PTBA suggests allowing further tax adjustment to suppliers

KARACHI: Pakistan Tax Bar Association (PTBA) has recommended the Federal Board of Revenue (FBR) to allow adjustment of further tax against input tax.

The PTBA in its proposals for budget 2019/2020, said that presently further tax has been charged by the registered person on the supplies made to the person who are required to be registered but does not obtain registration is not available for adjustment against input tax in pursuance of section 7(1) of the Sales Tax Act, 1990.

Moreover, through the Finance Act, 2017, further tax at the rate of 2 percent was also levied on zero-rated supplies.

The PTBA said that this results in unnecessary increase in cost of doing business and unrest amongst the taxpayers which is creating a negative business environment.

“Due to this amendment, all zero –rated supplies including exports are subject to further tax.”

Exports are made to non-resident persons who are not required to be registered with Pakistan tax authorities. Resultantly, the exporters will have the bear the amount of further tax charged to exporters which will badly affect their competiveness in the international market.

The PTBA recommended that the supplier should be allowed adjustment of further tax against input tax.

Appropriate clarification should be issued that export sales are not subject to further tax, the PTBA further advised.

The proposed amendments would put an end to unnecessary litigation, result in reducing the cost of doing business and create trust between taxpayers and tax collector.

The exporters will not be burdened with extra cost of further tax.

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