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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 deploys IR officers at 20 sugar mills for monitoring of production, supplies

    FBR deploys IR officers at 20 sugar mills for monitoring of production, supplies

    ISLAMABAD: Federal Board of Revenue (FBR) has deployed officers of Inland Revenue at 20 sugar mills to monitor production and supply for checking tax evasion.

    The IR officers have been deployed at the premises of sugar mills under Section 40B of Sales Tax Act, 1990 for the monitoring of stock, production and supply.

    Sources told PkRevenue.com that Large Taxpayers Unit (LTU) Karachi had requested the FBR to allow monitoring of sugar mills as huge tax evasion was detected in the past.

    Recently, the FBR conducted analysis of sugar production of the last year which revealed huge tax evasion by sugar mills.

    The outcome of analysis showed that FBR and the Cane Commissioner of three provinces had a difference of 641,000 metric tons which showed that the sugar mills were under reporting their stock in order to evade tax payments.

    It is also identified that the local supplies during the tax period of July 2019 fell by 255 percent due to enhancement in tax rate from eight percent in June 2019 to 17 percent in July 2019.

    The analysis further revealed that the stock holding last year ending June 2018 was 3,147,000 metric tons where as closing stock of the year ending on June 2019 was only 2,230,778 metric tons, which showed 29 percent decline.

    It is also pointed out that sugar manufacturers had declared high quantity of supplies during June 2019 to evade sales tax as the tax rate was to increase in July 2019.

    The FBR analysis revealed that the sugarcane was the biggest raw material of sugar industry.

    The undocumented/under-documented nature of this agriculture sector poses a great challenge to accurately gauge the quantity of sugarcane produced and supplied to a particular mill.

    Considering the above facts the FBR allowed deployment of IR officers at the sugar mills.

    It is worth mentioning that the FBR Chairman through an official memorandum barred the tax offices for invoking Section 40B of the Sales Tax Act, 1990 without prior permission of the board or Member IR Operations.

    Following is the list of sugar mills where IR officers have been deployed:

    01. M/s. Darya Khan Sugar Mills Limited.

    02. M/s. Popular Sugar Mills Limited.

    03. M/s. Deharki Sugar Mill Limited.

    04. M/s. Adam Sugar Mill Limited.

    05. M/s. Baba Farid Sugar Mill Limited.

    06. M/s. Digri Sugar Mill Limited.

    07. M/s. Mirpurkhas Sugar Mill Limited.

    08. M/s. Faran Sugar Mills Limited.

    09. M/s. Mehran Sugar Mills Limited.

    10. M/s. Dewan Sugar Mills Limited.

    11. M/s. Al-Abbas Sugar Mills Limited.

    12. M/s. Ansari Sugar Mills Limited.

    13. M/s. Bawany Sugar Mills Limited.

    14. M/s. Larr Sugar Mills Limited.

    15. M/s. New Dadu Sugar Mills Limited.

    16. M/s. Rani Sugar Mills (Pvt) Limited

    17. M/s. Al-Noor Sugar Mills Limited

    18. M/s. Tando Allahyar Sugar Mills Limited

    19. M/s. Habib Sugar Mills Limited

    20. M/s. Sindabadgar Sugar Mills Limited

  • Pakistan, China agree to expedite customs clearance through green corridor

    Pakistan, China agree to expedite customs clearance through green corridor

    ISLAMABAD: Pakistan and Chinese customs authorities have agreed to expedite clearance of agriculture products under proposed green corridor at Sost-Khunjarab Border.

    (more…)
  • Tax exemption available on ‘profit on debt’ if security issued outside Pakistan

    Tax exemption available on ‘profit on debt’ if security issued outside Pakistan

    KARACHI: Tax exemption is available to profit on debt where security issued outside Pakistan for raising loan.

    Officials in Federal Board of Revenue (FBR) on Wednesday said that tax exemption is available on profit on debt in certain conditions.

