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 proposes reducing retaining period of imported plant, machinery by export units for disposal at zero percent duty, taxes

ISLAMABAD: Federal Board of Revenue (FBR) has proposed to relax the condition of disposal of plant and machinery by export units at zero percent of duty and taxes to five years as compared with prevailing 10 years.

The FBR on Wednesday issued SRO 747(I)/2019 to proposed amendments in the Export Oriented Units and Small and Medium Enterprises Rules, 2008.

Through proposed amendment the FBR allowed the retaining imported goods including plant and machinery for a maximum period of five years as against prevailing ten years.

The FBR through SRO 327(I)/2008 notified “The Export Oriented Units and Small and Medium Enterprises Rules, 2008” to facilitate the exporters and promote the exports.

The FBR proposed that there will be no duty or tax if items imported by export oriented unit is sold or otherwise disposed of after five years from the date of importation. The existing retaining period is ten years.

The FBR proposed that there will be full duty and tax if sold or otherwise disposed of before the expiration of three years from the date of importation. The existing period of attracting full duty and taxes is five years.

It is proposed that there will be 75 percent duty and taxes if sold or otherwise disposed of after three and before four years from the date of importation. The existing period for this category is ‘after five and before seven and half years’ from the date of importation.

The FBR also proposed to impose 50 percent of duty and taxes if sold or otherwise disposed of after four and before five years from the date of importation. The existing time period for this category is ‘after seven and half years and before ten years.’

In the latest SRO the FBR also proposed to amend the word ‘Collector’ with the Regulatory Authority. The FBR also defined the regulatory authority is the additional collector of customs designated by the collector of customs as the regulatory authority in relation to an export oriented unit, in whose jurisdiction the place of business or manufacturing unit of the export oriented unit applicant, duly registered under the Sales Tax Act, 1990, is situated.

July 11, 2019
FBR directs customs to ensure retail price print on imported goods

KARACHI: Federal Board of Revenue (FBR) has directed customs authorities to ensure printing of retail prices on imported goods for collection of sales tax while clearance of consignments.

The Inland Revenue Policy Wing issued directives on Wednesday to Inland Revenue and Customs for the implementation of changes brought in to Sales Tax Act, 1990 through Finance Act, 2019.

It said that the locally manufactured goods specified in Third Schedule are already chargeable to sales tax on the basis of retail price.

Now, through amendment in section 3(2)(a) of Sales Tax Act, 1990, retail price taxation has also been made applicable to imported goods.

The importers are required to print the retail price in the manner prescribed in the aforesaid clause and such goods shall be assessed on the basis of declared retail price and not on the basis of customs value under section 25 of the Customs Act, 1969.

“All Model Customs Collectorates (MCCs) are requested to ensure that the declared retail prices are duly printed in the prescribed manner and that the sales tax is charged on the basis of such declared retail price,” the FBR said.

Twelve new serial numbers have been added to Third Schedule through Finance Act, 2019 such as electric and gas appliances, motorcycles, auto-rickshaws biscuits, tiles etc.

The FBR directed Large Taxpayers Units (LTUs) / Regional Tax Offices (RTOs) / MCCs should ensure application accordingly.

The FBR defined the value of supply, which has been amended to provide for application of retail price taxation to imported goods, and also to incorporate provisions from rescinded rules and STGOs.

These modifications are enumerated below:

Amendment in clause (d) to exclude imported Third Schedule items from purview of application of ‘customs value’ determined under section 25 of the Customs Act, 1969. These items are to be assessed on the basis of declared retail price. Further such price is also required to be printed on imported goods as stipulated in clause (a) of section 3(2) of the Sales Tax Act, 1990.

(ii) Substitution of clause (f) in section 2(46) pertains to value of supply in case of toll manufacturing, which has defined to be the charges received in lieu of value addition carried out on goods;

(iii) Newly added clause (h) defines value to be energy purchase price in case of supply by IPPs; and

(iv) Another new clause (i) transposes the provisions relating to exclusion of late payment surcharge from value, in case of supply of electricity and gas by the distribution companies, from the rescinded Sales Tax Special Procedures Rules, 2007.

July 10, 2019
FBR delegates powers to IR officers for International Tax Operations directorate

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday authorized officers of Inland Revenue to exercise powers and perform functions for the newly established Directorate General of International Tax Operations.

