ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn the condition on individuals to act as withholding agent in case the business turnover is up to Rs100 million.
The government through Tax Laws (Second Amendment) Ordinance, 2019 introduced major change to Income Tax Ordinance, 2001.
Under section 153 of the Ordinance, individuals having turnover of Rs50 Million or above in any of the preceding Tax Years are obliged to act as withholding tax agents whilst making payments for supply of goods, rendering of services or for execution of contracts.
“Henceforth traders, being individuals and having turnover up to Rs100 million shall not be required to act as a withholding agent under section 153 of the Ordinance,” according to the FBR.
Tax experts explained that individual having turnover of Rs50 million or more in any of the preceding tax years is liable to deduct tax under section 153 while making payments against supply of goods, services and contracts.
Through the Second Amendment Ordinance, traders being individuals having turnover up to Rs100 million have been exempted from deducting tax under section 153 while making payment against supply of goods, services and contracts.
However, the FBR may clarify the year with respect to which turnover of Rs100 million will be calculated by the trader.
ISLAMABAD: Federal Board of Revenue (FBR) has withdrawn the exemption of advance income tax on electricity bills to industrial and commercial consumers.
The exemption has been withdrawn through Tax Laws (Second Amendment) Ordinance, 2019.
The FBR said that in terms of clause (66) of Part-IV of the Income Tax Ordinance, 2001 exemption from collection of advance tax under section 235 of the Ordinance on the electricity bills of commercial and industrial consumers was available to the five export oriented sectors who fulfill the twin conditions of falling under the zero rated regime of sales tax and being registered in sales tax as exporters or manufacturers.
The zero rating regime for the five export–oriented sectors has now been abolished, therefore, consequent amendment in clause (66) of Part-IV of the Second Schedule has been made to remove the legal anomaly.
ISLAMABAD: The commissioner of Inland Revenue has been empowered to cancel business license of person on violation of tax laws.
An amendment has been made to Section 181D of Income Tax Ordinance, 2001 through Tax Laws (Second Amendment) Ordinance, 2019 to empower commissioner to impose fine and penalty and cancel business license.
Federal Board of Revenue (FBR) in salient features to tax amendment ordinance said that in order to document business activity section 181D of the Ordinance was inserted through the Finance Act, 2019 whereby it was made mandatory for every person engaged in any business, profession or vocation to obtain and display a business license as prescribed by the board.
In order to complement efforts towards implementation of this scheme the Commissioner is being empowered to impose a fine of Rs.20,000/- in the case of a taxpayer deriving income chargeable to tax under the Ordinance and Rs.5,000/- in all other cases.
Moreover, the Commissioner shall also be empowered to cancel a business license after providing an opportunity of being heard if a person fails to notify any change in particulars within 30 days of such change or if a person is convicted of any offence under any Federal Tax Law.
KARACHI: State Bank of Pakistan (SBP) on Thursday said that the tax amendment for foreign investors to generate great interest in government securities.
In a statement the central bank said that the tax amendments will help to deepen the capital market, generate greater interest in the longer-dated government securities, diversify the investor base, and reduce the cost of debt for the government.
Amendments in the Income Tax Ordinance, 2001 have been issued to simplify the tax regime for non-resident companies investing in debt instruments and Government securities.
The SBP said that these amendments aim to deepen our capital markets, support availability of long term rupee financing sources, support competition in the local currency debt market, and diversify the source of funding for the government.
The existing foreign exchange framework allows non-residents to invest in debt instruments and Government securities through Special Convertible Rupee Account (SCRA) maintained with banks in Pakistan.
However, the tax structure for non-residents investing in debt securities was historically complex. Different rates applicable for the withholding tax on profit on debt and capital gains tax, penal transaction charges for non-filers, a complex tax-filing process and uncertainty about tax applicability were the key impediments to foreign investment into the local debt market, particularly in the long-term debt instruments.
In this context, the recent amendment in the tax laws has simplified Pakistan’s tax regime for investment in the local debt market.
Specifically, the above Ordinance has implemented the following changes in Income Tax Ordinance, 2001 to simplify the tax regime for non-resident companies, having no permanent establishment in Pakistan, investing through SCRA in debt instruments and government securities (including Treasury Bills and Pakistan Investment Bonds):
The capital gains tax shall be subject to withholding at the rate of ten percent and shall constitute final discharge of the tax liability;
No deduction of 0.6% banking transaction tax under section 236P on transactions in SCRA;
No advance tax payment under section 147 on capital gains; Dispensation from the requirement of registration under section 181, filing of return under section 114 and filing of statement of final taxation under section 115 in respect of income solely from capital gains or profit on debt from investment in debt securities;
No distinction shall be made in terms of filer or non-filer;
Many non-resident investors currently benefit from tax treaties and already enjoy reduced rates of taxation around 10 percent. The key provision in the ordinance is to simplify the tax structure and process for international investors.
