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Tag: PBC

  • FBR urged to make Google pin location must for retailers

    FBR urged to make Google pin location must for retailers

    KARACHI: The Federal Board of Revenue (FBR) has been urged to make Google pin location mandatory for Tier-1 retailers to stop misusing sales tax registration for point of sales (POS).

    Pakistan Business Council (PBC) in its proposals for budget 2022/2023 submitted to the FBR proposed to make Google pin location for Tier-1 retailers.

    READ MORE: Commercial importers misusing tax registration

    The PBC suggested measures for preventing misuse of POS by importers who use fake registration profile of retailer.

    In order to avail / misuse reduced rate of sales tax at 12 per cent on supplies of textile (which is available on supply of finished textile article through integrated POS system for retail outlets), some unscrupulous persons, after importing raw materials get tolling bills issued in their name from other manufacturers.

    Thereafter, such imported raw material is being sold as finished textile article through POS integrated with FBR system to avail reduced sales tax rate of 12 per cent.

    READ MORE: FBR urged to massively reduce tax rates for return filers

    FBR, view notification dated January 4, 2022 has already clarified that bulk supply through POS is tantamount to be treated as wholesale and hence would be chargeable to standard rate of 17 per cent sales tax.

    To prevent this unscrupulous practice, the following should be made mandatory for entities whose imports are over 70 per cent of their output and who have a POS facility:

    a) Should declare the number of their retail shops and

    b) Provide the square ft. retail space, detailed address, and Google pin location of all the retail stores

    c) Report per shop per month sales volume and invoices along with the monthly sales tax return.

    READ MORE: Commercial importers’ under invoicing destroying industry

    Earlier, the PBC also highlighted practice of commercial importers misusing tax registration to avail lower rates.

    Considering the fact that most of the commercial importers have been misusing the lower rate of tax otherwise available to manufacturers, therefore, FBR has reduced down the rate of tax at import stage to 1 per cent/2 per cent/5.5 per cent [on the basis of HS codes] for manufacturers as well as commercial importers.

    READ MORE: FBR’s database mining suggested for new taxpayers

    However, instead of making rate of tax at par for both commercial importers and manufacturers, PBC recommends to place system-based controls to track those commercial importers involved in under invoicing and importing under the garb of registration as manufacturers.

  • Commercial importers misusing tax registration

    Commercial importers misusing tax registration

    KARACHI: The Pakistan Business Council (PBC) has alleged that commercial importers are misusing registration as manufacturers to avail reduced tax rates on imports.

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  • FBR urged to massively reduce tax rates for return filers

    FBR urged to massively reduce tax rates for return filers

    KARACHI: The Federal Board of Revenue (FBR) has been urged to massively reduce the withholding tax rates for annual filers of income tax returns in order to ease burden on compliant taxpayers.

    Pakistan Business Council (PBC) in its proposals for budget 2022/2022 submitted to the FBR, recommended reduction in withholding tax rates for return filers.

    READ MORE: Commercial importers’ under invoicing destroying industry

    It said difference in withholding tax rate between filers and non-filers is nominal. Discrimination in tax treatment of filers and non-filers is commendable.

    “However, this has now become a revenue measure with no effort to use the data collected to increase documentation and broaden the tax base,” the PBC said.

    READ MORE: FBR’s database mining suggested for new taxpayers

    It recommended that the withholding tax regime should be simplified by reducing the number of withholding provisions.

    The current withholding tax guide available on FBR website is a 48-page document as of 2021, which clearly shows the complexity of the regime from compliance and ease of doing business aspects.

    READ MORE: PBC recommends restriction on cash above certain limit

    “There needs to be a significant distinction in the withholding income tax rates charged from non-filers as compared with the rates for filers. The rates of filers need to be reduced so that not only the burden of complaint taxpayers is reduced, but also the cost of doing business for non-complaint persons is increased.”

    Earlier, the PBC urged the tax authorities to monitoring under invoicing and mis-declaration by commercial importers as those are destroying local industry.

    READ MORE: FBR proposed to exempt withholding tax on telecom services

    It further said that information regarding values at which various custom check posts clear import consignments is not publicly available. This encourages unscrupulous importers to under-declare the value of consignments to evade government revenues.