The FBR designated Chief Commissioner / Commissioner of Inland Revenue to perform as Director General of International Tax Operations. The director general shall have jurisdiction over persons or classes of persons carrying on business or residing in areas, within the territorial jurisdiction of Pakistan.

Similarly, the commissioner of Inland Revenue has been designated as director of International Tax Operations to have jurisdiction over .all persons or classes of persons carrying on business, falling within the jurisdiction of regional tax offices and large tax units.

The FBR also designated assistant and deputy directors of International Tax Operations.

Through Finance Act, 2017 Directorate General of International Tax Operations was established by amending Section 230E of Income Tax Ordinance, 2001.

The section stated:

(l) The Directorate General of international Tax Operations shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.

(2) The Board may, by notification in the official Gazette,

(a) specify the functions and jurisdiction of the Directorate General and its officers; and

(b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.

(3) The functions and powers of the Directorate General of International Tax Operations shall include but not limited to-

(a) receive and send information from other jurisdictions under spontaneous, automatic and on demand exchange of information under exchange of information agreements;

(b) levy and recover tax by passing an assessment order under section I23(1A) in case of undeclared off-shore assets and incomes;

(c) receive, transmit and exchange country reports to the jurisdictions that are parties to international by country agreements with Pakistan; and

(d) conduct transfer pricing audit in cases selected for such audit by the Director General of international Tax Operations.

(4) The Board may, by notification in the official Gazette, specify the criteria for selection of the taxpayer for transfer pricing audit.

Explanation- For the removal of doubt, it is clarified that transfer pricing audit refers to the audit for determination of transfer price at arm’s length in transactions between associates and is independent tax audit under section 177 and 2l4C which is audit of the income tax affairs of the taxpayer.

July 9, 2019
FBR to launch crackdown against non-compliant professionals

KARACHI: Federal Board of Revenue (FBR) will initiate action against professionals including lawyers, doctors and chartered accountants, who are not on the Active Taxpayers List (ATL).

Sources in FBR told PkRevenue.com that Section 114 of Income Tax Ordinance, 2001 explained persons or companies required to file their income tax returns.

The FBR sources said that on the directives of the government the tax machinery had launched massive drive against undocumented economy and tax evasion.

The sources said that professionals had also come under the FBR radar under the ongoing drive.

They said that return filing is a mandatory for a resident person registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan.

The sources said that many professionals are working in the undocumented economy and receiving fees without issuing invoices.

Sources in Regional Tax Office (RTO)-II Karachi told that recently survey teams had pointed out many businessmen, doctors, chartered accountants, cost accountants, lawyers and other professionals were not paying taxes as per their income.

The sources said that in some cases investigation had been conducted where professionals were taking huge sum of amount from companies as benefits, besides frequently going abroad.

Some FBR officials told that they had filed suits regarding against decisions of the board and lawyers hired for the cases demanded payment in cash instead banking transactions.

The sources said that the filing of income tax returns has been extended up to August 02, 2019 for all the categories of individuals and companies.

After the expiry of date the FBR will launch mega drive against the non-compliant professionals, the sources added.

July 9, 2019
FBR not to reduce GST below 17 percent on petroleum products

KARACHI: Federal Board of Revenue (FBR) to maintain general sales tax at 17 percent on all petroleum products in coming months as agreed by the Pakistani authorities with the International Monetary Fund (IMF).

Pakistan has committed with the IMF for taking many steps for curbing powers of authorities in issuing statutory regulatory orders (SROs), eliminating exemptions and maintaining GST on petroleum products at 17 percent.

Through SRO 700(I)/2019 dated June 30, 2019, the FBR notified sales tax at 17 percent on supply of all petroleum products for the month of July 2019. The petroleum products are included: petrol, high speed diesel, kerosene oil and light speed diesel oil.

The Letter of Intent (LoI) presented by Pakistan for IMF loan program, the country assured the fund of eliminate the legal authorization for the executive to grant tax exemptions/concessions through Statutory Regulatory Orders (SROs) without prior National Assembly approval.

“We understand that the use of SRO needs to be subject to greater scrutiny and limited discretion. To that end, we have adopted the necessary revisions and amendments to the various relevant tax ordinances to further limit or eliminate the use of SROs to genuine emergencies, in line with best international practices,” according to the LoI.

