What's new

FBR publishes stats on market tax filers: Karachi tops list

A

Abdullah719

T20I Captain
Joined
Apr 16, 2013
Runs
44,825
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Tax paid by shop keepers in top cities:<a href="https://twitter.com/hashtag/Karachi?src=hash&ref_src=twsrc%5Etfw">#Karachi</a> - Rs 30,000 million<a href="https://twitter.com/hashtag/Lahore?src=hash&ref_src=twsrc%5Etfw">#Lahore</a> - Rs 560 million <a href="https://twitter.com/hashtag/Faisalabad?src=hash&ref_src=twsrc%5Etfw">#Faisalabad</a> - Rs 140 million <a href="https://twitter.com/hashtag/Islamabad?src=hash&ref_src=twsrc%5Etfw">#Islamabad</a> - Rs 1,930 million<a href="https://twitter.com/hashtag/Rawalpindi?src=hash&ref_src=twsrc%5Etfw">#Rawalpindi</a> - Rs 1,090 million<br><br>Lahore & Faisalabad are the lowest tax paying cities despite massive business activity. <a href="https://t.co/5lzlwKtHWU">pic.twitter.com/5lzlwKtHWU</a></p>— Usama Qureshi (@UsamaQureshy) <a href="https://twitter.com/UsamaQureshy/status/1189841190792966144?ref_src=twsrc%5Etfw">October 31, 2019</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
Abdullah719 said:
<blockquote class="twitter-tweet" data-lang="en"><p lang="en" dir="ltr">Tax paid by shop keepers in top cities:<a href="https://twitter.com/hashtag/Karachi?src=hash&ref_src=twsrc%5Etfw">#Karachi</a> - Rs 30,000 million<a href="https://twitter.com/hashtag/Lahore?src=hash&ref_src=twsrc%5Etfw">#Lahore</a> - Rs 560 million <a href="https://twitter.com/hashtag/Faisalabad?src=hash&ref_src=twsrc%5Etfw">#Faisalabad</a> - Rs 140 million <a href="https://twitter.com/hashtag/Islamabad?src=hash&ref_src=twsrc%5Etfw">#Islamabad</a> - Rs 1,930 million<a href="https://twitter.com/hashtag/Rawalpindi?src=hash&ref_src=twsrc%5Etfw">#Rawalpindi</a> - Rs 1,090 million<br><br>Lahore & Faisalabad are the lowest tax paying cities despite massive business activity. <a href="https://t.co/5lzlwKtHWU">pic.twitter.com/5lzlwKtHWU</a></p>— Usama Qureshi (@UsamaQureshy) <a href="https://twitter.com/UsamaQureshy/status/1189841190792966144?ref_src=twsrc%5Etfw">October 31, 2019</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Click to expand...

Insane that a city the size of Islamabad pays almost 4 times as much as Lahore. No wonder the Nooras kept winning there, corrupt people voting corrupt representatives into Parliament
 
FBR publishes statistics on market tax filers

KARACHI (Dunya News) – The Federal Board of Revenue (FBR) has published statistics on market tax filers on Wednesday, according to which in Karachi markets around 85000 have been registered as filers at Tariq Road, Goli Mar, DHA, Gulistan Johar and Clifton.

The tax collection from these registered filers is around Rs30 billion. Of this, 18744 are big taxpayers who paid Rs29.94 billion.

Similarly, in Lahore markets around 3925 have been registered as filers at Anarkali, Mall road, Hafiz centre and liberty. The tax collection from these registered filers is around Rs560 million. Of this, 466 are big taxpayers paid Rs530 million.

In Faisalabad markets, around 2266 have been enumerated as filers at Kutchri, Rail Bazar, Anarkali and Chinot. The tax collection from these filers is around Rs140 million, out of which Rs125 million were paid by big taxpayers who are 170 in number.

In Islamabad markets, around 6428 have been recorded as filers at Supermarket, blue area, Jinnah super and F10 Markaz. Tax collection from these registered filers is around Rs 1.93 billion out of which Rs1.68 million were paid by big taxpayers, 2065 in number.

Meanwhile, in in Rawalpindi markets, around 6580 have been recorded as filers at Commercial Market, Saddar, Raja Bazar, Murree road. Tax collection from these registered filers is around Rs1.09 billion out of which Rs1.02 billion were paid by big taxpayers, 1061 in number.

https://dunyanews.tv/en/Business/516511-FBR-publishes-statistics-on-market-tax-filers
 
Not surprised.... only one city is holding the burden of the entire economy on its shoulders while Lahori enjoy pajjay ke paye for nashta and then long nap.
 
I personally felt it was a mistake to shift the Capital of Pakistan from Karachi to Islamabad. Karachi should be calling the shots on the rest of the country given that it is singlehandedly generating the bulk of the nations revenues.
 
In a true democracy and federation you get the money you paid in the system, Karachi should get more funding.
 
Savak said:
I personally felt it was a mistake to shift the Capital of Pakistan from Karachi to Islamabad. Karachi should be calling the shots on the rest of the country given that it is singlehandedly generating the bulk of the nations revenues.
Click to expand...

What were the reasons for the shift in Pakistan's capital? It was in the 60s I think.
 
Varun said:
What were the reasons for the shift in Pakistan's capital? It was in the 60s I think.
Click to expand...

At the time of independence, Pakistan's federal bureaucracy was made up of mostly muslim Indian civil servants predominantly from Urdu speaking areas of UP/Bihar and some from Madras that had immigrated and settled in Karachi. Barring Lahore and Karachi, majority of what made up Pakistan was the backwaters of the British Indian Empire with little or no educational infrastructure. For the first 10-15 years, the bureaucracy kept being dominated by the immigrants which bred ill will by the other ethnic groups. Under Ayub Khan's directive the Capital was moved away from Karachi whose population was dominated by the immigrants known as "mohajirs". Policies equivalent to "Affirmative Action" such as quota system were also instituted to "encourage" participation of the local populace in the Federal Government. The policies however discriminated disproportionately against Karachi and are still in force. These discriminatory policies were the reason MQM came into existing (which however did nothing to change or abrogate such policies). Nowadays, there is little if any representation of Karachi in the higher echelons of Federal Bureaucracy. You are more likely to get the coveted Foreign Service jobs if you are from Bannu or Larkana versus Karachi.
 
cric_man said:
At the time of independence, Pakistan's federal bureaucracy was made up of mostly muslim Indian civil servants predominantly from Urdu speaking areas of UP/Bihar and some from Madras that had immigrated and settled in Karachi. Barring Lahore and Karachi, majority of what made up Pakistan was the backwaters of the British Indian Empire with little or no educational infrastructure. For the first 10-15 years, the bureaucracy kept being dominated by the immigrants which bred ill will by the other ethnic groups. Under Ayub Khan's directive the Capital was moved away from Karachi whose population was dominated by the immigrants known as "mohajirs". Policies equivalent to "Affirmative Action" such as quota system were also instituted to "encourage" participation of the local populace in the Federal Government. The policies however discriminated disproportionately against Karachi and are still in force. These discriminatory policies were the reason MQM came into existing (which however did nothing to change or abrogate such policies). Nowadays, there is little if any representation of Karachi in the higher echelons of Federal Bureaucracy. You are more likely to get the coveted Foreign Service jobs if you are from Bannu or Larkana versus Karachi.
Click to expand...