    According to Income Tax Ordinance, 2001, any profit received by a non-resident person on a security issued by a resident person shall be exempt from tax under this Ordinance where—

    (a) the persons are not associates;

    (b) the security was widely issued by the resident person outside Pakistan for the purposes of raising a loan outside Pakistan for use in a business carried on by the person in Pakistan;

    (c) the profit was paid outside Pakistan; and

    (d) the security is approved by the FBR for the purposes of this section.

    The income tax exemption is also available to any scholarship granted to a person to meet the cost of the person’s education shall be exempt from tax under this Ordinance, other than where the scholarship is paid directly or indirectly by an associate.

    Any income received by a spouse as support payment under an agreement to live apart] shall be exempt from tax under the Ordinance.

    The officials said income tax exemption is also available to the income derived by the federal government, provincial government, and local government.

    The income of the Federal Government shall be exempt from tax under the Ordinance.

    The income of a Provincial Government or a Local Government in Pakistan shall be exempt from tax under this Ordinance, other than income chargeable under the head “Income from Business” derived by a Provincial Government or Local Government from a business carried on outside its jurisdictional area.

    Any payment received by the Federal Government, a Provincial Government or a Local Government shall not be liable to any collection or deduction of advance tax.

    Exemption under this section shall not be available in the case of corporation, company, a regulatory authority, a development authority, other body or institution established by or under a Federal law or a Provincial law or an existing law or a corporation, company, a regulatory authority, a development authority or other body or institution set up, owned and controlled, either directly or indirectly, by the Federal Government or a Provincial Government, regardless of the ultimate destination of such income as laid down in Article 165A of the Constitution of the Islamic Republic of Pakistan:

    Provided that the income from sale of spectrum licenses and renewal thereof by Pakistan Telecommunication Authority on behalf of the Federal Government after the first day of March 2014 shall be treated as income of the Federal Government and not of the Pakistan Telecommunication Authority.

  • Ministry’s approval must for liquor import for diplomatic bonded warehouse

    Ministry’s approval must for liquor import for diplomatic bonded warehouse

    KARACHI: The Import permission from Ministry of Commerce is necessary for the import of liquor for a diplomatic bonded warehouse.

    “A Muslim cannot import or deal in liquor in the diplomatic bonded warehouse,” according to explanation issued by Federal Board of Revenue (FBR) regarding Diplomatic Bonded Warehouse.

    “Liquor is allowed to Diplomats against the Exemption Certificates issued by the Ministry of Foreign Affairs.”

    Liquor can be purchased by diplomats according to the quantities mentioned in the exemption certificates issued by the Ministry of Foreign Affairs, it said.

    Privileged persons can purchase liquor according to the quota provided in the Model Rules and CGO.15/96 which is as under :-

    According to CGO.15/96, the Import / purchase of alcoholic beverage is restricted to US$ 200/= per family per month by expatriate employees of foreign or local companies, loan funded projects or media personnel.

    According to the Model Rules dated 15-04-1963 for customs concessions to privileged personnel arriving under various foreign aid programmes or projects, Import / purchase of liquor can be made as per following quota.

    The FBR said that Diplomatic Bonded Warehouse is the warehouse licensed under section 13 of the Customs Act, 1969 for warehousing the dutiable goods Imported exclusively for diplomats / privileged persons.

    A Bonded Warehouse License is issued under the provisions of section 13 of Customs Act,1969.

    However, in case of Diplomatic Bonded Warehouse, the licenses were issued with the prior approval of the Federal Board of Revenue (FBR).

    As provided under sub-section(2) of section 13 of the Customs Act,1969, an application for the grant of license shall be made in the prescribed form Annex-B along with following documents :-

    Map of the proposed area.

    Article and Memorandum of Association in case of company and copy of partnership deed in case of partnership firm.

    Certificate from a scheduled bank showing soundness of financial position.

    Income Tax Registration Certificate.

    Details of Directors and authorized persons.