The authorities have also assured the Fund of refraining from issuing any SRO reducing the GST rate below 17 percent on petroleum products.

For Modernize the Public Finance Management Framework, Pakistan has adopted an organic budget law that will minimize variance in budget authorizations during the year, which shall also require ex-post parliamentary approval, restrict virements, expand the content of annual budget statements, define accounting standards, and provide the legal basis for a well-defined cash management system and establishment of a treasury single account (TSA).

For Enforcing fiscal discipline, this will include strengthening the enforcement mechanism of the FRDLA through aligning the annual report presented by the Minister of Finance (MoF) to the National Assembly with the content and analysis prescribed in the Act. “Also, we will expand the capacity of the MoF for macro-fiscal work. Moreover, proper identification and monitoring of fiscal risks from SOEs, PPPs, IPPs and development projects will be strengthened through the establishment of a fiscal risk unit in the MoF, which will work in coordination with the PPP Authority.

“We are aware that PPP projects, while bringing great benefits, can also be the source of important risks. Thus, we are committed to strengthening the PPP legal framework. To this end, we are conducting a legal analysis of the current system to determine if amendments to the PPP law are required or, alternatively, whether enacting secondary legislation is sufficient, drawing on the expertise of our development partners.

“We will also make sure that proposed financial vehicles such as the Pakistan Infrastructure Bank is created in line with best international governance standards.”

Pakistani authorities informed the Fund about creating a Treasury office that would conduct sound commitment controls and cash management, closely coordinating with the debt management unit.

“We will strengthen the debt management office and will ensure greater coordination across the different relevant units. Elements of this strategy will include centralizing the issuance and management of public debt and developing a new Medium-Term Debt Strategy. To support our consolidation efforts and reduce our financing requirements, we will lengthen the maturity profile of public debt and will introduce new market instruments to widen the investors’ base, also transparently accounting for all borrowing and contingent liabilities.

“We will ensure that any collateralized public external debt or external arrears would be properly accounted.”

July 9, 2019
Elimination of zero rating, other policy and administrative measures to generate Rs733.47 billion

KARACHI: Federal Board of Revenue (FBR) to generate additional revenue of Rs733.47 billion during current fiscal year after abolishing zero-rating of sales tax and other policy and administrative measures.

Pakistan has outlined its strategy for enhancing revenue collection before the International Monetary Fund (IMF) through eliminating exemptions, distortion and other policy and administrative measures.

These budgetary measures likely enhance tax to GDP ratio by 1.7 in the fiscal year 2019/2020.

The FBR will generate additional revenue of Rs222.77 billion from measures taken through budget 2019/2020 in the sales tax, which included:

Petroleum products levy increase to 15 PRs (and set as a floor) and

GST rate at 17 percent (set as a floor)

Cancel SRO # 480 and bring steel sector, edible oil and medium to large retailers to 17 percent GST regime

Extend the list of products under the retail price taxation – Third Schedule (home appliances, paint.., currently under SRO # 480)

Cancel SRO#1125 and bring exportable sectors to standard GST regime at 17 percent rate, with immediate cash refund for exported goods only

Remove certain items from exemptions (packaged food), and apply GST tax at 17 percent.

Increase GST on sugar from 8 percent to 17 percent

Redefine the exemption available to Cottage Industry

An additional amount of Rs90.114 billion estimated under Federal Excise Duty (FED) through following measures:

0.2 Increase of FED on cigarettes and remove the third tier.

Introduce FED on cigarettes coming from non tariff areas

Increase/introduce FED on sugary drinks to 13 percent

Increase FED on cement from 1.5 Rs per kg to 2 Rs

Additional amount of Rs324.98 billion estimated through eliminating exemptions and other distortions in Income Tax, such as

Personal Income Tax (PIT): lower the threshold to Rs400,00 and Rs600,000 for non-salaried and salaried individuals respectively, increase tax rates Increase in rate of minimum tax u/s 113 from 1.25 to 1.5 percent

Extend the regime of higher withholding tax rates for non-filers

Resume Telecom withholding rate

Change in income tax regime of Services sector (banks and insurance companies)

Abolish BMR credit incentives

Increase the holding period liable to tax for capital gain tax on immovable properties and securities

