Pkrevenue.com

Tag: Value Added Tax

  • Sales tax value addition at 3 percent applicable on all imported goods

    Sales tax value addition at 3 percent applicable on all imported goods

    ISLAMABAD: Sales tax on account of minimum value addition at three percent is applicable on all imported goods subject to exclusions on import of various imported goods.

    According to Sales Tax Act, 1990, all imported goods are subject to 3 percent ad valorem subject to exclusion as in conditions and procedure.

    The government recently abolished three percent sales tax value addition on import of sugar to help in reducing domestic prices of the commodity.

    The officials at the Federal Board of Revenue (FBR) said that under the Sales Tax Act, 1990 the procedure and conditions have been laid down for the levy of three percent value addition tax on imported goods.

    (1) The sales tax on account of minimum value addition as payable under this Schedule (hereinafter referred to as value addition tax), shall be levied and collected at import stage from the importers on all taxable goods as are chargeable to tax under section 3 of the Act or any notification issued thereunder at the rate specified in the Table in addition to the tax chargeable under section 3 of the Act or a notification issued thereunder:

    (2) The value addition tax under this Schedule shall not be charged on,—

    (i) Raw materials and intermediary goods imported by a manufacturer for in-house consumption;

    (ii) The petroleum products falling in Chapter 27 of Pakistan Customs Tariff as imported by a licensed Oil Marketing Company for sale in the country;

    (iii) Registered service providers importing goods for their in-house business use for furtherance of their taxable activity and not intended for further supply;

    (iv) Cellular mobile phones or satellite phones;

    (v) LNG / RLNG;

    (vi) Second hand and worn clothing or footwear (PCT Heading 6309.000);

    (vii) Gold, in un-worked condition;

    (viii) Silver, in un-worked condition;

    (ix) The goods as specified in the Third Schedule on which tax is paid on retail price basis; and

    (x) plant, machinery and equipment falling in Chapters 84 and 85 of the First Schedule to the Customs Act, 1969 (IV of 1969), as are imported by a manufacturer for in-house installation or use.

    (3) The value addition tax paid at import stage shall form part of input tax, and the importer shall deduct the same from the output tax due for the tax period, subject to limitations and restrictions under the Act, for determining his net liability.

    The excess of input tax over output tax shall be carried forwarded to the next tax period as provided in section 10 of the Act.

    (4) The refund of excess input tax over output tax, which is attributable to tax paid under this Schedule, shall not be refunded to a registered person in any case, except that as used for making of zero-rated supplies.

    (5) The registered person, if also dealing in goods other than imported goods, shall be entitled to file refund claim of excess carried forward input tax for a period as provided in section 10 or in a notification issued there under by the Board after deducting the amount attributable to the tax paid at import stage i.e. sum of amounts paid during the claim period and brought forward to claim period. Such deducted amount may be carried forward to subsequent tax period.

  • Implementing full-fledged VAT regime in next two to four years decided

    Implementing full-fledged VAT regime in next two to four years decided

    ISLAMABAD: The government has decided to implement full-fledged Value Added Tax (VAT) by eliminating General Sales Tax (GST) in next two to four years.

    This has been decided at a meeting under the chairmanship of the prime minister held last month.

    According to the minutes of the meeting, it was considered that VAT regime instead of GST needs to be gradually implemented within 2-4 years to enhance revenues, broaden tax base and assist in documentation of economy.

    It is decided that the Federal Board of Revenue (FBR) will fully implement VAT regime for all business segments over next 2-4 years.

    According to the roadmap for VAT implementation, the mechanism would be:

    — Member Inland Revenue (Operations); focal steward for implementation of VAT Regime over next 2-4 years.

    — Director General Input – Output Coefficient Organization (IOCO – IR) should be redesignated as DG IOCO & VAT Compliance – Functional lead for VAT Implementation.

    — Commissioner Broadening of Tax Base (BTB) at each Regional Tax Office (RTO)/ Large Taxpayer Unit (LTU) would be responsible for business level implementation – Assistant Commissioner of respective RTO/LTU for Value Chain Evaluation and VAT Implementation.

    — VAT would be progressively implemented across various segments commencing with 3rd Schedule products and gradually absorbing complex value chain products.

    The meeting considered the implementation of VAT and decided enactment of VAT related legislation, rules and regulation if required.

    For the purpose capacity building of FBR for absorption of VAT Regime would be undertaken.

    It is also decided that time and resources for VAT assessment surveys of particular industrial/business segment. In order to implement the scheme successfully, the revenue potential of particular industrial segments would be assessed.

  • Protest on June 10 against plan to abolish zero-rate sales tax

    Protest on June 10 against plan to abolish zero-rate sales tax

    KARACHI: Textile value added sector has announced to stage protest on Monday June 10, 2019 against proposed plan to abolish sales tax zero-rating for export sector.

    Muhammad Jawed Bilwani, Chief Coordinator for Five Zero Rated Export Sectors in a statement on Saturday said that the exporters and manufacturers would stage peaceful protest outside the Karachi Press Club and would also hold a press conference to explain the negative impact of this proposed plan.

