Tag: super tax

Super tax to hammer auto business in Pakistan: Honda Atlas

KARACHI: Honda Atlas Cars (Pakistan) Limited on Thursday said that super tax to hammer the already thin margins of the auto business in the country.

The company in its detailed financial report said: “The imposition of Super Tax will further hammer the already thin margins of auto business.”

The company said that the automobile industry is considered as one of the key sectors for rapid transformation of the economy.

READ MORE: Suzuki Motors warns plant shutdown in Pakistan

Likewise, the automobile industry of Pakistan epitomizes considerable growth, capacity building and technological prowess.

“The current state of auto sector, however, has matured differently through the quarter under review. Adverse USD/PKR exchange rate parity and global supply glitches continue to undermine the Industry’s potential throughout,” it said.

Moreover, the fiscal measures adopted by the State Bank of Pakistan (SBP) for the management of foreign reserves has unavoidably impacted the import and production schedules lately.

READ MORE: Indus Motors rebuts plant shutdown reports

Rupee devaluation has approached an alarming level under the vague economic and political direction; further aggravating the situation.

“Resultantly, the car customers are facing delays in delivery, hikes in prices and temporary non- availability of some car variants,” the company said.

Honda Atlas Cars said during the period under review, the sales and production of the four-wheeler segment have not been up to the Industry’s expectation owing to curbed auto lending, escalating inflation and soaring fuel prices.

The overall industry production for the three months ended June 2022 remained 71,745 units in comparison with 53,915 units a year ago while car sales were observed at 73,815 units against 46,679 units during the same period.

READ MORE: Toyota Indus Motors offers 100% refunds on booking cancellation

The company produced 9,324 units against 7,826 units and sold 9,446 units as compared to 7,598 units in the same period of last financial year.

The recently approved Federal Budget 2022-2023 also poses tough times ahead for the auto industry. Amid negotiations with International Monetary Fund (IMF), to release the bailout package, the Government had to enforce stringent stabilization measures. Accordingly, the purchase of automobiles with engine capacity exceeding 1300CC has now been subject to 1 per cent of Capital Value Tax (CVT).

The advance tax on vehicles with engine capacity above 1600CC has also been significantly increased.

These revenue measures by the Government will further burden the customers, which may affect the Industry’s sales volume.

READ MORE: Toyota lowers July production in Japan

The imposition of Super Tax will further hammer the already thin margins of auto business.

The auto industry may experience a further slowdown in anticipation of price revision and rising interest rates.

Ranging from raw material sourcing to management of stable commodity pricing and customary lead time, the automobile industry is currently in the midst of multiple challenges.

During the quarter, the OEMs have managed to avoid potential shut down of production due to relatively higher stock levels. This led to improved financial results for the 1st quarter of the new financial year.

During the three months ended June 30, 2022, the Company achieved net sales revenue of Rs 30,246 million as compared to Rs 21,765 million in the corresponding period last year.

Higher production volumes with better overhead absorption helped to generate gross profit of Rs 1,915 million against Rs 1,595 million, a year ago. The selling and administrative expenses were increased to Rs 575 million against Rs 363 million.

Other income improved to Rs 526 million against Rs 335 million owing to customers’ confidence on the Company’s products and better funds management; benefited by increased interest rates.

The Company posted Rs 1,094 million as profit before tax in comparison to Rs 1,364 million. After statutory tax adjustments, including super tax provision, the net profit for the three month period ended June 30, 2022 came out Rs 658 million as compared to Rs 928 million of the corresponding period last year.

The earning per share remained Rs 4.61 against Rs 6.50 for three months of the last year.

July 28, 2022

Super tax to apply for Tax Year 2022 and onwards: FBR

ISLAMABAD: The Federal Board of Revenue (FBR) on Thursday said that super tax will be applicable for tax year 2022 and onwards.

The FBR issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments made to Income Tax Ordinance, 2001 through Finance Act, 2022.

The FBR said that a new section 4C to Income Tax Ordinance, 2001 has been introduced through Finance Act, 2022 and this section will apply for tax year 2022 and onwards.