ISLAMABAD: The government has reduced the minimum tax rate to 0.5 percent from 1.5 percent for traders having turnover up to Rs100 million.
Federal Board of Revenue (FBR) issued salient features to explain changes made to Income Tax Ordinance, 2001 through Tax Laws (Second Amendment) Ordinance, 2001.
The FBR said that the standard rate of minimum tax under section 113 of the Income Tax Ordinance, 2001 is being reduced from 1.5 percent to 0.5 percent in the case of traders having turnover up to Rs.100 million for the Tax Year 2020.
However, traders having turnover up to Rs.100 million who have filed their returns for the Tax Year 2018 will be obliged to pay tax equal to or more than the tax paid for the Tax Year 2018 for the Tax Years 2019 and 2020.
Moreover, a trader has been defined as an individual engaged in the buying and selling of goods in the same state including a retailer and a wholesaler, however, distributors have been ousted from the scope of this definition.
Under section 153 of the Ordinance, individuals having turnover of Rs.50 million or above in any of the preceding Tax Years are obliged to act as withholding tax agents whilst making payments for supply of goods, rendering of services or for execution of contracts.
Henceforth traders, being individuals and having turnover up to Rs.100 million shall not be required to act as a withholding agent under section 153 of the Ordinance.
ISLAMABAD: In a significant move aimed at promoting digital accessibility and e-commerce in Pakistan, the government has reduced the advance tax on the import of mobile phones.
ISLAMABAD: The government has facilitated manufacturers in obtaining exemption certificates for import of raw material.
The Federal Board of Revenue (FBR) issued salient features to explain amendments to Income Tax Ordinance, 2001 brought through Tax Laws (Second Amendment) Ordinance, 2019.
A major change was introduced under which a manufacturer applies for exemption certificates to the Commissioner Inland Revenue. In case the commissioner unable to approve the request within give timeframe then the exemption certificate would automatically granted.
The FBR explained that in order to facilitate manufacturers, a Commissioner, under the auspices of clause (72B) of Part-IV of the Second Schedule to the Ordinance has the mandate to issue exemption certificate in respect of collection of tax under section 148 of the Ordinance at the import stage in respect of raw materials being imported by industrial undertakings subject to various conditions.
However, no time limit has been prescribed under the law or rules for disposal of such exemption certificate by the Commissioner.
In order to complement efforts being made towards ease of doing business if a Commissioner fails to issue such certificate within the time period prescribed under the Income Tax Rules, 2002 the certificate shall be automatically processed and issued by IRIS and shall be deemed to have been issued by the Commissioner.
However, the Commissioner shall have the mandate to modify or cancel the certificate issued automatically by IRIS on the basis of reasons to be recorded in writing after providing an opportunity of being heard to the taxpayer.
ISLAMABAD: The government has announced a comprehensive package of tax incentive and exemptions to attract foreign investment into debt securities.
The Federal Board of Revenue (FBR) issued salient features on Wednesday to explain amendments to Income Tax Ordinance, 2001 brought through Tax Laws (Second Amendment) Ordinance, 2019.
The FBR said that the existing foreign exchange framework of the country allows non-residents to invest in debt securities and Government securities through Special Convertible Rupee Accounts (SCRA’s) maintained with banks in Pakistan.
There is no restriction on repatriation of funds from SCRA’s which incentivizes investment in the local debt market by non-resident investors.
Several amendments for encouraging investment in the local debt market and simplifying the tax regime for non-resident companies have been introduced which are summarized hereunder:-
(i) Capital gains emanating from the disposal of debt instruments and government securities (including treasury bills and Pakistan Investment Bonds) to non-resident companies (not having a permanent establishment in Pakistan)who have made investments in such debt instruments/securities exclusively through a Special Convertible Rupee Account (SCRA) maintained with a bank in Pakistan shall be subject to withholding tax @ 10 percent by banks/financial institutions which shall constitute final discharge of tax liability.
(ii) Enhanced rate of withholding tax for persons not appearing on the active taxpayers list under the Tenth Schedule to the Ordinance shall not apply to capital gains and profit on debt earned by non-resident companies, not having a permanent establishment in Pakistan, which invest in local debt instruments/securities through SCRA maintained with a bank in Pakistan.
(iii) Special Convertible Rupee Accounts (SCRA) being maintained by non-resident companies having no permanent establishment in Pakistan shall be exempt from collection of advance tax on banking transactions otherwise than through cash under section 236P of the Ordinance.
(iv) A non-resident company having no permanent establishment in Pakistan investing debt instruments and government securities through SCRA shall not be required to pay advance tax under section 147 of the Income Tax Ordinance, 2001 in respect of capital gains arising to it.
