terminate avoidance of double tax treaty with the United Arab Emirates (UAE) for not sharing information of Pakistanis having assets in that country.

    In a statement on Monday, the FBR spokesman said that the tax authorities had once again asked UAE authorities to provide information of Pakistanis having iqama (residential permit) in the UAE.

    The spokesman said that the FBR was conducting scrutiny of those Pakistanis who transferred money illegally to other destinations by evading tax money.

    The spokesman said that those Pakistanis fraudulently shifted the money and concealed by taking advantage of iqama.

    The FBR wrote another memorandum to the UAE authorities to provide details otherwise Pakistan would consider the other option to terminate the avoidance of double taxation treaty.

    Pakistan and UAE signed a full scope tax treaty on February 7, 1993 and it was come into force on November 30, 1994. The treaty became effective in Pakistan from July 01, 1995 and in the UAE on January 01, 1995.

    Under Article 27 of the Treaty both the states are bound to exchange information in case of fiscal fraud and tax evasion.

    The Article 27 is as follow:

    01. The competent authorities of the Contracting States shall exchange such information (including documents) as is necessary for carrying out the provisions of the Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention, in so far as the taxation thereunder is not contrary to the Convention, in particular for the prevention of fraud or evasion of such taxes.

    Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State.

    However, if the information is originally regarded as secret in the transmitting State, it shall be disclosed only to persons of authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes which are the subject of the Convention.

    Such persons or authorities shall use the information only for such purposes but may, disclose the information in public court proceedings or in judicial decisions.

    The competent authorities shall, through consultations, develop appropriate conditions, methods and techniques concerning the matters in respect of which such exchange of information shall be made, including where appropriate, exchange of information regarding tax avoidance.

    2. The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases or both.

    The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis.

    3. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

    a) to carry out administrative measures at variance with the laws or administrative practice of that or of the other Contracting State;

    b) to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

    c) to supply information or documents which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy.

  • FBR issues draft rules for movement of international transshipment cargo

    FBR issues draft rules for movement of international transshipment cargo

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday issued draft rules for the movement of international transshipment cargo through any sea port in Pakistan.

    The FBR issued SRO 1538(I)/2019 for introducing draft rules and asked stakeholders to provide their comments within 15 days to finalize the rules.

    Following are the rules to be inserted in the Customs Rules 2001:

    Rule 510A: Transshipment of imported cargo from gateway port to a foreign port

    The following procedure is prescribed for the movement of the International Transshipment (IT) cargo through any sea port in Pakistan, which shall be distinctly manifested as such in the IGM/carrier declaration uploaded electronically in the Customs Computerized System by the shipping line or its agent. Such manifest shall necessarily include the following information, namely:

    (a) port of loading

    (b) via port (name of the transshipment port of Pakistan)

    (c) port of destination (final port of discharge at foreign destination)

    (d) bill of lading (B/L) No

    (e) name of foreign exporter, and

    (f) name of foreign importer.

    510B: Transshipment of containerized cargo

    The unloading of IT containers of the transshipment of containerized cargo shall,-

    (a) mode in presence of Preventive Officer and after unloading. IT containers shall be stored separately at a place earmarked for them in the notified premises of a seaport.

    (b) the Preventive Officer shall examine the shipper seals of the IT containers and in case of any broken seal, such container shall be examined and immediately released with the Customs seal in the presence of the custodian and same shall be recorded.

    (c) the cargo so unloaded from one vessel for storage for subsequent loading at another vessel shall not be allowed under any circumstances to be taken out of the bonded area. The terminal operator shall b e responsible for safe storage and security of the goods. In case of any pilferage, shortage, theft or damage to goods, the terminal operator shall be liable to make payment of duty and taxes leviable thereon and compensate the owner of goods.

    (d) for loading of stored international destined cargo, master of the vessel or his authorized agent, or Non-Vessel Operating Common Carrier (NVOCC) shall electronically file an online declaration in Pakistan Customs Computerized System for International Transshipment (IT) against respective VIR/IGM and index to be loaded on a vessel for transportation to an international destination.

    (e) this online declaration shall indicate complete details of the consignment and shall be filed with invoice, packing list, bill of lading and any other requirement document.

