KARACHI: Passengers or crew members found involved in illegal trading of currency, gold or precious stones to be convicted with up to 14 years imprisonment along with huge amount of fine and penalty.
(more…)Tag: Finance Bill 2020
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Minimum tax to apply on non-resident PE companies
KARACHI: The minimum tax on turnover has been proposed to impose on non-resident companies having permanent establishment (PE) in Pakistan.
The amendment in Section 113 of the Income Tax Ordinance, 2001 has been proposed through Finance Bill, 2020.
According to EY Ford Rhodes Chartered Accountants the Section 113 of the Ordinance levies minimum tax on a person based on his turnover where such person is not liable to pay tax due to various reasons listed therein.
However, the levy of minimum tax in case of corporate taxpayers, is only applicable on resident companies.
This means that foreign companies having a permanent establishment in Pakistan (including a branch) are not subject to minimum tax.
The Finance Bill 2020 has now proposed to include non-resident companies having a permanent establishment in Pakistan under the domain of minimum tax on turnover.
Consequently, such companies would be required to compute minimum tax under Section 113 of the Ordinance for determination of their ultimate tax liability.
It may be noted that in the matter of levy of tax on non-resident persons, as per Section 107 of the Ordinance, the provisions of the Avoidance of Double Tax Agreement between Pakistan and the respective country would prevail over the provisions of the Ordinance.
It needs to be appreciated that in most of the agreements Pakistan has signed with other countries, a permanent establishment of a non-resident in Pakistan would be taxable only on net income basis.
“Therefore, the applicability of minimum tax in case of a non-resident person having a permanent establishment in Pakistan may be put to a question where a avoidance of double taxation treaty prevails,” they said.
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FBR to get information of all persons entering, leaving Pakistan for broadening of tax base
KARACHI: Federal Board of Revenue (FBR) will get access to information of all persons entering or leaving Pakistan from federal investigation agency and bureau of emigration for the purpose of broadening of tax base.
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Commissioner IR empowered to amend assessment without definite information
KARACHI: Commissioners of Inland Revenue have been empowered to amend assessment on the basis of best judgment and make dis-allowances without specific supporting evidence.
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Cash withdrawal should be exempted from withholding tax; Senate recommends key changes in Finance Bill 2020
ISLAMABAD: The Senate of Pakistan has recommended the government to abolish withholding tax on cash transactions from banks. In its key tax recommendations for finalizing budget 2020/2021, the Senate recommended that the government should abolish all kinds of withholding tax chargeable on cash transactions from banks.
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Senate recommends tobacco must be treated as crop, exempted from duty/taxes
ISLAMABAD: The Senate of Pakistan has recommended a significant policy shift, advocating for tobacco to be treated as a crop and exempted from duties and taxes. This recommendation was made in the context of the Finance Bill 2020, reflecting the upper house’s stance on the agricultural status of tobacco.
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Tax collection target of Rs4.96 trillion for 2020/2021 achievable
ISLAMABAD: Hammad Azhar, Minister for Industries and Production, has said that the tax collection target of Rs4.96 trillion assigned to Federal Board of Revenue (FBR) during next fiscal year is achievable.
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Banks to provide information of all recipients of profit on debt
In a decisive move to bolster transparency in financial transactions, the Federal Board of Revenue (FBR) is set to require all banks to provide detailed information on individuals receiving profit on debt, effective from July 1, 2020.
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Tax deduction allowed on salary up to Rs25,000 paid in cash
KARACHI: The Finance Bill 2020 has proposed major changes related to tax deduction in order to provide relief to business community. Under the proposed amendments the threshold amount has been increased up to Rs25,000 for tax deduction in case salary is paid.
According to interpretation of the Finance Bill 2020 by BDO Pakistan, the Finance Bill proposed amendments to Section 21 of the Income Tax Ordinance, 2001.
(l) The Bill seeks to enhance threshold of deduction for cash payment against business income under single account head from Rupees fifty thousand to Rupees two hundred and fifty thousand per annum.
This proposal seeks to relieve businesses from making transactions through banking channel, as it is difficult for business to make every transaction through banking channel.
Further The Bill seeks to increase the threshold of expenditure liable to be disallowed as a business expense if the same is not made through a crossed banking instrument/ online transfer of payment from Rs.10,000/- to Rs.25,000/ per transaction.
Furthermore, The Bill seeks to enhance threshold from Rs.15,000/- to Rs.25,000/- as allowable deduction against business income if the salary is paid in cash.
(p) & (q) The Bill seeks to add two new clauses to regulate limit of expenditure on account of utility bill and sales made to persons required to be registered but not registered under the Sales Tax Act, 1990 as an admissible deduction against business income where sales equal to or exceed Rs. 100 million per person. However, the disallowance of expenditure shall not exceed 20 percent of total deduction claimed.
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Exemption from withholding tax on foreign remittances may not practical for banks
The Pakistani government has announced a significant tax relief measure, granting withholding tax exemption on the transfer of foreign remittances to Pak Rupee (PKR) accounts. However, tax experts have raised concerns about the practical implementation of this exemption, particularly regarding the bifurcation of transactions for banks.
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