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Tag: turnover tax

  • Yarn traders demand restoring turnover tax rate at 0.1pc

    Yarn traders demand restoring turnover tax rate at 0.1pc

    KARACHI: Pakistan Yarn Merchants Association (PYMA) has informed the Federal Board of Revenue (FBR) that present turnover tax rate for yarn traders is very high and many traders may resort to shutdown their factories at this high rate.

    Farhan Ashrafi, Vice Chairman of Pakistan Yarn Merchants Association(PYMA) & convener FPCCI’s Central Standing Committee on Yarn Trading and Khurram Bharaa, former SVP, have demanded Muhammad Javed Ghani, Chairman Federal Board of Revenue (FBR) to withdraw 1.5 turnover tax imposed on yarn traders and restore the previous rate of 0.1 percent.

    “Otherwise, the majority of yarn traders will be forced to close their businesses, which are already badly affected by the Corona epidemic and are facing severe financial crunch.”

    A letter to FBR chairman, Farhan Ashrafi informed that PYMA members, who are yarn traders have brought attention towards this important issue, as they were doing business in large volume but unfortunately at nominal rate of profit margin which is 1pc even less.

    By virtue of SRO.333 (I) 2001 dated 02.05.2011, the traders of yarn had been subject to turnover tax at concessional rate 0.1pc, which constitutes about 10pc of their margin. Provision of rate of minimum tax 0.1pc was made under clause 45 (A) second schedule to the income tax ordinance 2001.

     “Because of some oversight traders of yarn were not included in the purview of minimum tax under the first schedule Part-1 (Division IX) of the Income tax ordinance 2001, which would be the correct approach to treat the levy of concessional rate on yarn traders, as is the case with various other sectors and persons”, they added. Due to this lacuna a state of confusion remains about the levy of tax and frequent changes are made in the rate of turnover tax without consultation with stakeholders.

    Khurram Bharaa said that to compound the misery of yarn traders an amendment was made through Finance Act 2020, whereby Yarn Traders have been taken out of the scope of clause 45A (Part IV of 2nd Schedule) and the exemption from application of minimum turnover tax under Section 113 has been withdrawn, which prescribes 1.5pc turnover tax.

    Accordingly, the yarn traders are how subject to turnover tax at the rate of 1.5pc, which is way above their actual margin. Consequently, many traders of yarn have to discontinue their business unless the previous rate of 0.1pc is restored.

    Farhan Ashrafi asked to FBR chairman to remove the anomaly by insertion of the provision of minimum turnover tax at 0.1pc for the yarn traders in the first schedule Part-1 Division IX (exempting yarn traders from minimum 1.5pc tax under section 113 of income tax ordinance 2001).

    He requested Javed Ghani for intervention in the matter will help to rescue the complaint tax-prayers, who are conducting a large volume of trade and sustaining the textile sector of Pakistan.

  • Foreign investors express concern over high turnover tax

    Foreign investors express concern over high turnover tax

    KARACHI: Foreign investors have expressed concerns over high rate of turnover tax rate, especially for those sectors where margins are very low.

    Overseas Investors’ Chamber of Commerce and Industry (OICCI) expressed this concern at an interactive session with Dr. Abdul Hafeez Sheikh held on September 12, 2020, a statement said on Monday.

    The statement said that the foreign investors expressed concern on the continuation of the high rate of turnover tax especially for high turnover but low margin sectors like petroleum and chemical businesses.

    OICCI members also vented concern on the recent incident on the Lahore-Sialkot ring road which has damaged the morale of the stakeholders, who were otherwise satisfied with the highly improved security environment in Pakistan.

    OICCI President Haroon Rashid, welcomed Dr Abdul Hafeez Sheikh and briefed him about the critical role of OICCI and its members in the economy of Pakistan and shared that delays in tax refunds and some other issues are creating hurdles in bringing Foreign Direct Investment (FDI) in the country, as well as not being in sync with the government’s agenda of Ease of Doing Business (EODB).

    The participants representing the major foreign investors operating in the country appreciated the GOP’s effort in successfully overcoming the Covid 19 challenge to the economy and taking appropriate measures for the health and safety of the people of Pakistan.

    OICCI members complimented the Advisor on Finance for the constructive approach adopted during the 2020-21 Budgeting process where the tariff rationalization of over 1600 items, together with rationalization of withholding taxes at import stage and many other measures contributing towards Ease of Doing Business.

    OICCI also appreciated the recent launch of Roshan Digital Account for overseas Pakistanis as a step in the right direction.

    Haroon Rasheed recommended that the government should take a collective view of the measures to encourage foreign investment in Pakistan, including appointing a focal ministry for streamlining operating issues of foreign investors.