Thanks for the reply and the information.
 
In conclusion the corrupt Sharifs got voted back into power by winning Punjab, where the majority neglected paying taxes to the government.
Yet the government used almost all the collected revenue from other regions on Lahore only.
Yet these guys were competent??
 
Last edited:
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Taxes of retailers & markets paid by Saddar + Jodia Bazar in Karachi: PKR 80.7 bn<br><br>Taxes of retailers & markets paid by Islamabad & Lahore combined together: PKR 81 bn<br><br>This is the kind of unimaginable scale at which Karachi operates, and this is barely scratching the surface</p>— Ammar Khan (@rogueonomist) <a href="https://twitter.com/rogueonomist/status/1307063276564615170?ref_src=twsrc%5Etfw">September 18, 2020</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
ISLAMABAD: The tax payment by Prime Minister Imran Khan surged by 172 per cent to Rs282,449 in tax year ending on June 30, 2018 from Rs103,763 a year ago, while that of former prime minister Shahid Khaqan Abbasi saw a robust increase, making him the highest taxpaying parliamentarian in the country.

According to the sixth tax directory of parliamentarians released by Adviser to the Prime Minister on Finance and Revenue Dr Hafeez Shaikh on Friday, Mr Abbasi paid the highest tax of Rs241.32 million in 2018 as against Rs3.08m in 2017 when he was prime minister.

The second highest taxpayer among the parliamentarians is Pakistan Tehreek-i-Insaf (PTI) MNA Muhammad Najeeb Haroon who paid Rs140.03m, followed by Law Minister and Muttahida Qaumi Movement Senator Farogh Naseem who paid Rs35.13m.

ARTICLE CONTINUES AFTER AD

The lowest taxpayers among the parliamentarians include Sardar Yar Muha*mmad Rind (Rs400), Zulfiqar Bachani (Rs388) and Kanwal Shozab (Rs165).

Pakistan Muslim League-Nawaz president and Leader of the Opposition in the National Assembly Shahbaz Sharif paid Rs9.73m in tax year 2018 as against Rs10.29m in 2017, showing a decline of 5.75pc. His son Hamza Shahbaz paid Rs8.70m in 2018 and Rs8.26m in 2017.

Pakistan Peoples Party co-chairperson Asif Ali Zardari paid Rs2.89m and his son PPP chairperson Bilawal Bhutto-Zardari paid Rs294,117 in tax year 2018. A Bilawal House spokesman, however, said that the PPP chairman had paid Rs4.56m in taxes in 2019, which includes R4.03m Agriculture Income Tax. In the year 2018, he paid Rs4.15m, including Rs3.85m Agriculture Income Tax.

Balochistan Chief Minister Jam Kamal Khan Alyani paid the highest tax of Rs4.80m among the chief ministers, followed by Sindh CM Syed Murad Ali Shah (Rs898,357) and Khyber Pakhtunkhwa CM Mahmood Khan (Rs235,982).

Punjab Chief Minister Usman Bazdar did not pay any tax in 2018.

The tax directory clearly shows some mistake because the Federal Board of Revenue (FBR) deducts tax on salaries of the parliamentarians in advance. It does not mention agriculture income tax of the parliamentarians and only compiles data on income tax.

Three senators — Shammim Afridi, Faisal Javed and Rana Maqbool Ahmad — did not pay taxes in 2018. Two PTI ministers, Muhammad Faisal Vawda and Zartaj Gul, also did not pay taxes in 2018.

Fifty MNAs who did not pay taxes in 2018 are: Muhammad Bashir Khan, Muhammad Sajjad, Malik Anwar Taj, Zahid Akram Durrani, Jawad Hussain, Mohsin Dawar, Abdul Shakoor, Aamer Mehmood Kiani, Mansoor Hayat Khan, Syed Faizul Hassan, Chaudhry Zulfiqar Ali Bhindar, Malik Muhammad Ehsanullah Tiwana, Muhammad Sanaullah Khan Mastikhel, Nawab Sher, Ali Gohar Khan, Sahibzada Muhammad Mehboob Sultan, Muhammad Ameer Sultan, Malik Karamat Ali Khokhar, Saad Waseem, Ahmad Raza Maneka, Rana Iradat Sharif Khan, Rai Muhammad Murtaza Iqbal, Zahoor Hussain Qureshi, Makhdoom Zain Hussain Qureshi, Muhammad Ibrahim Khan, Noorul Hassan Tanvir, Syed Mobeen Ahmed, Muhammad Shabbir Ali, Raza Rabbani Khar, Makhdoom Zada Sayed Basit Ahmad Sultan, Niaz Ahmed Jakhar, Khawaja Sheraz Mehmood, Naveed Dero, Irfan Ali Laghari, Jamil Ahmed Khan, Agha Hassan Baloch, Syed Mehmood Shah, Mohammad Aslam Bhootani, Ms Asma Hadeed, Ms Aliya Hamza Malik, Seemi Bokhari, Ms Rubina Jamil, Ms Fauzia Behram, Ms Rukhsana Naveed, Ms Farukh Khan, Ms Naz Baloch, Ms Shamim Ara Panhwar, Ms Syma Nadeem and Ms Nusrat Wahid.

The tax directory provided some insight into the wealth of members of the National Assembly, Senate and provincial assemblies, but lifestyles and expenditures of many of them are in stark contrast to what their income tax declarations indicate. The directory prepared by the FBR shows that the sums paid as income tax by most of the elected representatives are laughably low and do not match their princely lifestyles.

Hafeez Sheikh said that 311 MNAs and 90 senators paid Rs800m, while members of the provincial assemblies paid Rs340m in taxes in 2018.

Among the federal ministers, Farogh Naseem paid the highest tax of Rs35.135m, followed by Power Minister Omar Ayub Khan (Rs26.055m), Planning and Development Minister Asad Umar (Rs5.346m), National Food Security Minister Fakhar Imam (Rs5.212m), Human Rights Minister Dr Shireen Mazari (Rs2.435m), Defence Minister Pervez Khattak (Rs1.826m), Aviation Minister Ghulam Sarwar Khan (Rs1.046m), Maritime Affairs Minister Ali Haider Zaidi (Rs896,191), Economic Affairs Minister Khusro Bukhtiar (Rs624,292), Narcotics Control Minister Azam Khan Swati (Rs590,916), Railways Minister Sheikh Rashid Ahmed (Rs579,011), Minister of State for Parliamentary Affairs Ali Muhammad Khan (Rs430,695), Kashmir and Gilgit-Baltistan Affairs Minister Ali Amin Gandapur (Rs378,763), Communications and Postal Services Minister Murad Saeed (Rs374,728), Information and Broadcasting Minister Shibli Faraz (Rs367,460), Education Minister Shafqat Mahmood (Rs231,730), Foreign Minister Shah Mehmood Qureshi (Rs183,900), States and Frontier Regions Minister Shehryar Afridi (Rs183,900), IT and Telecommunication Minister Aminul Haque (Rs66,749), Interior Minister Ijaz Ahmad Shah (Rs58,120) and Industries and Production Minister Hammad Azhar (Rs22,445).