    Certificate of Membership of Chamber of Commerce and Industry.

    Lease / Tenancy Agreement.

    Copies of National identity Card(s) & Character Certificate(s).

    Comprehensive Insurance Policy from an approved Insurance Company.

    Survey Certificate issued by the approved surveyor.

    Besides the requirements mentioned above, all other conditions required under the Customs Act,1969 or any other law for the time being in force shall also be fulfilled.

    The permission for Import of liquor is, however, granted to non-Muslims only.

    The diplomatic bonded warehouses are dealing in Import of goods Imported exclusively for the use of diplomats, foreign missions and privileged persons. As such, all such goods / items which are used by the diplomats, foreign missions and privileged persons can be imported.

    The goods are not imported against L/C. The Importer (holding diplomatic bonded warehouse license) Import goods on contract basis and store the same in his warehouse. Subsequently goods are sold to diplomats / privileged persons according to their requirement and exemption certificates issued by the Ministry of Foreign Affairs.

    The purchase will be made strictly according to the quota fixed by the Ministry of Foreign Affairs and quantities mentioned in the exemption certificate.

    Quota is allotted and purchases are authorized by the Ministry of Foreign Affairs.
    The strength of the diplomatic community in the country which benefits from the warehouses is maintained by the Ministry of Foreign Affairs.

    The licensee of a bonded warehouse cannot open its sub-office in other cities. Periodical stock taking is conducted.

    The audit is also carried out by the staff of the Director General, Revenue Receipt Audit on quarterly basis.

    Moreover, insurance policy is obtained from the bonders covering all risks including pilferage etc.

    Besides there are specific provisions in Chapter-XI and Chapter-XVIII of the Customs Act,1969.

    In case of detection of any pilferage or misuse of the facility, penal action under the relevant clauses of sub-section (1) of section 156 of the Customs Act,1969 can also be initiated.

    On first arrival in Pakistan a privileged person shall be allowed to import free of duty and taxes foodstuff and other consumable stores including liquors and tobacco up to C&F value of US$ 200/- under chapter III of SRO 450(i)/01.

    During the period of his assignment he shall be allowed to Import free of duty and taxes foodstuff and consumable stores including liquor and tobacco up to C&F value of US$ 150/- per month but the value of liquor will not exceed US $50/- per month.

  • FBR discusses Customs internship program at NUST, LUMS

    FBR discusses Customs internship program at NUST, LUMS

    ISLAMABAD: Federal Board of Revenue (FBR) is in discussion with top universities to launch ‘Customs internship program’ for the youth of the country.

    In this regard, Syed Shabbar Zaidi, Chairman FBR held a meeting with Heads of Departments of National University of Science and Technology (NUST) and Lahore University of Management Sciences (LUMS) to discuss the launch of “Customs Internship Program” for the youth of Pakistan in June 2020.

    Earlier the program had been got approved and Chairman had directed its expeditious implementation.

    As informed by Dr. Jawwad Uwais Agha, Member Customs Operations, through this program two hundred BS/MS level students of top universities of Pakistan like LUMS, NUST, IBA and GIK in areas of Law, Public Financial Management, Economics, Finance, Public Policy and Information Technology would get an opportunity to work in the field units of Pakistan Customs for a 10-12 weeks’ internship program.

    A stipend of Rs 12,000 / month will be offered in this regard.A special internship program for 200 High School students will also be launched simultaneously with a stipend of Rs 4000-8000 for a 2-6 weeks internship program.

    FBR chairman lauded the efforts of Pakistan Customs in launching this innovative initiative which will create awareness about International and Domestic Economy and Public sector functioning and elaborated that the program will increase opportunities of employability and enhance confidence and ability of youth.

    The representatives from NUST and LUMS appreciated the initiative taken by Pakistan Customs and ensured their complete cooperation in this regard.