    (f) no goods for international transshipment shall be loaded on a vessel until the system has allowed loading electronically. The computerized system may on the basis of Risk Management System (RMS) assign such online declaration to the assessing officers for documentary and physical inspection.

    (g) International transshipment of cargo shall be effected within thirty days of inward berthing of vessel.

    (h) if there is a reason to believe that the goods in violation of any prohibition or restriction have been brought for international transshipment, the same shall be examined and auctioned after the approval of the collector of customs, and

    (i) after online allow of loading, goods shall be allowed to be loaded on to the ship under the Customs supervision. The preventive officer supervising the loading shall acknowledge the loading of such cargo. This record shall be reconciled with the copy of Export General Manifest.

    510C. Transshipment of oversized, bulk and break bulk cargo

    (1) Oversized, bulk and break-bulk cargo shall be examined by the Customs upon discharge and examination report along with the pictures of the cargo shall be uploaded in the Customs Computerized system against B/L. Upon filing of online declaration for transshipment, the details of the cargo shall be reconciled with the imported cargo.

    (2) Partial transshipment of bulk or break bulk cargo shall be allowed against Online Bulk Transshipment Declaration having endorsement ‘partial transshipment’ containing details of total cargo arrived, quantity being transshipped and remaining quantity. The shipping line or its representative shall furnish a complete accountal of bulk or break cargo to the Assistant Collector (Import Section) within twenty four hours of the completion of transshipment. In case of liquid bulk cargo, the same shall be stored in the storage tank used exclusively for the international transshipment.

    510D: Financial guarantee on transshipment goods

    (1) The international transshipment goods shall not be subject to payment of import or export duties and taxes provided the activities are in conformity with these rules.

    (2) Shipping line intending to use the facility of International Transshipment shall furnish a financial guarantee for the leviable duty and taxes of the goods as security to ensure exit of goods outside the country within thirty days from the berthing of inward vessel. The financial guarantee shall be forfeited apart from the other consequential penal action under the Customs Act, 1969 and the rules made there under, if the shipping line misuse the facilities of international transshipment.

    (3) If a request for transshipment is not filed for the goods stored for transshipment within thirty days of its arrival, a notice shall be sent to the shipping line or its agent on the address given in the shipping documents for transshipment of goods from the port. If goods still remain on the port after expiry of sixty days of their arrival, the goods shall then be auctioned and unless the delay is attributable to the port authorities.

    513E: Execution of Bond by Shipping Line

    Shipping line shall execute a bond for ensuing to follow Customs Rules and regulations and for immediate removal of the goods from port in case the same is required by an officer not below the rank of Collector of Customs. The collector of customs, after recording the reason of such direction in writing, shall require the shipping line of immediate removal of transshipment cargo.

    510F: Prohibition and Restrictions

    The facility for international transshipment shall not be available to cargo containing arms and ammunition, explosive, radioactive materials, goods and technologies relating to Nuclear and Biological Weapons and restricted commodities under the UNSCC sanctions.

  • Banks to provide details of persons receiving profit on debt

    Banks to provide details of persons receiving profit on debt

    ISLAMABAD: Banks will provide certain information of persons receiving profits on their deposits to the Federal Board of Revenue (FBR) after amendment in the tax rules, sources said on Monday.

    The sources said that the banks will provide details of depositors receiving profit on debt, including name, CNIC, most recent particulars including address, amount of profit on debt during the year, tax deducted etc.

    The banks are required to provide information of persons receiving profit on debt exceeding Rs500,000 during the financial year.

    According to the FBR, every banking company officer, shall file electronically on FBR’s web portal the Account Holders Deposits Statement and Credit Card Payments Statement and Cash Withdrawal Statement as specified in Form „A‟ and Form ‘B’ respectively, for immediately preceding calendar biannually.

    Every banking company officer shall furnish to the Board an annual Written off Loans Statement as specified in Form „C’ for immediately preceding calendar year within three months of the end of the preceding calendar year.

    Every banking company officer, shall furnish to the Board a copy of each currency transactions report and suspicious transactions report generated by it at the time it is submitted to the Financial Monitoring Unit under the Anti-Money Laundering Act, 2010 (VII of 2010).

    Every banking company officer, shall furnish to the Board any information and documents in addition to those mentioned in sub-rules (1) to (3) within the time allowed by the Board.