National Assembly Speaker Asad Qaiser paid Rs537,730, Senate Chairman Sadiq Sanjrani Rs1.363m and Senate Deputy Chairman Saleem Mandviwalla paid Rs1.591m in taxes in 2018.

Other top taxpaying parliamentarians include PPP MPA (Punjab) Mumtaz Ali Rs34.068m, Senator Talha Mahmood (JUI-F) Rs29.210m, Senator Taj Muhammad Afridi Rs28.177m, Senator Sajjad Hussain Turi Rs17.028m, PTI MNA Shaukat Ali Rs14.660m, PML-N MNA Sheikh Fayyazud Din Rs13.861m, PTI MNA Saleh Muhammad Rs12.674m, PTI MPA (Punjab) Amjad Mehmood Chaudhry Rs12.319m, Balochistan Awami Party MPA (Balochistan) Mir Akbar Askani Rs11.863m, PML-N MPA (Punjab) Chaudhry Arshad Javaid Warraich Rs11.111m, PML-N MPA (Punjab) Sheikh Alla-ud-Din Rs10.419m, PTI MPA (Punjab) Aleem Khan Rs9.193m, PML-N MPA (Balochistan) Sanaullah Zehri Rs8.320m and PML-N MPA (Punjab) Ghazali Saleem Butt Rs8.205m.

Members of provincial assemblies

As many as 43 members of the Balochistan Assembly filed their tax returns in 2018, while 13 did not file their returns. Mir Akbar Askani paid the highest tax of Rs11.863m, while Sardar Yar Muhammad Rind paid the lowest tax of Rs400.

Of the 369 members of the Punjab Assembly, 62 did not file tax returns for 2018.

MPA Mumtaz Ali is the highest taxpayer with Rs34.068m, followed by Amjad Mehmood Chaudhry (Rs12.319m), Chaudhry Arshad Javid Warraich (Rs11.11m) and Sheikh Aladdin (Rs10.419). The lowest income tax of Rs33 was paid by Chaudhry Khush Akhtar Subhani, followed by Yasir Zafar Sandhu Rs564 and Agha Ali Haider Rs840. Punjab Information Minister Fayazul Hasan Chohan did not pay any tax in 2018.

Of the 168 members of the Sindh Assembly, 21 did not file their tax returns for 2018, but their names exist on the tax roll. Nasir Hussain Shah is the highest taxpayer in the assembly with Rs7.615m, followed by Firdous Shamim Naqvi (Rs6.770m), Ms Rabia Azfar Nizami (Rs5.582m), Lal Chand Ukrani (Rs4.218m) and Ms Faryal Talpur (Rs4.563m). The lowest tax was paid by Ghulam Jellani (Rs760) and Shamim Mumtaz (Rs1283).

Of the 123 members of the Khyber Pakhtunkhwa Assembly, 14 did not file their tax returns for 2018. Amjad Khan Afridi paid the highest tax of Rs8.053m, followed by Faisal Shakoor Khan Rs4.305m. The lowest tax paid by KP Finance Minister Taimur Saleem Khan (Rs341) and Ahmad Kundi (Rs700).

https://www.dawn.com/news/1580451/pms-tax-payment-surged-172pc-in-2018
 
Karachi’s Saddar Bazaar emerges as the country’s highest tax paying market

The center of economic hub Karachi’s Saddar market emerged as the highest tax-paying market in the country, as per the data released by the Federal Board of Revenue (FBR).

According to the Tax Directory Analysis for the Year ended June 30, 2018, from Saddar market which is one of the country’s largest market Rs 77,177,558,945 were collected in taxes from 72,339 tax filers, for the fiscal year ended in June, 2018.

Among leading taxpaying markets in Karachi, from Jodia Bazaar alone situated in Saddar, Rs 3,059,924,445 was collected in taxes from 2,384 filers, whereas from Market Estate Avenue in Karachi Rs 6,191,036,104 were collected from just 774 filers and from The Forum, Karachi Rs 3,314,055,039 were collected in taxes from 202 filers.

Second on the list was Islamabad’s Blue Area, from here Rs 39,935,580,162 were collected from 5,854 tax filers, for the fiscal year ended in June, 2018.

From Multan Road, Lahore Rs 10,912,783,552 was collected in taxes from 17,800 tax filers, whereas, Rs 4,175,140,322 was collected in taxes from Lahore’s Raiwind Bazaar. From Karkhano Market, Peshawar Rs 5,274,998,666 was collected from 10,417 tax filers.

FBR said that the data has been compiled on the basis of registered addresses of filers. Retail Outlets have been reported as per registered address of head office.

https://www.brecorder.com/news/4001...ges-as-the-countrys-highest-tax-paying-market
 
ISLAMABAD: During the tax year 2018, Karachi remains the top taxpaying city followed by Islamabad, Lahore, Rawalpindi, and then Faisalabad, The News Reported on Saturday.

According to tax analysis carried out by the Federal Board of Revenue (FBR) for the tax year 2018 on the basis of a city-wise breakup, the collection from Karachi amounted to Rs572.59 billion for the tax year 2018, followed by Rs204.14 billion from Islamabad, Rs200.71 billion from Lahore, Rs35.17 billion from Rawalpindi, and Rs16.26 billion from Faisalabad.

The break-up of the tax collection from the metropolis which was recorded as Rs572.59 showed that Rs9.05 billion was collected from Karachi Central, Rs34.09 was collected from Karachi East, Rs114.22 billion from Karachi South and Rs28.89 was collected from Karachi West.

Islamabad remained the second-highest tax-paying city as its dwellers and companies deposited Rs204.14 billion during 2018, whereas, Lahore remained at third position as it collected Rs200.71 billion during the tax year 2018.

The collection from Lahore was Rs180.58 billion; Lahore Cantonment Rs5.27 billion, and Lahore City Rs14.86 billion.

However, the income tax collection from return filers in Rawalpindi stood at Rs35.17 billion for the same period. Multan contributed Rs12.7 billion, and Sahiwal contributed Rs1.77 billion as taxes from filers. The income tax collection from Gujranwala city was Rs7.92 billion.

The FBR collected Rs4.49 billion from income tax return filers of Sialkot. Tax collection from Abbottabad stood at Rs1.61 billion, and the FBR collected Rs2.48 billion in tax from Bahawalpur. The FBR also collected Rs6.35 billion tax from Dera Gazi Khan and Rs1.64 billion tax from the income tax return filers from Kohat during the tax year 2018.

The FBR collected Rs13.64 billion from Peshawar, while the collection of tax from Quetta stood at Rs10.05 billion.

Read more: Sindh govt refuses to collect advance tax on federal government's behalf

As per the details from the FBR data, the tax collection from Sargodha was Rs2.21 billion and Rs2.61 from Sheikhupura.

The income tax return filers in Sukkur contributed income tax of Rs3. 57 billion. The city of Haripur contributed Rs1.7 billion from the income tax return filers. Total income tax collection from the return filers of Hyderabad amounted to Rs4.06 billion.