Taxation of gifts from unrelated person at standard PIT rate

Aligning value of immovable properties with the market rates

Reduction of number of withholdings and simplification of procedures

Amortization of expenditure in BOT projects over useful life of the project instead of current 10 year amortization

Long term lease hold right may be considered as purchase of property

Taxation of formal agricultural sector within the scope of federal government

Rationalization of tax credit available to Non-profit organizations (NPOs)

An amount of Rs60 billion has been estimated to be generated through measures taken under Customs duty:

Increase in Additional Customs Duty Rate on finished and luxury goods

Withdrawal of exemption on import of LNG and subjected to 5 percent duty

Revenue administrative measures to generate Rs 35.6 billion through following steps:

Implement Track and Trace system for Tobacco Products

Automated monitoring of GST and income at retail (point of sale)

Changes in ADCIR mechanism

Separation of audit & adjudication functions

Making procedure for prosecution easier

Enabling and strengthening FBR field formations

Cleansing of databases and integration to enable effective data mining

Enabling efficient enforcement through investment in FBR

Infrastructure and process reengineering

Taxpayer education and facilitation

July 9, 2019
FBR urged to allow filing amnesty scheme declarations

KARACHI: Federal Board of Revenue (FBR) has been urged to allow those persons to file their declarations who have paid duty and taxes under amnesty scheme 2019 by due date.
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July 8, 2019
FBR rescinds 42 non-operational sales tax general orders

ISLAMABAD: Federal Board of Revenue (FBR) on Monday rescinded 42 non-operational Sales Tax General Orders (STGOs).

The FBR issued STGO 101/2019 and rescinded the following STGOs being non-operational, transposed to Sales tax Act, 1990 or Sales Tax Rules, 2006, with immediate effect:

01. STGO No. 03/2004, Dated 12th June, 2004 related to consolidation of STGOs; desirable provisions being transposed to the Sales Tax Rules, 2006.

02. STGO No. 04/2004, Dated 4th September, 2004, Amendment in STGO 3/2004

03. STGO No. 01/2005, Dated 2ist April, 2005, e-filing of Sales Tax return at LTU, Karachi and Lahore – Redundant STGO

04. STGO No. 02/2005, Dated 15th August, 2005, Amendment in STGO 1/2005.

05. STGO No. 03/2005, Dated 1st September, 2005, Repayment of Sales Tax to Duty Free Shops on locally manufactured goods.

6 STGO No. 04/2005, Dated 29th September, 2005, Special Procedure for collection and payment of S.T. on vehicles.

07. STGO No. 01/2006 Dated 5th June, 2006, procedure for payment of S.T. against advance receipt.

08. STGO No. 03/2006 Dated 28th July, 2006, issues relating to steel sector

09. STGO No. 06/2006 Dated 8th September, 2006, Amendment in STGO 3/2006.

10 STGO No. 01/2007 Dated 10th January, 2007, Mitigating the hardships of Islamabad based taxpayers.

11. STGO No. 02/2007 Dated 6th February, 2007 Refund claims relating to local supply made by the five export oriented zero-rated sectors.

12. STGO No. 03/2007 Dated 30th July, 2007 issues relating to Commercial Importers.

13. STGO No. 04/2007 Dated 21st August, 2007 procedure for e-filing of ST returns.

14. STGO No. 05/2007 Dated 25th August, 2007, payment of S.T. by Steel Melters and re-rolling mills operating on self-generation basis.

15. STGO No. 06/2007 Dated 28th August, 2007, transfer of jurisdiction of collectorate of S.T. & FE now RTO, Rawalpindi to RTO, Islamabad.

16. STGO No. 22/2008 Dated 26th June, 2008, revision of S.T. Rate, printing of retail price.

17. STGO No. 32/2008 Dated 8th July, 2008 issues relating to solvent extraction units.

18. STGO No. 1/2010 Dated 20th January, 2010 Fiscal relief to rehabilitate the economic life in NWFP, FATA, installment in arrears.

19. STGO No.3/2010 Dated 27th January, 2010 Refund of Sales Tax by Customs Collectorate.

20. STGO No. 11/2010 Dated 30th March, 2010, Delivery of sales tax registration certificates to registered persons of Gilgit Baltistan.

21. STGO No. 18/2010 Dated 10th May, 2010, Input tax adjustment to Pakistani registered person against their purchases from AJK registered persons.