  • FBR sets up special assessment circle for builders, developers

    FBR sets up special assessment circle for builders, developers

    KARACHI: Federal Board of Revenue (FBR) has launched monitoring of sale and purchase in real estate sector by establishing dedicated zone for assessing developers and builders.

    Sources in the FBR said that cases of builders and developers had been transferred to special circular established at Large Taxpayers Unit (LTU)-II, Karachi.

    According to an official order made available to PkRevenue.com all the cases of tax offices in Sindh and Balochistan had been transferred to the newly established circle.

    The sources said that the developers and builders were enjoying the final tax regime for the past several years.

    However, through Finance Act, 2017 the taxation of such segments of taxpayers brought under documented economy.

    These taxpayers will now require filing true declarations and also providing details of transactions made with their clients.

    The special circle will conduct detailed audit of those taxpayers besides obtaining details of buyers.

    According to the official order, the special circular for builders and developers established at the LTU-II Karachi would have jurisdiction over those cases which were earlier with the LTU Karachi, Corporate Regional Tax Office (CRTO) Karachi, RTO-II Karachi, RTO-III Karachi, RTO Hyderabad, RTO Sukkur, RTO Quetta and all cases of builders and developers presently assessed in LTU-II Karachi.

    The FBR also notified setting up special circles at Islamabad and Lahore. The Islamabad circle will have jurisdiction over cases in Islamabad, Abbotabad, Peshawar, Rawalpind, Faisalabad, Gujranwala, Sargodha and Sialkot.

    Further, the Lahore circle shall have jurisdiction over cases in LTU Lahore, CRTO Lahore, RTO-II Lahore, RTOs in Multan, Sahiwal and Bhawalpur.

  • FBR to issue procedure to document non-duty paid fast moving consumer goods

    FBR to issue procedure to document non-duty paid fast moving consumer goods

    ISLAMABAD: Federal Board of Revenue (FBR) will issue procedure for documenting smuggled and non-duty paid fast moving consumer goods (FMCG).

    In a tweet message on Saturday, FBR Chairman Syed Shabbar Zaidi said that the FBR was working in developing a ‘expeditious settlement’ of ‘non duty paid’ fast moving consumer goods available in the market.

    He said that the tax machinery would release details next week.

    “The purpose is to facilitate businessmen and improve documentation without disturbing business confidence,” he added.

    Recently, teams constituted by the FBR conducted physical survey of main markets and shopping centers/plazas to identify the presence of non-duty paid and smuggled goods.

    The FBR teams inspected imported products including garments, cosmetics, watches, toys, gift items, batteries, cigar, leather goods, designer bags etc.

    The sources said that the teams had identified smuggled and non-duty paid goods at big retails outlets.

    The FBR on August 17, 2019 decided to launch monitoring the presence of smuggled goods in main shopping markets across the country from this month. It was also decided to launch the monitoring by joint teams of Inland Revenue and Pakistan Customs.

    The Overseas Investors Chamber of Commerce and Industry (OICCI) recently in a letter to the FBR chairman the chairman highlighted the magnitude of smuggled/illegal goods.

    “There is not a single study to identify the complete magnitude of illegal trade in Pakistan but it is estimated that approximately 60 percent of the total demand for products of over half a dozen sectors of the formal economy, including petroleum, tea, mobile phones and auto parts industry, is met only through smuggling.”

    It said that bulk quantity of illegal/smuggled goods is available and these goods were mainly affecting sectors including petroleum, tea, mobile phones and auto parts industry.

    Highlighting the impact of illegal trade, the OICCI said: “virtually all major organized crime groups are not involved in the trade, resulting from huge profits but little risk, and whilst utilizing the services of children and slave labor.”

    These groups do not pay taxes, nor do they pay fair wages, and there is zero traceability of funds generated from the trade and their eventual disposition, the OICCI said, added: “More often than not, these funds may be redirected to terrorism, and money laundering.”

  • Draft law for collecting income tax from small shopkeepers

    Draft law for collecting income tax from small shopkeepers

    ISLAMABAD: Federal Board of Revenue (FBR) has drafted special procedure for collection of income tax from small shopkeepers.

    FBR sources said that an agreed mechanism between the FBR and small traders would be implemented from next week.

    They said that it would be another big achievement of the tax agency after convincing the banks for sharing information of account holders.

    The share of retailers in income tax collection is very low when compared with their contribution towards the national GDP.