    The government reportedly decided in principle to abolish zero rating for five export oriented sectors especially for textile from the next budget 2019-2020.

    According to estimates prepared by the FBR, the total value of domestic and exports stood at Rs3 trillion out of which approximately Rs1.2 trillion was exported while remaining share of Rs1.8 trillion being consumed into the country.

    The rate of GST might be less than 17 percent as the FBR considers that the higher rate at initial stage would create more problems so the rate might be fixed lower than the standard rate.

    Earlier in a joint press conference on May 28, 2019 the Chairmen of Value Added Export Sector Associations stated that discontinuation of zero rated status will result in ruin and disaster of export oriented industries, flight of capital, mass unemployment and huge foreign exchange losses.

    It will also lead to corruption in connivance with dubious FBR officials under the mode of flying invoices, over invoicing, frauds in refunds etc.

    Further, due to significant volumes of liquidity being stuck in the form of sales tax refunds, export growth will be severely affected and we may even witness a decline in exports.

    More than 200 billion rupees of exporters in Refunds of Sales Tax, Customs Rebate, Withholding Tax, DLTL & DDT are already held up with Government.

    They also conveyed serious apprehension on proposed abolition of Final Tax Regime (FTR) for exporters.

    The Chairmen and Representatives of Council of All Pakistan Textile Mills Associations, Pakistan Apparel Forum, Pakistan Hosiery Manufacturers & Exporters Association, Pakistan Textile Exporters Association, Pakistan Bedwear Exporters Association, Towel Manufacturers Association of Pakistan, Pakistan Cloth Merchant Association, Pakistan Knitwear and Sweater Exporters Association, Pakistan Denim Manufacturers & Exporters Association, All Pakistan Textile Processing Mills Association, Pakistan Readymade Garment Manufacturers & Exporter Association, Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association, The Surgical Instrument Manufacturers Association of Pakistan, Pakistan Leather Garments Manufacturers & Exporters Association, Pakistan Tanners Association, Pakistan Sports Goods Manufacturers & Exporters Association, Pakistan Carpet Manufacturers & Exporters Association, All Pakistan Bedsheets & Upholstery Manufacturers Association have fervently appealed to continue the Zero-Rating Scheme in the national interest to uplift exports. The five zero rated sectors are already documented and contribute 70% of total Nation’s exports and generate 50% of total Nation’s employment.

    They added that collecting sales tax and then refunding – is a futile exercise which creates hassles for exporters and also opens flood gates of corruption. No collection and no refund of sales tax from five zero rated export sectors is a tried and tested formula for increasing revenue and exports. We must not forget that during last two decades the Government had tried to undo zero rating twice but miserably failed, hence, zero rating was reintroduced. The zero rated scheme, in consultation with stakeholders, can further be improved for much better outcome.

    They added that the Government rather than involving in futile exercise of collecting sales tax and then refunding should focus its energy on increasing the number of taxpayers. According to FBR, in year 2017 number of active taxpayers was only 1.13 million only (0.51% of total population).

    They warned that Government’s attempt to collect interest free money in shape of sales tax will put the country’s export at stake. Today, in this period of worst economic crisis, can we afford to do away with zero rated status for the five export oriented industries? they questioned. They cautioned that if the Zero-Rating Scheme is discontinued, 30 percent of the export will decline in first year. They urged the Government to broaden the tax-base rather than burdening the existing tax-payers and documented sectors of the economy.

    Pakistan rupee has been devalued approx. 20.16 percent against dollar from 123.6 to 149.07 in just 9 months. Such state of affairs when the dollar is appreciating and banks are also reluctant to fix dollar rates, the Textile Exporters will be aggrieved in case of BMR because some machineries are delivered in 6 to 8 months and cost of machinery is increased to 20% during the period. Previously, on assurances of the Government to continue zero rating, exporters made huge investment in shape of BMR.

    They articulated that the Government focused on enhancing exports and identified the Five Zero-Rated Export Sectors as the main engines of growth for this purpose whereby Power Division vide Notification SRO12(I)/2019 dated 1st January, 2019 has revised the power tariff for zero rated industrial consumers to net 7.5 cents / kwh and OGRA vide Notification dated 18th October 2018 has been fixed Gas tariff for Registered Manufacturers or Exporters of five Zero-Rated sectors and their Captive Power to Rs600/- per MMBTU but discontinuation of zero rating status from the five export sector will put all the hard efforts of the government in vain.

    The Federation of Pakistan Chambers of Commerce & Industry, Karachi Chamber of Commerce & Industry, Lahore Chamber of Commerce & Industry, Faisalabad Chamber of Commerce & Industry & Sialkot Chamber of Commerce & Industry have also supported the stance and demand of Value Added Export Sector Associations to continue zero-rating scheme for the betterment of economy and export enhancement.

  • Complete VAT system planned under medium term fiscal framework

    Complete VAT system planned under medium term fiscal framework

    ISLAMABAD: The government is planning to a complete Value Added Tax (VAT) regime under its medium-term fiscal framework, aiming to make significant changes in taxation, according to sources.

    (more…)