22. STGO No. 19/2010 Dated 13th May, 2010 Filing and processing of expeditious refunds by IT system of FBR.

23. STGO No.20/2010 Dated 1st July, 2010 Revision of Sales Tax rates w.e.f. 1st July, 2010 printing of retail price.

24. STGO No.35/2010 Dated 23rd September, 2010 revision of Sales Tax rates w.e.f. 1st July, 2010 printing of retail price.

25. STGO No.37/2010 Dated 24th September, 2010 Establishment of CSTRO.

26. 26 STGO No.49/2010 Dated 30th November, 2010 revision of Sales Tax rates w.e.f. 1st July, 2010 printing of retail price.

27. STGO No.50/2010 Dated 23rd December, 2010 revision of Sales Tax rates w.e.f. 1st July, 2010 printing of retail price.

28. STGO No. 1/2011 Dated 8th January, 2011 filing and processing of expeditious refund by IT system of FBR.

29. STGO No.3/2011 Dated 24th June, 2011 Revision of Sales Tax rates w.e.f. 1st July, 2011 printing of retail price.

30. STGO No.4/2011 Dated 27th June, 2011, monitoring committee for the steel sector.

31. STGO No.9/2011 Dated 26th August, 2011 Monitoring committee for the steel sector.

32. STGO No. 10/2011 Dated 26th August, 2011 Monitoring committee for the steel sector.

33. STGO No.28/2013 Dated 5th July, 2013 Revision of Sales Tax rates w.e.f. 13th June, 2013 Printing of retail price.

34. STGO No.34/2013 Dated 16th August, 2013 Uniform procedure for action under sub-section (4) of Section 21 of the Act.

35. STGO No.27/2014 Dated 18th March, 2014 Levy of 2 percent extra tax on the supply of auto parts and accessories, tyres and tubes etc.

36. STGO No.66/2014 Dated 21st July, 2014 Collection of Sales Tax from retailers in terms of sub-section (9) of section 3 of the Act, read with SRO 608(I)/2014.

37. STGO No.68/2014 Dated 11th August, 2014 Clarification regarding persons liable to be registered but not actually registered in terms of rule-2(3)(ii) of the Sales Tax Special Procedure (Withholding) Rules, 2007.

38. STGO No. 117/2015 Dated 14th July, 2015 Procedure for issuance of STGOs for grant / withdrawal and rejection of zero-rating on electricity and gas to RPs falling under SRO 1125(I)/2011.

39. STGO No. 18/2016 Dated 9th February, 2016 Procedure for adjustment of S.T. by Steel melters under sub-rule-2C of rule-58H.

40. STGO No. 107/2016 Dated 20th September, 2016 Procedure for issuance of STGOs for grant / withdrawal and rejection of zero-rating on furnace oil, diesel oils and coal to RPs falling under SRO 1125(I)/2011.

41. STGO No. 130/2016 Dated 2nd November, 2016 Processing of application of exemption under sr.no. 48 of table-1 of 6th schedule of the Act.(Grant in aid).

42. STGO No. 144/2018 Dated 12th July, 2018 Procedure for adjustment of S.T. by Steel melters under sub-rule-2C of rule-58H.

July 8, 2019
Reduced sales tax rates on supply of gold, jewelry imposed

The Federal Board of Revenue (FBR) has introduced significant amendments through the Finance Act, 2019, bringing gold, jewelry, and other precious articles into the sales tax ambit by implementing reduced rates on supplies.
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July 8, 2019
Immovable property cannot be purchased without bank account: FBR

ISLAMABAD: Federal Board of Revenue (FBR) has barred purchase of immovable property by any persons making payment without banking channels.

FBR sources told PkRevenue.com that in this regard amendment had been made to Income Tax Ordinance, 2001 in this regard.

The sources said that amendment had been made to Income Tax Ordinance, 2001 which explained that immovable property valuing more than Rs5 million and other assets more than Rs1 million cannot be transferred without a bank accounts.

The new section introduced through Finance Act, 2019 is reproduced as under:

“75A. Purchase of assets through banking channel.

(1) Notwithstanding anything contained in any other law, for the time being in force, 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.

(2) For the purposes of this section in case of immoveable 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.

(3) In case the transaction is not undertaken in the manner specified in sub-section (1),—

(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.”

July 7, 2019