    “Values at which import shipments are cleared through PRAL or CARE need to be publicly available,” the PBC recommended.

  • Commercial importers’ under invoicing destroying industry

    Commercial importers’ under invoicing destroying industry

    KARACHI: Pakistan Business Council (PBC) has said massive under-invoicing especially by commercial importers is destroying domestic industry across the board.

    (more…)
  • FBR’s database mining suggested for new taxpayers

    FBR’s database mining suggested for new taxpayers

    KARACHI: Federal Board of Revenue (FBR) has been suggested for mining its database in order to identifying new taxpayers and ease burden on the existing taxpayers.

    The Pakistan Business Council (PBC) in its proposals for budget 2022/2023 submitted to the FBR, said that the country had low taxpayer base which resulted in reliance on the existing taxpayers.

    READ MORE: PBC recommends restriction on cash above certain limit

    “The number of taxpayers needs to be significantly increased – the narrow taxpayer base is leading to greater pressure on the existing taxpayers.”

    There is need to document the economy and provide level playing field to the formal sector.

    READ MORE: FBR proposed to exempt withholding tax on telecom services

    The PBC suggested mining of FBR’s database to identify new taxpayers and those not fully discharging their liabilities.

    The FBR has got access to financial data in various forms including the monthly statements submitted by withholding tax / collecting agents as per various sections. Information as per Statement under sections 165A, 165B, 175A of Income Tax Ordinance, 2001 and NADRA, FIA, Bureau of Immigration and Overseas Employment records are also available.

    READ MORE: Zero rate tax demanded for pharmaceutical API imports

    “This can be a start to bringing new taxpayers in the net. In addition, the FBR has also collected data about tax paid by non-filers on vehicles, immovable property and on gains made in the Stock Market,” it added.

    Earlier, the PBC also recommended restriction on use of cash above certain limit. “Restrictions on use of cash above a certain limit would also assist,” the PBC said.

    READ MORE: OICCI recommends tax amendment for FMCG

  • PBC recommends restriction on cash above certain limit

    PBC recommends restriction on cash above certain limit

    KARACHI: Pakistan Business Council (PBC) has recommended use of cash above certain limit in order to document the economy.

    In its proposals for budget 2022/2023 submitted to Federal Board of Revenue (FBR), the PBC recommended that the use of cash in the economy should be discouraged.

    READ MORE: FBR proposed to exempt withholding tax on telecom services

    “Restrictions on use of cash above a certain limit would also assist,” the PBC said.

    The transit treaty with Afghanistan has been misused through diversion of goods to Pakistan.

    The Afghan Transit Trade Agreement has expired, with the evolving situation in Afghanistan, Pakistan needs to look to renegotiate the treaty with clauses putting in quantitative and qualitative restrictions on what can transit, insist on letters of credit, charge duty and General Sales Tax (GST) on import which would only be refunded to the Afghan government on exit, track and monitor containers, strengthen inspection of empty containers returning to Pakistan and make physical controls along the border stronger.

    READ MORE: Zero rate tax demanded for pharmaceutical API imports

    “The civil and military authorities need to be on the same page to do this,” the council recommended.

    Electronic Data Interchange with key trading partners should be deployed to check under-invoicing of imports. The provinces have little incentive to check smuggling as customs duty and GST evaded are federal taxes and do not hurt their revenues.

    READ MORE: OICCI recommends tax amendment for FMCG

    Provinces may be incentivized to conduct raids on shops that deal in smuggled goods. Positive lessons from the success of cell phone registration with Pakistan Telecom Authority (PTA) and Urdu language labelling requirement for imported food items can be applied to other smuggling prone goods.

    READ MORE: FBR urged to review minimum tax for OMCs, refineries

  • PBC submits measures to avoid challenges confronting Sri Lanka

    PBC submits measures to avoid challenges confronting Sri Lanka

    KARACHI: Pakistan Business Council (PBC) has urged the new prime minister of Pakistan Shahbaz Sharif don’t allow the country to experience the kind of challenges confronting Sri Lanka.

    The PBC in a letter congratulated the Prime Minister and assured him of full support in tackling the challenges facing the economy.