Except for the persons whose income as envisaged in this section is below Rs150 million, all other persons including those assessed under Fourth, Fifth and Seventh Schedules to the Ordinance are liable to pay super tax on graduated rates ranging from 1% to 4% based on graduated income slabs provided in Division JIB of Part I of First Schedule given as under:

S. No.	Income under Section 4C	Rate of Tax
1.	Where income does not exceed Rs150 million	0% of the income
2.	Where income exceeds Rs150 million 1% of the income but does not exceed Rs200 million	1% of the income
3.	Where income exceeds Rs200 million 2% of the income but does not exceed Rs250 million	2% of the income
4.	Where income exceeds Rs250 million but does not exceed Rs300 million	3% of the income
5.	Where income exceeds Rs300 million	4% of the income

However, for tax year 2022 the rate of super tax under this section will be 10% instead of 4%, where the income of the persons engaged, partly or wholly, in business of airlines, automobiles, beverages, cement, chemicals, cigarette & tobacco, fertilizer, iron & steel, LNG terminal, oil marketing, oil refining, petroleum & gas exploration and production, pharmaceuticals, sugar and textiles exceeds Rs.300 million. For tax year 2023, this super tax on income of banking companies will be 10% if the income for the year exceeds Rs. 300 million.

For the purposes of this section, the income will be the sum of the following:

(i) Profit on debt, dividend, capital gains, brokerage, and commission;

(ii) Taxable income (other than brought forward depreciation and brought forward business losses) under section 9 of the Ordinance, excluding amounts specified in (i) above;

(iii) Imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i) above; and

(iv) Income computed, other than brought forward depreciation, brought forward amortization and brought forward business losses under Fourth, Fifth and Seventh Schedule.

Super tax payable under this section will be paid on the date and manner as specified in under section 137(1) of the Ordinance.

In case of default by the person liable to pay super tax under this section, Commissioner through an order in writing will determine the liability of the person and proceed to recover the same under applicable provisions of the Ordinance, the FBR added.

July 21, 2022

FPCCI denounces super tax imposition

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has denounced the imposition of super tax by the government to generate additional revenue.

FPCCI acting president Shabbir Mansha denounced imposition of 10 percent super tax on large industries; which already pay hefty corporate tax of 29 percent and generate millions of jobs in the country as well.

READ MORE: Pakistan stocks crash on super tax imposition

“No country in the world can charge 39 percent tax to corporations and still keep the economy afloat, he added. Additionally, new private-sector and foreign investments dry up completely in an uncompetitive market.”

Shabbir Mansha explained that industries affected will include all major industries; namely, cement, steel, sugar, oil and gas, fertilizers, LNG terminals, textiles, banking, automobiles, cigarettes, beverages, chemicals and airlines – and, these are 13 industries in total. Furthermore, all the remaining industries will be subjected to 4 percent additional tax.

READ MORE: Pakistan slaps super tax on industries, individuals

Acting FPCCI Chief also expressed his shock that the federal budget 2022 – 23 was announced just two weeks back and it mentioned no super tax on industries. It is a highly abrupt, unfortunate and anti-industry measure.

Mansha reiterated FPCCI’s stance that the government should not squeeze the existing taxpayers further and look for the avenues to broaden the tax net; as that is the only practical and sustainable way to generate more taxes without hurting the industries, exports, employment and the economic growth.

He noted with profound concern that Pakistan Stock Exchange (PSX) was unnerved on the decision and the trading had to be suspended on Friday after KSE-100 index lost 2,055 points or 4.81 percent in a quick span of merely 20 minutes.

Mansha emphasized that the cost of doing business is already at an all-time-high in the country and the interest rate of 13.75 percent will not let the economy grow at any meaningful rate; and, prices of electricity and gas have already made us uncompetitive as far as the exports are concerned.

Additionally, there are rumors that interest rate may be further raised. He added that the government should also consult with the stakeholders in business, industry and trade on how and when interest rate can be brought down; so that, businesses can plan their year ahead accordingly.

READ MORE: Key tax measures taken through Finance Bill 2022

Mansha emphasized that imposition of PDL – though in a phased manner – will totally destroy the cost of doing business competitiveness and will fuel the inflation like never before through its multiplier effect. He demanded that the government should take business community on board on its commitment with IMF on PDL.

Acting FPCCI Chief has also stressed upon the need to start a consultative process with the stakeholders on the implementation status of hike in electricity base tariff; impending PDL imposition and new or additional taxes as these costs will cumulatively destroy the business sentiment and industry will come to a halt.

READ MORE: FPCCI identifies tax anomalies in budget 2022-2023

June 24, 2022
Pakistan slaps super tax on industries, individuals

ISLAMABAD: Pakistan on Friday imposed a 10 per cent super tax on earnings of certain industrial sectors and on income of high net worth individuals.

Prime Minister Shehbaz Sharif announced to impose the 10 percent super tax on over 12 large industries and also on affluent persons with more than Rs 150 million annual income with a rate up to four percent.