The income tax return filers in Taxila contributed Rs1.25 billion as income tax, and the filers in Thatta deposited Rs1.01 billion tax during the same period.

Taxes collected from filers from other major cities include Dera Ghazi Khan Rs6.35 billion, Gujrat Rs1.69 billion, Haripur Rs1.7 billion, Hyderabad Rs2.5 billion, Hyderabad City Rs1.56 billion, Jaranwala Rs1.42 billion, Kohat Rs1.64 billion, Loralai Rs1.79 billion, Mardan Rs1.33 billion, and Rahim Yar Khan Rs1.9 billion.



https://www.geo.tv/latest/308937-karachi-stands-at-top-taxpaying-city-with-collection-of-rs57259-bn
 
ISLAMABAD: The Federal Board of Revenue’s Large Taxpayer Unit in Islamabad on Wednesday sealed the main business premises of cellular company Jazz, alleging non-payment of Rs25.393 billion income tax for the tax year 2018.

Earlier in the day, a notice was issued to Principal Officers Pakistan Mobile Communication Limited (PMCL) Aamir Hafeez Ibrahim under Section 138(1) of the Income Tax Ordinance 2001 with a deadline to pay arrears of tax by 1300 hours (1:00pm) on October 28.

Jazz spokesperson, Aisha Sarwari, told Dawn that her company “has received a notice from FBR this afternoon. Jazz has made tax submissions based on legal interpretations of the tax owed. We will review and take measures under our legal obligations and will collaborate with all institutions for an early resolution of this issue.”

The case is related to the acquisition of over 13,000 tower assets across the country by Deodar Private Limited, a subsidiary company of PMCL. The Islamabad LTU created the demand for tax as well as surcharge in the tax year 2019.

The company argues that under Section 97 of the Income Tax Ordinance, gain from sale of an asset from a holding company to a subsidiary is not taxable. According to Shabbar Zaidi, who was a partner at Ferguson’s who are Jazz’ auditors, “this section needs to be properly interpreted, some problem has arisen with the understanding of this section.”

Employees from the telecom giant, speaking on condition of anonymity, told Dawn that the FBR teams swarmed into the offices of Jazz moments after serving the notice. “They had been to our banks as well, demanding freezing of all accounts too,” they said.

PMCL challenged the FBRs demand for tax recovery first in an appeal to Commissioner Income Tax in which commissioner upheld the decision of the department. Subsequently, the PMCL challenged the commissioner’s decision at the Appellate Tribunal of Inland Revenue. The Appellate Tribunal also upheld the order of the commissioner appeal on Wednesday and the FBR moved rapidly after that.

The LTU issued a recovery notice for payment to PMCL which the company has challenged in the Islamabad High Court (IHC) to stay the recovery exercise, according to Sarwari, adding that the hearing is scheduled for Thursday.

The LTU notice warned that in case of failure strict action can be initiated against the company from attachment and sale of moveable or immoveable property to arrest and detention in person for a period not exceeding six months.

The payable tax is estimated at Rs22.032bn for the tax year 2018 in addition of default surcharge of Rs3.361bn.

“Tax amount is outstanding against the defaulter while the defaulter is refraining itself deliberately, dishonestly and without lawful excuse to discharge tax liability and thus causing huge loss to the national exchequer,” the LTU Islamabad order said.

The order further said the main office of Jazz in Islamabad will remain sealed till the payment of outstanding dues in full or withdrawal of this order.

“Non-compliance/defiance to this order will be tantamount to obstruction in discharge of functions of an income tax authority and will be punishable on conviction with a fine or imprisonment for a term not exceeding one year or both,” the order further added.

Published in Dawn, October 29th, 2020

https://www.dawn.com/news/1587564/f...e-moments-after-serving-tax-notice-for-rs25bn
 
ISLAMABAD: The Federal Board of Revenue (FBR) has received nearly 23 per cent less income tax returns for the tax year 2020 compared to the preceding year ahead of the Dec 8 deadline.

The board received 1.31 million tax returns until Dec 5 as against 1.69m returns filed in the tax year 2019. These include both salaried and non-salaried individuals, the association of persons and companies.

The tax received with returns stood at Rs6.5 billion during the period under review as against Rs12.8bn received over the corresponding period of last year, reflecting a decline of 49.2pc.

The last date for filing income tax returns for tax year 2020 was extended since September to facilitate individuals to file their returns.

For the tax year 2019, FBR had received 2.9m returns — the highest number in FBR’s history.

In India, the ratio of return filing to the population is 5pc, 58pc in France and 80pc in Canada. In Pakistan, it stood at nearly 0.02pc.

Special Assistant to Prime Minister on Revenue Dr Waqar Masood Khan told Dawn that it has been decided in principle to not extend the last date further. He said returns filing are increasing day by day.

Dr Waqar said that field formations have been directed to give an extension in timing for filing of income tax returns to those people who could not able to file them before the deadline. He said non-filers of returns will have to submit an application to the concerned tax office for getting extra time for filing returns.

In the same way, the special assistant said that tax practitioners have also been allowed to get extensions for their clients. However, the special assistant said there will be no further extension across the board.

Asked about the penalty, Dr Waqar said that there will be no penalty for those people who sought an extension for the filing of tax returns. He said the decision not to extend further is aim to bring tax discipline in the country.

In the budget 2019-20, the government enhanced penalty rate to Rs40,000 from Rs20,000, where any person fails to furnish a return of income.

Under the World Bank-funded project, one of the targets set for Pakistan is to enhance the filing of income tax returns to 3.5m until 2023.

The bigger challenge for the FBR this year is to cross last year’s tax returns margin let alone record growth over the previous year returns.

Under the law, the filing of tax return is mandatory for all those people who possess house of more than 500 square metres and a car of over 1,000cc. It is also mandatory for all commercial and industrial consumers of gas and electricity to be on active taxpayers list.

The FBR has come up with a number of facilitation measures for taxpayers. The FBR has allowed the filing of tax returns through an online application as well as on computers. The board’s helpline is a free, fast, and reliable service that is committed to provide the very best service to the public.

Published in Dawn, December 6th, 2020
 
It's now coming to the point where you can't even operate an individual or joint bank account or sell, buy property without filing your tax returns in the country. How the heck do 218 million Pakistanis get away with not filing their tax returns vs the 1.31 million filers
 
Savak said:
It's now coming to the point where you can't even operate an individual or joint bank account or sell, buy property without filing your tax returns in the country. How the heck do 218 million Pakistanis get away with not filing their tax returns vs the 1.31 million filers
Click to expand...

The FBR is corrupt and a waste of time. Like the Punjab Police, you can't reform this crap, you have to get rid of it and start again because reform means using the same corrupt people.
 
https://www.dawn.com/news/1614476/alvi-signs-ordinance-to-withdraw-corporate-tax-exemptions

President Dr Arif Alvi has signed an ordinance to implement the withdrawal of corporate tax exemptions and rationalise taxes to comply with the conditionality of the International Monetary Fund.

A senior tax official in the FBR told Dawn on Wednesday that the president has signed the ordinance, which will be released shortly.