    READ MORE: Minimum tax 0.2% suggested for listed chemical companies

    The PBC recommended the new prime minister to stem the pressure on foreign exchange reserves by reducing imports. “Don’t allow the country to experience the kind of challenges confronting Sri Lanka,” it said. In order the discourage imports, the PBC recommended raising regulatory duty on import of non-essentials. Further, as regulatory duty is impractical on fuel imports, limit import through conservation measures: work from home, early closure of commercial centers and wedding halls; rationing of fuel private vehicles.

    There are several very critical choices that your government needs to make in the next few days. Foremost amongst these is restoring fiscal prudence, stemming the pressure on the foreign exchange reserves and reviving the IMF programme. In the attached summary we have listed the immediate economic imperatives and offered our suggestions on the way forward.

    READ MORE: Proposals for capital gain on disposal of securities by insurance companies

    The PBC urged the prime minister to restore fiscal prudence by withdrawal of general subsidy on fuel. “Replace with targeted assistance through BISP,” it recommended. The council suggested to avoid further populist measures that also result in increasing the inflation.

    The PCB recommended equitable taxation and urged the prime minister for avoiding burdening existing taxpayers further. “Avoid knee-jerk revenue seeking measures that impact the long term health of the economy,” it added.

    READ MORE: FBR urged to align corporate tax rate for banks

    The PBC suggested to accelerate Federal Board of Revenue (FBR) reforms to broaden the tax base, pending which, increase the advance and withholding tax rates on non-filers.

    Review anomalies that arose from hasty changes to meet the claimed demands of the IMF: Multiple taxation of inter-corporate dividends and other anomalies in group taxation; tax credits for investment; and other exemptions that still had time to run.

    It is further suggested to phase down the inequitable minimum and advance taxes on the formal sector which raise the cost of doing business.

    READ MORE: OICCI suggests duty cut on locally manufactured cars

  • LTO Karachi, PBC discuss tax issues

    LTO Karachi, PBC discuss tax issues

    KARACHI: A team of senior officials from Large Taxpayers Office (LTO) Karachi visited Pakistan Business Council (PBC) on Wednesday.

    Shahid Iqbal Baloch, Chief Commissioner Inland Revenue, Large Taxpayers Office (LTO) Karachi headed the team of tax officials. Kazi Hifzur Rehman, Commissioner Inland Revenue, Audit Zone-ll, LTO, Karachi also part of the team.

    LTO Karachi is the major revenue collecting arm of the Federal Board of Revenue (FBR).

    CEO PBC Ehsan Malik, Director Research PBC Samir S Amir and other member taxpayers of PBC attended the meeting.

    The chief commissioner highlighted the role of LTO, Karachi in collection of all domestic taxes particularly with reference to members of the PBC, who are the highest taxpayers of the country.

    The members of the Pakistan Business Council shared their views and issues of taxation with the Chief Commissioner-IR, LTO, Karachi who also ensured their timely completion and highlighted that the team of officers posted at LTO, Karachi are thorough professionals and it was reiterated that all their pending issues related to taxes shall be completed as per law accordingly.

    Aman Ghanchi, Company Secretary, Unilever Pakistan Limited proposed that to better understand various business cycles and processes, workshops may be arranged so that the department would better understand the trade of the taxpayers for effective implementation of the policies of the Board. That would also help improve the taxation within the country.

    Ehsan Malik, CEO, Pakistan Business Council also highlighted the exchange of industry notes by virtue of which old settled issues would not be repeated and resultantly there would be less pressure on the appellate side and precious time of the tax machinery as well as the businessmen would be saved.

    The members of the PBC appreciated the efforts of FBR in effective implementation of the policies of Government of Pakistan in a very effective and efficient manner.

    FBR surpasses quarterly revenue target by Rs186 billion
  • POS installation offers reduced tax rates: LTO Karachi

    POS installation offers reduced tax rates: LTO Karachi

    KARACHI: Officials of Large Taxpayers Office (LTO) Karachi have apprised the business community that installation of Point of Sale (POS) offered reduced rate of sales tax.

    A team of tax officials from Large Tax Office (LTO) Karachi visited Pakistan Business Council (PBC) on Wednesday to discuss the integration of Tier-1 retailers, a statement said on Wednesday.

    The purpose of the visit was to listen and redress the grievances regarding the online integration of Tier-1 retailers / Point of Sale (POS) with the FBR system.