Addressing the members of his economic team, he said the imposed taxes would be the “first step towards the country’s financial self-reliance”.

READ MORE: Key tax measures taken through Finance Bill 2022

The prime minister said the 10 percent tax aimed at poverty alleviation would be imposed on industries and sectors including cement, fertilizers, steel, sugar, textile, oil and gas, LNG terminals, banking sector, cigarette, chemicals and beverages.

He said the individuals earning over Rs 150 million a year would pay one percent tax; those earning Rs 200 million will pay two percent, those over Rs 250 million income to pay three percent and the ones earning above Rs 300 million will pay four percent tax.

The prime minister said he had formed teams to boost tax collection with the help of organs of State institutions and through digital means.

READ MORE: FPCCI identifies tax anomalies in budget 2022-2023

He said the step would help the country attain economic stability and push it out of the shakles of loans.

PM Sharif pointed out that every year, an amount of around Rs 2,000 billion in the country was misappropriated through tax evasion.

He mentioned that 60 percent of the formal sector was paying taxes, however the rest of 40 percent economy needed to be brought into tax net.

He said the collected tax would be diverted towards the projects of health, education, skilled training and information technology.

For the first time in country’s history, he said, a budget had been presented to provide relief to common man, orphans, widows and poor.

READ MORE: Pakistan announces massive tax reduction for salaried persons

The prime minister hoped that with hard work and faith in Allah Almighty, the things would ease up.

The measures taken in the budget will enable the poor overcome their financial challenges, he added.

PM Sharif said the history was evident that the poor always sacrificed while facing challenges, but now it was the moral obligation upon the affluent to come forward and contribute.

He expressed confidence that the measures would take Pakistan forward on the path of prosperity, progress and economic stability.

READ MORE: Rate of super tax for Tax Year 2022

June 24, 2022
Section 4B of Income Tax Ordinance, 2001: super tax

ISLAMABAD: The Section 4B of the Income Tax Ordinance, 2001 deals with super tax for rehabilitation of temporarily displaced persons. The Federal Board of Revenue (FBR) issued the updated Income Tax Ordinance, 2001.
(more…)

July 18, 2021
Super tax permanently imposed on banking companies

ISLAMABAD: The levy of super tax has been permanently imposed on banking companies as it was expiring in the tax year 2021.

Sources in the Federal Board of Revenue (FBR) said that the super tax was only imposed on banking companies while the other taxpayers were exempted from tax year 2020.

The sources said that the Finance Bill 2021 had proposed to continue the levy of super tax at 4 percent on banking companies beyond Tax Year 2021 and onwards.

The government imposed the super tax through Finance Act, 2015 for one year, which was later extended for subsequent years, by inserting Section 4B to the Income Tax Ordinance, 2001.

According to Section 4B:

Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

(2) For the purposes of this section, “income” shall be the sum of the following:—

(i) profit on debt, dividend, capital gains, brokerage and commission;

(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

June 20, 2021
Super tax made permanent for banks

ISLAMABAD: The levy of super tax has been made permanent for banking companies beyond Tax Year 2021, sources in Federal Board of Revenue (FBR) said on Monday.

Tax Laws (Amendment) Ordinance, 2021 has been promulgated on February 12, 2021 after approval by the President of Pakistan.

As per the ordinance the levy of super tax on banks shall continue beyond Tax Year 2021. Through the ordinance the levy shall apply in tax year 2021 and onwards.

With this amendment the banks shall pay the super tax at four percent in subsequent tax years. For the banking companies the tax year 2022 has commenced from January 01, 2021.

The one-time super tax was imposed by inserting Section 4B of Income Tax Ordinance, 2001 through Finance Act, 2015.

The Income Tax Ordinance, 2001 explained the super tax as:

“4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

(2) For the purposes of this section, “income” shall be the sum of the following:—

(i) profit on debt, dividend, capital gains, brokerage and commission;

(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.”

In tax year 2018 the rate of super tax was four percent for banking companies on percentage of income and three percent on person other than a banking company, having income equal to or exceeding Rs500 million.

In tax year 2020 the tax rate at 4 percent was maintained for banking companies. However, in other cases it was abolished.

With the new amendment, the banking companies shall continue to pay the super tax with not time frame.

February 15, 2021
TAX YEAR 2021: rate of super tax

ISLAMABAD: Federal Board of Revenue (FBR) has updated rate of super tax to be applicable for tax year 2021 (July 01, 2020 – June 30, 2021).