The promulgation of the ordinance is one of the prior actions for the approval of the $500 million IMF tranche.

Earlier, Islamabad held out an assurance to the IMF to put in place the legislation in parliament before March 20 with an agreement that it will come into effect from July 1, 2021.

It was a requirement ahead of the IMF executive board meeting, which was yet to be notified.

The board can only approve the tranche when Islamabad puts in place the legislation as per the agreed deadline, which was now only possible through an ordinance.

According to the official, the bill was submitted in the National Assembly with a delay of two days when the lower house had already been prorogued.

The fund, however, was not willing to accept this excuse and asked Islamabad to promulgate the proposed measures through a presidential ordinance.

With the introduction of the ordinance, the decisions will come into effect immediately, which were earlier agreed to be effective from July 1, 2021. The revenue implication as per ordinance will be for three months and eight days of the tax year 2021.

The corporate income tax reforms are in line with recommendations of the IMF, which estimates it will generate revenue of Rs140 billion annually.

Meanwhile, the FBR will introduce the ordinance, which will be called the Income Tax (Second Amendment) Bill 2021, in the next session of the lower house, whenever convened.

With the introduction of the bill, it is likely that the bill will be approved with implementation from July 1, 2021.

The official said the ordinance is only meant for compliance with the fund deadline as agreed with the IMF. However, the fund has linked the approval of the tranche with the piece of legislation as assurance that Islamabad will not backtrack from its commitment.

The implementation of the tax exemptions implication from July 1 might not be an issue with the fund.

Under the proposed ordinance, the government will withdraw around 36 tax exemptions and streamline other corporate tax exemptions. There will be no blanket exemption for the non-profit organisations (NPOs). The tax credit will be given to NPOs based on compliance level.

Tax exemptions are replaced with tax credit for coal mining projects and IT exports. There will be no turnover tax for the IT sector anymore. The availing of tax credit is linked with mandatory filing of income tax and sales tax returns as well as submission of withholding statements.

There will be a tax credit for greenfield industrial undertakings, exemption of turnover tax on supply chain of locally manufactured mobile phones. No exemption for IPP projects from July 1, 2021. There is also a change in penalties for non-compliant taxpayers.
Click to expand...
 
These kind of gimmicks always tend to damage the economy in the long-run as investors lose trust in the government. Pakistan is such an unstable tax jurisdiction.
 
https://tribune.com.pk/story/2291811/traders-demand-single-digit-tax-rate

Businessmen have called upon the government to reinstate the single digit tax rate in the upcoming budget to encourage business activities in the country.

In a statement on Saturday, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former president Anjum Nisar requested the government to reduce the tax rate from existing 17% to a single digit, which would help steer ease of doing business and enhance tax revenue.

“Just like its past practices, the government has not taken stakeholders on board to discuss the upcoming budget proposals,” he said. “Our budget recommendations include revamping taxation system, documentation of economy, employment generation through industrialisation, promoting a responsive and equitable taxation system and infrastructure development.”

Endorsing FPCCI’s recommendations, Pakistan Industrial and Traders Associations Front (PIAF) Chairman Mian Nauman Kabir called for elimination of all duties and taxes on import of machinery.

Instead, he suggested imposition of taxes on final goods.

He also recommended setting up of export warehouses at the borders to uplift trade with neighbouring countries and bringing the agriculture and service sectors into the tax net. He also demanded enhancing the education and health budget for improving human capital of Pakistan.

Pakistan Pharmaceutical Manufacturers Association (PPMA) former chairman Shahzeb Akram underlined the need for promotion of small and medium enterprises (SMEs) in Pakistan and advised the government to formulate mechanism for monitoring prices of consumer goods.

He also requested the government to take the business community on board prior to the finalisation of agreement with IMF and reveal conditions of the global lender to the public.

“Pakistan’s economy is facing many challenges due to declining exports, widening trade and current accounts deficits and falling foreign exchange reserves,” he said.

He said that the lower rate of sales tax will increase revenue and discourage malpractices in input and adjustment. It will give the industry a breathing space against the menace of smuggling.

The official also demanded incentives that would transform the existing infrastructure into an efficient network and bring radical changes in the society through improved socio-economic indicators.

While appreciating the government’s reform plan for the Federal Board of Revenue (FBR), Nisar said the automated system needs to be improved, citing that multiple flaws existed in it.

In this regard, Kabir termed equitable taxation a must for expansion of the tax net rather than placing more burden on the existing taxpayers.
Click to expand...
 
About time other cities start pulling their weight and not expect Karachi to be supporting them
 
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">I commend FBR efforts, achieving historic growth of 41% in March '21 with collections recorded at Rs.460 bn. During Jul '20-Mar '21 our collections reached Rs.3380 bn which is 10% higher than the same period last year. This reflects broad-based econ revival led by govt policies.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1377251928598536194?ref_src=twsrc%5Etfw">March 31, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
Renowned Pakistani classical singer Rahat Fateh Ali Khan has paid Rs 300,000 in taxes to the Federal Board of Revenue (FBR), on Wednesday.

The Federal Board of Revenue (FBR) had sent a notice to the singer for payment of Rs 1.2 million in advance tax. FBR had issued the notice after estimating his income in the last year.

It is pertinent to be stated here that Rahat Fateh Ali Khan has submitted Rs 300,000 advance income tax.

https://nation.com.pk/07-Apr-2021/rahat-fateh-ali-khan-pays-fbr-tax-of-rs-300-000
 
https://tribune.com.pk/story/2295325/fbr-world-bank-agree-to-enhance-cooperation

Federal Board of Revenue (FBR) Chairman Asim Ahmad and World Bank Country Director for Pakistan Najy Benhassine have agreed to enhance bilateral cooperation between the two institutions.

In a meeting on Saturday, the two heads discussed World Bank’s ‘Pakistan Raises Revenue’ program worth $400 million, which is aimed at domestic resource mobilisation through the automation of tax collection processes and simplification of tax compliance procedures.

The FBR chairman gave an update on the progress of the reforms agenda covering 10 Disbursement Linked Indicators (DLIs).

He also shared concerns about the difficulties being encountered while implementing reform interventions such as problems associated to data sharing with provinces and the Sindh High Court’s stay on the track and trace process.

It was decided that the FBR reforms team would deliver a detailed presentation to Benhassine regarding the impediments being faced by the authority especially with regards to Component 1 of the reforms program, covering $320 million.

The FBR is on track to achieve most of the DLIs and has made good progress on automation of key business processes and signing of memorandums of understanding with various authorities for data sharing.

Benhassine agreed to look into concerns raised by Ahmad over matters that are beyond the scope of FBR’s administrative authority.
Click to expand...
 
Prime Minister Imran Khan on Saturday commended the efforts of The Federal Board of Revenue (FBR) on achieving a record tax collection of Rs384 billion during the month of April.

"I commend FBR efforts on achieving growth of 57 per cent," the prime minister said in a tweet comparing the collection of Rs240 billion during the same month in 2020.

PM Imran added that the current government's policies had led to " broad-based econ[omic] revival."

"During July-April, the collections reached 3,780 billion rupees, 14 per cent higher than the same period last year," the premier added.