    It was apprised to the members that the POS integration of retailers does not involve new tax, rather it gives the benefit of reduced rate of sales tax to consumers who buy the goods from integrated Tier-1 retailers.

    The LTO Karachi team was comprised of officers included: Shakeel Ahmad Kasana, Commissioner-Inland Revenue (IR); Aijaz Hussain, Additional Commissioner-IR; Shoukat Ali Changezi, Additional Commissioner-IR; Abdul Hameed Mangrio Deputy Commissioner-IR; and Amjad Ali Moroojo, Audit Officer-IR.

    The representatives of the PBC were: Ehsan A. Malik, Chief Executive; Samir S. Amir, Director Research; and Aman Chanchi, Unilever Pakistan.

    The Commissioner-IR briefed the members regarding the scope and purpose of POS integration.

    A formal presentation was given by Abdul Hameed Mangrio, Deputy Commissioner which was followed by Q&A session.

    The delegation requested the members to encourage the Tier-1 retailers to get integrated with the FBR system for ease of reporting of sales and avoid unnecessary documentation besides enjoying reduced rates of tax on their supplies.

    The members of the Council appreciated the outreach efforts of FBR to remove the misconception and misgivings regarding the online integration of retailers with the FBR system.

    They appreciated the system and informed that Pakistan Business Council is always encouraged to promote documentation of the economy and Point of Sale (POS) is the right step in this direction.

    They also assured their active engagement for making the Point of Sale (POS) integration a success story for the larger interest of the country and the documentation of the economy.

    FBR issues list of 1136 retailers for POS integration
  • Measures proposed to curb under invoicing by commercial importers

    Measures proposed to curb under invoicing by commercial importers

    KARACHI: Pakistan Business Council (PBC) has recommended the authorities to take additional measures to stop massive under invoicing by commercial importers.

    In its proposals for the budget 2021/2022, the PBC said that across the board massive under invoicing and dumping of imported products has been increasing.

    Information regarding values at which various custom check posts clear import consignments is not publicly available.

    This encourages unscrupulous importers to under-declare the value of consignments to evade government revenues.

    There are massive leakages in the Afghan Transit Trade (ATT) and smuggled goods are being openly sold in all major shopping centers of the country.

    Customs however is not willing to act against smuggled products citing lack of cooperation from local authorities.

    The PBC recommended the following:

    a) Values at which import shipments are cleared through PRAL or CARE need to be publicly available.

    b) The Government of Pakistan must insist of Electronic Data Interchange (EDI), for both FTA and non-FTA imports from China. In future the requirement of EDI should be made compulsory for imports from FTA / PTA partner countries.

    c) Depending on industry, the Import Trade Price (ITP) be fixed e.g. on the basis of country of origin, weight, volume etc. after discussion with stakeholders. ITP’s may be fixed for most items prone to mis-declaration such as consumer goods and margins of commercial importers be monitored to assess the value of subsequent supply of imported goods. A certificate to this effect should be issued by auditors of commercial importers.

    d) For items, prone to under invoicing and mis-declaration, FBR should designate one or two ports (including the dry ports) for clearing of import consignments. This will allow better monitoring of the import consignments where chances of mis-declaration are on a higher side.

    e) Additionally, the old Customs General Order 25 needs to be revived with a provision that local manufacturers be given the option to buy at a 15% premium, any consignment which appears undervalued.

    f) Taxes and duties deposited by local manufacturers and commercial importers should be published.

    g) The rate of tax collected from commercial importers be increased by at least by 2%. Presently, tax collected from commercial importers is treated as Final Tax.

    In order to avoid burdening of genuine commercial importers, we would recommend that the income tax collected at import stage be treated as an advance tax.

    h) In order to allow commercial importers to claim adjustment of taxes deducted at import stage, commercial importers should be asked to present certificate from auditors that at least 70% of imported items have been exported or sold to registered manufacturers. This will also help increase the overall tax base.

    i) Monthly sales declared by commercial importers should be matched with sales declared in annual income tax return as well as the credit entries in all business bank accounts. In case of any discrepancy, a reconciliation with justifiable reasons should be submitted by the commercial importers

    j) Online CREST system must be amended in a way to trace sales along with value addition thereon of person to whom supplies were made by Commercial importers.