The FBR issued Income Tax Ordinance, 2001 after incorporating amendment brought through Finance Act, 2020. The FBR issued the following updated rate of super tax:

Provided that in case of a banking company, super tax for tax year 2019 shall be payable, on estimate basis, by thirtieth day of June, 2018.

Super tax was introduced through Finance Act, 2015 by inserting Section 4B to Income Tax Ordinance, 2001.

The section 4B is read as:

4B. Super tax for rehabilitation of temporarily displaced persons.― (1) A super tax shall be imposed for rehabilitation of temporarily displaced persons, for tax years 2015 and onwards, at the rates specified in Division IIA of Part I of the First Schedule, on income of every person specified in the said Division.

(2) For the purposes of this section, “income” shall be the sum of the following:—

(i) profit on debt, dividend, capital gains, brokerage and commission;

(ii) taxable income (other than brought forward depreciation and brought forward business losses) under section (9) of this Ordinance, if not included in clause (i);

(iii) imputable income as defined in clause (28A) of section 2 excluding amounts specified in clause (i); and

(iv) income computed, other than brought forward depreciation, brought forward amortization and brought forward business lossess under Fourth, Fifth, Seventh and Eighth Schedules.

(3) The super tax payable under sub-section (1) shall be paid, collected and deposited on the date and in the manner as specified in sub-section (1) of section 137 and all provisions of Chapter X of the Ordinance shall apply.

(4) Where the super tax is not paid by a person liable to pay it, the Commissioner shall by an order in writing, determine the super tax payable, and shall serve upon the person, a notice of demand specifying the super tax payable and within the time specified under section 137 of the Ordinance.

(5) Where the super tax is not paid by a person liable to pay it, the Commissioner shall recover the super tax payable under subsection (1) and the provisions of Part IV,X, XI and XII of Chapter X and Part I of Chapter XI of the Ordinance shall, so far as may be, apply to the collection of super tax as these apply to the collection of tax under the Ordinance.

(6) The Board may, by notification in the official Gazette, make rules for carrying out the purposes of this section.

October 16, 2020
FBR estimates additional revenue of Rs2 billion through changes in super tax

ISLAMABAD: Federal Board of Revenue (FBR) has estimated additional revenue of Rs2 billion through proposed changes in law related to super tax.

The changes have been introduced to Section 4B of Income Tax Ordinance, 2001 through Finance Bill 2019.

The FBR in explanation to the Finance Bill said that presently brought forward depreciation and business losses are excluded while computing income for calculating liability of super tax.

However, such losses are not excluded in the case of banking, insurance, oil and mineral exploration companies.

In order to ensure similar tax treatment, brought forward business and depreciation losses have been excluded from income computed to calculate super tax in the case of the abovementioned sectors.

FBR sources said that Large Taxpayers Unit (LTU) Karachi had submitted its proposals related to super tax with estimated revenue generation of Rs2 billion.

The LTU Karachi in its proposals said that the proposed amendment would bring uniform chargeability of super tax to all taxpayers including taxpayers falling within the purview of Fourth, Fifth, Seventh and Eighth Schedules of Income Tax Ordinance, 2001.

Fourth Schedule mainly deals with Insurance companies.

Fifth Schedule is related to exploration and production companies.

Seventh Schedule is about banking companies.

While Eighth Schedule covers capital gains and National Clearing Company Pakistan Limited (NCCPL).

June 13, 2019
Super tax application may be amended to generate around Rs2 billion

KARACHI: Federal Board of Revenue (FBR) may recommend amending application of super tax in the forthcoming budget 2019/2020 to generate around Rs2 billion.

FBR sources said that the tax authorities had recommended amendments to Section 4B of Income Tax Ordinance, 2001 through Finance Bill, 2019.

The sources said that it had been recommended to apply super tax on the income computed under Fourth, Fifth, Seventh and Eighth Schedules ‘other than brought forward depreciation and brought forward business losses.

According to the recommendation, the proposed amendment would bring uniform chargeability of super tax to all taxpayers including taxpayers falling within the purview of Fourth, Fifth, Seventh and Eighth Schedules of Income Tax Ordinance, 2001.

As per the ordinance the fourth schedule covers insurance companies, fifth schedule covers exploration and production companies, seventh schedule for banking companies and eighth schedule covers capital gains and National Clearing Company Pakistan Limited.

The sources said that the proposed amendment will help the FBR to generate around Rs2 billion as revenue.

June 5, 2019