    OICCI strongly recommended that the government should ensure that incentives once given to foreign investors, for example vide Section 65 of the IT Ordinance 2001 in respect of new investments, should not be withdrawn while the respective projects are in implementation phase. OICCI also requested for orderly and prompt settlement of long pending tax refunds and circular debt.

    OICCI members were optimistic that the country can attract large FDI by ensuring predictable, consistent and transparent policy framework and its implementation.

    The participants also sought Finance Advisor review of the recent announcement that investment in the National Saving scheme will not be available to retirement funds after 2022.

    On questions from the audience, Finance Advisor assured that the GIDC issue will be managed amicably in accordance with the Supreme Court decision and that the FBR will be more proactive and will regularly engage with key stakeholders like OICCI members in resolving all legitimate issues especially on tax refunds.

    At the meeting Advisor to PM on Finance Dr Abdul Hafeez Sheikh gave a comprehensive overview of the challenges faced by the economy in the past two years and how the GOP has successfully managed to stabilize the economy which is now on a recovery path.

    Dr Hafeez Shaikh added that the growth trend in some industries like cement, automobile and fertilizer and rapid growth noticed at PSX are very encouraging and should give confidence to investors.

  • Finance Bill 2019: turnover tax enhanced to 1.5 percent

    Finance Bill 2019: turnover tax enhanced to 1.5 percent

    ISLAMABAD: The rate of minimum turnover tax has been increased to 1.5 percent from 1.25 percent in the budget 2019/2020 presented a day earlier.

    The Finance Bill, 2019 proposed to enhance the rate of minimum turnover tax

    The Federal Board of Revenue (FBR) explained that presently minimum tax on turnover is charged at the rate of 1.25 percent of the turnover if taxable income is less than 1.25 percent of turnover.

    Certain sectors have reduced rate of minimum tax at 0.2 percent, 0.25 percent and 0.5 percent of turnover.

    The aforesaid rates of minimum tax are being enhanced from 1.25 percent to 1.5 percent, from 0.20 percent to 0.25 percent, from 0.25 percent to 0.3 percent and from 0.5 percent to 0.75 percent, respectively.

    The following changes have been made in the minimum turnover tax for different sectors:

    Minimum tax rate increased from 0.2 percent to 0.25 percent for:

    (a) Distributors of pharmaceutical products, fast moving consumer goods and cigarettes;

    (b) Petroleum agents and distributors who are registered under the Sales Tax Act, 1990;

    (c) Rice mills and dealers; and

    (d) Flour mills.

    Minimum tax rate increased from 0.25 percent to 0.3 percent for motorcycle dealers registered under the Sales Tax Act, 1990.

    Minimum tax rate increased from 0.5 percent to 0.75 percent for:

    (a) Oil marketing companies, Oil refineries, Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited (for the cases where annual turnover exceeds rupees one billion.)

    (b) Pakistani Airlines; and

    (c) Poultry industry including poultry breeding, broiler production, egg production and poultry feed production.

    (d) Dealers or distributors of fertilizer; and

    (e) person running an online marketplace as defined in clause (38B) of section 2.

    Minimum tax rate increased from 1.25 percent to 1.5 percent in all other cases.

  • Yarn merchants urge FBR to stop harassment over turnover tax

    Yarn merchants urge FBR to stop harassment over turnover tax

    KARACHI: The Pakistan Yarn Merchants Association (PYMA) has urgently called on the Federal Board of Revenue (FBR) to issue a clear clarification regarding the applicable turnover income tax rate for yarn merchants, following what it describes as unjustified harassment by tax authorities.

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  • FBR asked not to send notices for turnover tax

    FBR asked not to send notices for turnover tax

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has urged Federal Board of Revenue (FBR) to issue necessary instructions to all RTOs to refrain from sending notices for demanding the unjust annual turnover Tax to members of Pakistan Yarn Merchants Association (PYMA) till the issue is resolved as the Annual Turnover Tax, which was 0.1 percent, was inadvertently being charged at 1.0 percent.

    In a letter sent to Member (Inland Revenue-Policy) FBR, Dr. Hamid Ateeq Sarwar on Wednesday, President KCCI Junaid Esmail Makda referred to a meeting between KCCI delegation and FBR authorities held recently at FBR House in Islamabad in which this particular issue was also thoroughly discussed with Member IR-Policy and other officials who assured to resolve the same in due course but no correction has been done so far in SRO333 (1)/2011.

    While reiterating that Inland Revenue-Policy department and RTOs should not issue further notices, he said that PYMA members have been receiving notices for Annual Turnover Tax which have to be suspended till the FBR makes necessary amendment.