Earlier it was reported that the tax collection body maintained a steady momentum and received Rs3.78 trillion in taxes in the first 10 months of the current fiscal year but its dependence on indirect taxes further increased to 64% of the total receipts.

Provisional results for July-April showed that FBR collected Rs143 billion more than its revised target. The collection was almost equally made at the import stage where nearly one out of every two rupees was collected.

The FBR collected Rs3.78 trillion in the first 10 months of the current fiscal year as against Rs3.32 trillion in the same period of last fiscal year, registering a growth rate of nearly 14%, according to the provisional results.

The collection was Rs460 billion higher as compared to the same period of last fiscal year.

The FBR managed to exceed the sales tax and customs duty collection targets, but missed the targets of income tax and federal excise duty.

Express Tribune
 
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">I commend efforts of FBR in crossing historic milestone of Rs 4,000 bn in any yr for first time ever. During Jul-May our collections reached Rs.4143 bn & still counting - 18% higher than same period last yr. This reflects broad-based economic revival spurred by govt policies.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1398588541681156096?ref_src=twsrc%5Etfw">May 29, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
Prime Minister Imran Khan on Saturday commended the Federal Board of Revenue (FBR) for crossing a 'historic milestone' by collecting more than Rs4 trillion in taxes for the first time in any fiscal year.

"During Jul(2020)-May(2021) our collections reached Rs.4143 bn and still counting," PM Imran said in a tweet adding that the tax collection is "18% higher than same period last (fiscal) year."

The premier added that such performance reflected the broad-based economic revival spurred by the current government's policies.

Earlier it was reported that the tax collection body maintained a steady momentum and received Rs3.78 trillion in taxes in the first 10 months of the current fiscal year but its dependence on indirect taxes further increased to 64% of the total receipts.

Provisional results for July-April showed that the FBR collected Rs143 billion more than its revised target. The collection was almost equally made at the import stage where nearly one out of every two rupees was collected.

The FBR collected Rs3.78 trillion in the first 10 months of the current fiscal year as against Rs3.32 trillion in the same period of the last fiscal year, registering a growth rate of nearly 14%, according to the provisional results.

The collection was Rs460 billion higher as compared to the same period of last fiscal year.

The FBR managed to exceed the sales tax and customs duty collection targets, but missed the targets of income tax and federal excise duty.

The increasing collection at the import stage and growing reliance on indirect taxes remained the two distinctive features of the FBR’s revenue performance in the first 10 months of current fiscal year. Indirect taxes have also contributed to higher prices, including those of sugar and edible oil.

Out of Rs3.78 trillion, an amount of Rs1.72 trillion was generated at the import stage on account of income tax, sales tax and customs duty. This was equal to 46% of the total taxes pooled by the FBR in the current fiscal year.

The 10-month collection was Rs143 billion more than its target of around Rs3.64 trillion. However, the Rs3.78 trillion collection is on the basis of a downward revised annual target of Rs4.7 trillion. Parliament had approved the Rs4.963 trillion tax collection target for the FBR.

The FBR also paid Rs195 billion in tax refunds as compared to Rs118 billion paid last year. The government had withdrawn the zero-rating facility for the export-oriented sectors, which became a reason for the higher share of indirect taxes and repayment of refunds.
 
https://www.thenews.com.pk/print/844177-fbr-barred-from-issuing-notices-to-taxpayers-from-july-no-dltl

The government has barred the Federal Board of Revenue (FBR) from issuing notices from next fiscal year with the taxpayers enabled to carry out self-assessment, finance minister said on Thursday.

Finance Minister Shaukat Tarin said only 4 to 5 percent of the cases will be forwarded to audit that will be done by third party instead of the FBR.

“I want to remove harassment by FBR,” Tarin said addressing an online meeting with the office bearers Karachi Chamber of Commerce and Industry. “We have agreed upon universal tax self-assessment and the audits by third party only.”

Tarin said wrongdoing found through audit will lead to investigation and ‘punitive’ action.

“We have created a section to review all the bills, number of deposits and travel history of individuals and if any person is found liable to pay taxes but is a defaulter, such cases will be sent to third-party auditors,” he said. “Defaulters will be put behind bars. Laws will be devised to put such persons behind bars responsible for willful default.”

Finance minister further said the government is focused on rationalising the turnover tax. He agreed that when three percent penalty is charged in case of unregistered persons, the CNIC condition should not be there.

The minister directed the FBR to look into this matter and stop demanding CNIC from traders.

Tarin said a call center will also be established at the FBR to record complaints, “which I will personally review on daily basis to ensure accountability.”

The minister said the FBR will also be directed not to stop refunds of businesses. “We will clear all the backlog of refunds within a few months by issuing tradeable bonds so that the businesses could have sufficient amount of liquidity available with them and a smarter mechanism will be introduced to clear refunds within 60 to 90 days.”

On Rs58 billion refunds pending under duty drawback on local taxes and levies (DLTL) scheme, Tarin directed the FBR to expedite the clearance and barred it from collecting DLTL this year as the it already owes huge amount.

Finance minister said reforms are being introduced at the revenue side to ensure that no harassment takes place and there will be no double taxation.

“The IMF [International Monetary Fund] has been pushing us to stop all exemptions and impose additional tax of Rs140 billion on existing taxpayers which I denied,” Tarin said.

“Only blatant exemptions will be dealt otherwise the rest will continue. We are broadening the tax base by making good use of technology and innovation, which will be devised in consultation with the business community.”

The finance minister said he would take up the business community’s concerns about Rs900 billion package allocated under public sector development program for Karachi, which has not been finalised.

Tarin further said the government is trying its best to facilitate small and medium enterprises (SMEs), which will be provided ‘clean credit’ facility with no security.

“For this purpose, the government will be providing huge amount of funds to banks at 8 percent which will be given to SMEs at 9 percent while credit insurance will be provided by the government,” he said. “It is a matter of grave concerns that out of a total of 6 to 8 million SMEs, only 180,000 SMEs have access to credit, hence efforts will be made to extend credit facility to at least 1 million SMEs in the next two years.”

Businessmen Group Chairman Zubair Motiwala said Karachi showed 18 percent growth in exports despite the outbreak of COVID-19. “The federal government must take Karachi’s robustness into consideration and accordingly give its due share which has unfortunately not been given so far.”
Click to expand...
 
I am not sure about Tarin,the jury is out. What I am sure about is that Shabbar Zaidi was a patriotic reformer and we need him back.
 
The government has proposed to exempt all registered political parties of Pakistan from the legal obligation of submitting their annual income and wealth record while also declaring their incomes tax-free, Finance Bill 2021 revealed on Friday.

The Pakistan Tehreek-i-Insaf (PTI) government has included the “Political Parties registered with Election Commission of Pakistan” in Table 1 of clause 66 of the second schedule of Income Tax Ordinances.

The government laid the Finance Bill before the National Assembly.

The part one of the second schedule exempts incomes of entities and individuals from tax. And clause 66 says that, “Any income derived by the following institutions, foundations, societies, boards, trusts and funds” will be exempted from the tax.