  • FBR to take strict action against individuals, companies fail to file annual returns

    FBR to take strict action against individuals, companies fail to file annual returns

    ISLAMABAD: Federal Board of Revenue (FBR) may take strict action against persons failed to file their annual returns for tax year 2019, besides imposing penal amount for late filing.

    Sources in FBR on Tuesday said that individuals and corporate entities (having special tax year) have six more days to file their returns in order to avoid strict action and paying late filing amount.

    The last date for filing income tax returns for tax year 2019 is December 16, 2016. The FBR granted third extension for filing returns on November 29, 2019.

    The actual date for filing income tax returns for tax year 2019 was September 30, 2019 for salaried persons, business individuals, Association of Persons (AOPs) and corporate entities having special tax years.

    The sources said that under Income Tax Ordinance, 2001 the defaulting taxpayers would face imprisonment up to three years.

    However, persons or companies filing tax returns after the due date will be liable to pay penalty amount to ensure their names on the Active Taxpayers List (ATL).

    The sources said that the income tax return filing for tax year 2018 had reached to a record high of 2.71 million by week ended November 30, 2019.

    They said that a large number of people were still filing their returns for tax year 2018 in order to appear on ATL 2018, which would remain in vogue till February 29, 2020.

    The new ATL for tax year 2019 will be published by the FBR on March 01, 2020.

    The sources said that the appearance the name on ATL had become important after the introduction of 10th Schedule to the Income Tax Ordinance, 2001 through Finance Act, 2019.

    They said that those persons having filed their returns but not on the ATL or those persons failed to file their returns are subject to 100 percent higher withholding tax rates.

  • FBR issues draft rules for business license scheme

    FBR issues draft rules for business license scheme

    ISLAMABAD: Federal Board of Revenue (FBR) has issued draft rules for business license scheme, which will be mandatory for every person engaged in any business, profession or vocation.

    Under Section 181D of Income Tax Ordinance, 2001, which is the new section introduced through Finance Act, 2019.

    The following are the draft rules for business license scheme:

    83A. The rules in this Chapter apply for the purposes of business license scheme.

    83B. Definitions.— in these rules, unless there is anything repugnant to the subject or context,—

    (a) “applicant” means a person who files application for issuance of business license;

    (b) “Iris” means the application software on the web portal of Federal Board of Revenue for the purposes including application for business license;

    (c) “service provider” means any person whose services to provide electronic data entry into Iris or any other web based application software, bio-metric verification and delivering the print out of the business license to the applicant for the purposes of these rules, has been hired by the Federal Board of Revenue.

    83C. Application for and issuance of business license

    (1) Subject to sub-rule (4), any person engaged in any business, profession or vocation, shall apply to the Federal Board of Revenue for issuance of business license in the Form specified in the schedule.

    (2) Where the applicant is having a cell phone number, issued by any mobile phone company and is having access to the internet facility, he shall file application form on the Iris or any software application developed by Federal Board of Revenue for the purposes of these rules. The system generated business license issued to the applicant shall be emailed to the applicant.

    (3) Where the applicant is not having any cell phone number issued by any mobile phone company or not having access to internet facility, he shall provide the particulars to the service provider or the personnel in a Kiosk established by a Regional Tax Office, for online filing of the form, and the service provider or the personnel in the Kiosk, as the case may be, shall—

    (i) verify particulars of the form filled in;

    (ii) complete bio-metric verification of the applicant; and

    (iii) give system generated print out of the business license to the applicant;

    (4) Where a person’s name is appearing in the active taxpayers’ list, he shall be treated to have filed application and the system generated business license shall be emailed to his email address registered in Iris.

    83D. Display of the business license

    (1) Every person who has been issued a business license under these rules, shall display the said license at every place of business of the person.

    83E. No liability on holding a business license

    Where a person has been issued a business license, he shall not be liable to payment of any tax on account of holding a business license unless such person is otherwise liable to payment of tax under any other provisions of the Income Tax Ordinance, 2001.

  • 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.