    The sources said that on October 30, 2019 the agreement was finalized between the FBR and small traders for the collection of income tax and also to remove procedural glitches.

    According to draft law the small shopkeeper means an individual where the business is carried out at a premises having covered area less than 300 square feet.

    The small business owners will not include in the definition of small shopkeeper if he is engaged in the activity of a jeweler, wholesale, warehouse, real estate agent, builder and developer, doctor, lawyer, chartered accountant or any other category specified by the Board, a retailer operating as a unit of a national or international chain of stores, a retailer operating in an air-conditioned shopping mall, plaza or center, a retailer who has a credit or debit card machine, any person whose cumulative electricity bill exceeds Rs300,000 in the immediately preceding twelve months; and any person covered under section 99C of the Income Tax Ordinance, 2001.

    As per the draft law the small shopkeepers will be liable to pay income tax biannually.

    The FBR will not conduct examination and audit of small shopkeepers. Further, shopkeepers will also not liable to collect withholding tax.

    The sources said that the rate of tax likely be notified next week. They said whatever tax rate is agreed the tax payment will be increased by Rs5,000 annually.

    The FBR will also notify simple income tax return form for small shopkeepers, which will be filed for tax year 2019 onwards.

  • Immovable property purchase above Rs5 million not allowed other than banking channel

    Immovable property purchase above Rs5 million not allowed other than banking channel

    KARACHI: Any immovable property purchased through cash or bearer instruments will liable to penalty of five percent of the total value of immovable property, sources in Federal Board of Revenue (FBR) said on Saturday.

    The sources said that a restriction had been imposed on the purchase of immovable property over Rs5 million through cash or bearer cheque.

    They said that any person who purchases immovable property having fair market value greater than rupees five million through cash or bearer cheque then such person shall pay a penalty of five percent of the value of property determined by the FBR under sub-section (4) of section 68 or by the provincial authority for the purpose of stamp duty, whichever is higher.

    The sources said that through Finance Act 2019 a Section 75A was inserted to Income Tax Ordinance, 2001, under which purchases of assets had been mandatory through banking channels.

    According to the section, no person shall purchase:

    (a) immovable property having fair market value greater than five million Rupees; or

    (b) any other asset having fair market value more than one million Rupees,

    otherwise than by a crossed cheque drawn on a bank or through crossed demand draft or crossed pay order or any other crossed banking instrument showing transfer of amount from one bank account to another bank account.

    For the purposes of this section in case of immovable property, fair market value means value notified by the Board under sub-section (4) of section 68 or value fixed by the provincial authority for the purposes of stamp duty, whichever is higher.

    In case the transaction is not undertaken:

    (a) such asset shall not be eligible for any allowance under sections 22, 23, 24 and 25 of this Ordinance; and

    (b) such amount shall not be treated as cost in terms of section 76 of this Ordinance for computation of any gain on sale of such asset.

  • Taxpayers should file true declarations to avoid 100 percent penalty

    Taxpayers should file true declarations to avoid 100 percent penalty

    KARACHI: The tax laws have explained that any false or misleading statement will liable to penalty of 100 percent of the amount of tax short paid.

    Officials at the Federal Board of Revenue (FBR) said that taxpayers should ensure correct and true entries in their income tax returns and wealth statement while filing their income tax returns for tax year 2019.

    The last date for filing income tax returns for tax year 2019 is December 16, 2019.

    According to Income Tax Ordinance, 2001, any person who –

    (a) makes a false or misleading statement to an Inland Revenue Authority either in writing or orally or electronically including a statement in an application, certificate, declaration, notification, return, objection or other document including books of accounts made, prepared, given, filed or furnished under this Ordinance;

    (b) furnishes or files a false or misleading information or document or statement to an Income Tax Authority either in writing or orally or electronically;

    (c) omits from a statement made or information furnished to an Income Tax Authority any matter or thing without which the statement or the information is false or misleading in a material particular.

    Such person shall pay a penalty of twenty five thousand rupees or 100 percent of the amount of tax shortfall whichever is higher:

    Provided that in case of an assessment order deemed under section 120, no penalty shall be imposed to the extent of the tax shortfall occurring as a result of the taxpayer taking a reasonably arguable position on the application of this Ordinance to the taxpayers’ position.