The political parties have been included in table one of the clause 66, exempting them from the requirement of filing annual income tax returns and wealth statements.

The decision comes at the time when PTI is facing a foreign funding case in the Election Commission of Pakistan (ECP). Petitioner Akbar S Babar had filed an application for scrutiny of the original PTI bank statements. Babar has alleged that the bank statements of PTI were being deliberately kept secret by the ECP.

“We have proposed to include the political parties in the table 1 of the clause 66 but after receiving inputs from various stakeholders we have again decided to tax the income of the political parties,” said Member Inland Revenue Policy Tariq Chaudhry while talking to The Express Tribune.

However, any amendment in the Finance Bill that has already been tabled in the Parliament can only be made at the time of budget speech and approval of the Finance Act, which means that the amendment will remain part of the Bill until dropped at the time of approval of the budget.

The political parties are among 15 entities that have been exempted from the purview of the income tax law, including Islamic Naya Pakistan Certificate Company, Abdul Sattar Edhi Foundation, Indus Hospitals, Privatisation Commission of Pakistan, Fauji Foundation, Securities and Exchange Commission of Pakistan, Sundus Foundation, Ali Zaib Foundation, Audit Oversight Board, Make a Wish Foundation and the Citizens Foundation.

All political parties are now exempted from the purview of the Income Tax Ordinance in the wake of amendments made to section 66, said Dr Ikram ul Haq, advocate Supreme Court of Pakistan and leading tax expert. “This has been done after I pointed out that only two political parties filed their annual income tax returns,” he added.The sources said that there was huge pressure on the FBR to exempt the political parties retrospectively. However, Chairman FBR did not agree to give the proposal a retrospective effect.

According to another amendment, the government has proposed to remove section 114,– (a) in sub-section (1), clause (ad) from the Income Tax Ordinance. ; The Section 114 [(ad) says “any welfare institution approved under clause (58) of Part I of the Second Schedule.

An FBR official maintained that clause 58 had become redundant and therefore, it had to be removed from the Bill.

There are 127 political parties registered with ECP, including the major ones such as PTI, PML-N, PPP, MQM, JUI-F.

According to Dr Haq, it was shocking that only two political parties filed income tax returns for tax year 2020 out of 27 registered with FBR and 127 with Election Commission of Pakistan despite the section 114(1)(ad) of the Income Tax Ordinance, 2001 which makes it mandatory.

“How can we expect the rule of law in Pakistan when 125 political parties are committing flagrant violation of Article 5(2) of the Constitution,” questioned Dr Haq.

Shockingly, political parties, with the exception of just two, have not been filing income tax returns, which is their legal obligation and also a command of the constitution,” he added.

Dr Haq said that despite 125 political parties not filing returns in the last fiscal year, the FBR did not serve them tax notices. In India, section 13A of Income Tax Act 1961 requires political parties to file returns.

The sources said that there was also immense pressure on the FBR to relax section 216 of the Income Tax Ordinance to allow sharing taxpayers’ data with the other government agencies, retrospectively.

The FBR has so far not relented under the pressure but there is a chance that another attempt can be made at the time of approval of the Budget, they added.

Section 216 says that any statement made, return furnished, or accounts or documents produced under the Income Tax Ordinance shall remain confidential.

The government has proposed an amendment in section 56A of the Sales Tax Act to authorize the FBR to share information about the taxpayers with other government departments. We faced problems in the sugar inquiry case in sharing data of the sugar sector with the federal and provincial departments, said Tariq Chaudhry, Member Inland Revenue Policy FBR.
 
The government has proposed to open more than five-year-old cases to tax undisclosed offshore assets of Pakistanis and also seeks to impose taxes on “suspicious” gifts transactions among relatives that increased to Rs170 billion last year.

In the Finance Bill 2021, the government has suggested to amend two critical clauses that deal with serving tax notices to the people and treating the gifts related transactions.

It has been recommended to condone the maximum time limit of five years to serve tax notices in cases where a person fails to disclose details of foreign income or assets in his tax returns, Dr Najeebullah Malik, chief of Inland Revenue Policy FBR, said during a meeting of the Senate Standing Committee on Finance.

Under the income tax law, the FBR cannot serve tax notice in a more than five years old case to a filer and can go back up to 10 years only in case of a non-filer of the income tax returns.

But a new legal amendment in the Finance Bill says that “Provided further that the time-limitation provided shall not apply if the Commissioner (grade 20 officer) is satisfied on the basis of reasons to be recorded in writing that a person who failed to furnish his return has foreign income or owns foreign assets”.

Sources said that the proposal to open more than five years old cases of foreign assets had been given by the FBR’s Operations Wing.

Read Govt to retain power to arrest tax evaders: Tarin

The revenue board has also proposed another amendment to help foreign countries to recover taxes from those Pakistani who at some point have stayed abroad.

In section 107, in sub-section (1), after the words “avoidance of taxes”, the words “or assistance in the recovery of taxes” shall be inserted, according to the proposal.
Taxing the gifts

The standing committee was informed that an amendment has also been proposed to streamline legal regime that deal with the tax structure of the gifts being given to the relatives.

“Provided that, if the capital asset acquired through gift is disposed of within two years of acquisition and the Commissioner is satisfied that such gift arrangement is a part of tax avoidance scheme, then the provisions of sub-section (3) of section 79 shall apply for the purpose of determining the cost of asset in the hands of recipient of the gift,” according to the proposal.

“The gift has become a tool to avoid taxes,” said Dr Najeebullah Malik.

Under the existing law, gifts are exempted from taxes and a large number of such individuals with high net worth are using the option as safe means of transferring income, assets and wealth without contributing to the national revenue.

A source in the FBR said that in tax year 2020, about Rs170 billion worth of gifts were given by the taxpayers, which were exempted from the taxes.

In essence, the government wants to impose taxes on gifts that are disposed of within two years, said Senator Farooq Naek of the PPP.

PTI’s Senator Mohsin Aziz opposed the move, terming it “impractical”.

People buy an asset today then transfer it in the name of a relative few years later for onward sale to avoid capital gains tax, Tariq Chaudhry, Member Inland Revenue Policy said.

The government has again proposed to change definition of the relative. From the existing definition of “grandparents, parents, spouse, brother, sister, son or a daughter”, the expression “relative” shall be substituted”, according to the proposal.

Relative means an ancestor or descendent of any of grandparents or an adopted child of the individual or of a spouse of the individual.

Other matters

Senate Standing Committee on Finance Chairman Senator Talha Mahmood rejected the proposal to impose tax on Modaraba income.

Ashfaq Tola – a tax consultant – contented before the committee that the FBR was discriminating the

Read more Over-reliance on indirect taxes irks economists

Modaraba – an Islamic financing instrument – against other similar tax treatments given to power people who are in business of mutual funds and Real Estate Investment Trusts (REITs).

The standing committee unanimously proposed to retain Modarba income tax exemption. It also recommended the FBR to give three months extension in payment of the last fourth tranche of taxes under the 2019 tax amnesty scheme.

The member of the FBR also briefed the committee on the matter dealing with the business accounts. According to the bill, business accounts will now have to be declared to the FBR.