(v) Requirement for filing a statement of final taxation under section 115(4) of the Income Tax Ordinance, 2001 and registration under section 181 of the Ordinance shall not apply to a non-resident company having no permanent establishment in Pakistan solely by reason of Capital Gain or Profit on Debt earned from investments indebt securities and Government securities through Special Convertible Rupee Account maintained with a banking company or financial institution in Pakistan.
ISLAMABAD: Tax officials have been empowered to confiscate goods where importer / manufacturer failed to mandatory print the retail price on consumer goods.
The government introduced Tax Laws (Second Amendment) Ordinance, 2019 on Wednesday through promulgated through presidential ordinance.
Federal Board of Revenue (FBR) issued salient features of the ordinance and stated that penalty had been proposed through the ordinance for person failed to comply with mandatory requirement of printing retail price on imported goods falling under Third Schedule of Sales Tax Act, 1990.
According to the amendment, any person, being a manufacturer or importer of an item which is subject to tax on the basis of retail price, who fails to print the retail price in the manner as stipulated under the Act.
“Such person shall pay a penalty of ten thousand rupees or five percent of the amount of tax involved, whichever is higher:
Further, such goods shall also be liable to confiscation. However, the adjudication authority, after such confiscation, may allow redemption of such goods on payment of fine which shall not be less than twenty percent of the total retail price of such goods.”
ISLAMABAD: The government has massively reduced sales tax on imported mobile phone valuing up to $100 to Rs200 from Rs1,320 through amendment to Sales Tax Act, 1990 through Tax Laws (Second Amendment) Ordinance, 2019.
The FBR notified the revised rates of sales tax on imported mobile phones. The amendment has been made to Ninth Schedule of the Sales Tax Act, 1990.
The updated NINTH SCHEDULE of the Sales Tax Act, 1990 to prescribe sales tax rates on mobile phones.
The Table:
S.No.
Description/ Specification of goods
Sales Tax on import or local supply
Sales tax chargeable at the time of registration (IMEI number by CMOs)
Sales tax on supply (payable at the time of supply by CMOs)
1.
Subscriber Identification
Module (SIM) Cards
Rs250
2
Cellular mobile phones or satellite phones to be charged on the basis of import value per set, or equivalent value in rupees in case of supply by the manufacturer, at the rate as indicated against each category:–
A. Not exceeding US$ 30
Rs130
Rs130
B. Exceeding US$ 30 but not exceeding US$ 100
Rs200
Rs200
C. Exceeding US$ 100 but not exceeding US$ 200
Rs1,680
Rs1,680
D. Exceeding US$ 200 but not exceeding US$ 350
Rs1,740
Rs1,740
E. Exceeding US$ 350 but not exceeding US$ 500
Rs5,400
Rs5,400
F. Exceeding US$ 500
Rs9,270
Rs9,270
LIABILITY, PROCEDURE AND CONDITIONS
(i) In case of the goods specified against S.No 1of the Table, the liability to charge, collect and pay tax shall be on the Cellular Mobile Operator (CMO) at the time of supply. In case of the goods specified against S.No 2, the liability to pay sales tax at the time of import shall be on the importer, and the liability to charge, collect and pay sales tax payable on supplies shall be on the Cellular Mobile Operator at the time of registering International Mobile Equipment Identity (IMEI) number in his system.
(ii) The Cellular Mobile Operators shall, if not already registered, obtain registration under the Sales Tax Act, 1990.
(iii) No IMEI shall be registered in his system by a Cellular mobile Operator without charging and collecting the sales tax as specified in the Table. (iv) The Cellular Mobile Operator shall deposit the sales tax so collected through his monthly tax return in the manner prescribed in section 26 of the Sales Tax Act, 1990, and rules made thereunder.
(v) The Cellular Mobile Operator shall maintain proper records of all IMEI numbers registered for a period of six years, and such records shall be produced for inspection, audit or verification, as and when required, by an authorized officer of Inland Revenue.
(vi) The Pakistan Telecommunication Authority shall provide data regarding IMEI numbers registered with other Cellular Mobile Operators to prevent double taxation on the same IMEI number in case of switching by a subscriber from one operator to another, and to provide data regarding registration of IMEI numbers to the Board on monthly basis.
(via) The sales tax as indicated in column (3) of the Table above shall be paid by the importer, in case of imports and by the manufacturer, in case of locally manufactured cellular mobile phones.
(vii) No adjustment of input tax shall be admissible to the Cellular Mobile Operator or any purchaser of cellular mobile phone against the sales tax charged and paid in terms of this Schedule.
(viii) The tax specified in column (4) of the Table shall be charged, collected and paid with effect from such date as may be specified by the Board and the sales tax specified in column(3) shall stand withdrawn from the date so specified.
The FBR said that notwithstanding anything contained in any other law for the time being in force, the levy, collection and payment of sales tax under Notification No. S.R.O. 460(I)/2013, dated the 30th May, 2013, shall be deemed to always have been lawfully and validly, levied, collected and paid.