The one who does not declare the accounts will be penalized with a minimum fine of Rs100,000 and face imprisonment.

The committee chairman sought revised details from FBR regarding tax on transaction.

Tariq Chaudhry said that the multinational and local companies were not disclosing all their business accounts to understate sales and evade taxes.

The committee also recommended revisiting the definition of the Small and Medium Enterprise (SME) sector. As against the current definition of Rs250 million annual turnover, the committee proposed a limit of Rs400 million.

Committee members said that a turnover of Rs250 million had been agreed upon 14 years ago which should now be increased to Rs400 million.

Tariq Chaudhry informed the committee that earlier the turnover limit for an SME had been proposed at Rs800 million, which if implemented, would have led to huge revenue losses.

The standing committee rejected the proposal to impose taxes on provident funds of the salaried persons.
 
https://tribune.com.pk/story/2306544/fbr-under-fire-for-tax-notices

The Senate Standing Committee on Finance on Monday denounced the Federal Board of Revenue’s (FBR) highhandedness against taxpayers, who have been served with notices having value that is many times more than their annual sales amid a sharp surge in tax demand to Rs2.4 trillion.

“I was shocked to see that the FBR issued a tax recovery notice of Rs65 million in a case where the total turnover of the person was Rs5 million per annum,” said Senator Talha Mehmood, Chairman of the Standing Committee.

The officers who issued such ridiculous notices should be handcuffed since the FBR was blackmailing the taxpayers through audit notices, said Mehmood.

The FBR has been serving tax notices despite Finance Minister Shaukat Tarin’s order to stop giving notices.

The development came amid increasing fear among the business community over the budget proposals to arrest the taxpayers on suspicion of concealment of income and link the relief with payment of 100% of tax demand.

FBR sources told The Express Tribune that tax demand had jumped to Rs2.4 trillion, which was almost half of the FBR’s annual tax target of Rs4.963 trillion. Just two months ago, the figure was Rs1.7 trillion, showed the Ministry of Finance monthly economic update.

Mehmood directed the FBR to submit a report on the inclusion of a director of a tobacco company in the tax anomaly committee, which was set up this week.

“The existing taxpayers are planning to run away due to the highhandedness of the FBR and the FBR is talking about expanding the tax base,” said Sohail Altaf, a businessman.

Altaf said that initially the business community had hailed the budget, but an in-depth review showed how dangerous the budget was for the businesses.

The standing committee also showed its reservations about proposed amendment in Section 127 of the Income Tax Ordinance that created a link between the tax demand and the right to appeal.

“The amendment in Section 127 is against the fundamental right to appeal,” said Senator Farooq H Naek of the PPP.

“No appeal shall be made by a taxpayer against an order of the assessment unless the taxpayer has paid the amount of tax due under Section 137 (which deals with payment of all types of taxes),” said the proposal.

However, the FBR said that the law relating to clearing the admitted tax liability that the taxpayer himself had worked out, on the basis of returned income, had always been on the statute book.

Dr Ikramul Haq, Advocate of the Supreme Court and a tax expert, has a different point of view.

The proposed amendment in Section 127, if approved, would be a violation of the Constitution - the supreme law of the land, said Haq. He feared that it would also give a free hand to the officers of Inland Revenue Service of the FBR to collect 100% of the disputed tax demand upheld by the Commissioners of Appeals and that would also be a violation of Article 10A of the Constitution.

Demanding 100% of the disputed tax before final adjudication by an independent appellate forum is a gross violation of the fundamental right guaranteed by the constitution for free access to justice.

Haq raised a question whether the FBR would pay refund immediately if the order was in favour of the taxpayer.

He said that it became almost impossible in a majority of the cases to get relief at the first level of appeal. The Commissioners of Appeals of Inland Revenue work directly under the administrative control of the FBR, which is also against Article 175(3) of the constitution.

The standing committee also turned down a request by the finance minister to propose amendment in Section 203A that seeks powers to arrest people on suspicion of concealment of income.

“We out rightly reject the amendment to empower the government to arrest people on suspicion of concealment of income,” said Senator Talha Mehmood.

The standing committee pended a decision on a budget proposal to reduce regulatory duty on export of molasse. Pakistan Sugar Mills Association Chairman Iskandar Khan agitated the reduction in duties, saying it would discourage export of ethanol, which currently stands at $500 million.

Ministry of Commerce Joint Secretary Mohammad Ashfaq said that the duties have been lowered on the demand of the European Union. He said that the EU allows duty free imports from Pakistan but we had imposed regulatory duty on exports.
Click to expand...
 
In a major development, the National Accountability Bureau has asked the government to give it access to local and offshore tax records of all politically exposed persons, bureaucrats and their families by introducing new legal amendments before approval of the budget.

The bureau has recommended four major amendments in the Income Tax Ordinance 2001 through the Finance Bill 2021, which the National Assembly is expected to approve next week on Tuesday. These proposals, if accepted by the government, will allow NAB to even reopen the past and closed transactions of the last 20 years, official documents showed.

The “request” for bringing these amendments in the Income Tax Ordinance with effect from the year 2001 is made at a time when the bureaucracy has already been complaining about overdoing by NAB. The opposition parties too have lodged protests over what they call “witch-hunting” by NAB.

NAB has asked to end immunity in sharing of local and offshore tax records of politically exposed persons including the members of parliament, bureaucracy, public servants and people in service of Pakistan, the holders of public office and their spouses and children, the documents showed.

The sources said that the government’s top tier was reviewing NAB’s request and the decision will be taken by Prime Minister Imran Khan.

“The secretary law has forwarded NAB’s request to the finance ministry and they have to take a decision whether to accept these proposals or not,” Law Minister Barrister Farogh Naseem told The Express Tribune.

“The government believes in transparency and rule of law and to stop wrongdoings by public office holders and politically exposed persons … there is a need to end layers of secrecy,” Barrister Naseem said.

NAB seeks to relax Section 216 of the Income Tax Ordinance, which ensures confidentiality of taxpayers’ data. The bureau has stated that India has ended confidentiality in 1964 by omitting Clause 137 in its law, which is equivalent to Pakistan’s Section 216.

However, under Section 138, the Indian government still has the authority to keep any information confidential.

NAB also seeks access to tax data being shared by other countries under avoidance of double taxation treaties and the Organization for Economic Cooperation and Development (OECD) by amending Section 107 of the income tax law. Any change in this section may create serious troubles for the government, as the country is bound to keep offshore data confidential under the international conventions, the sources said.

The proposal is pushed to be included in the amended Finance Bill 2021, which Finance Minister Shaukat Tarin is expected to introduce in the National Assembly on Monday (tomorrow). As a practice, any tax matter-related changes that the government wishes to bring after introduction of the budget are then brought through the finance bill.

One of the reasons for delaying the amended finance bill is the government’s indecisiveness about NAB’s proposals, the sources said.

Federal Board of Revenue Chairman Asim Ahmed was not available for comments.

NAB has sought that sections 107, 182, 198 and 216 of the Income Tax Ordinance “be suitably amended so that immunity available to exposed persons including the members of parliament, bureaucracy, public servants and people in service of Pakistan, public office holders and their spouses and children may be done away with”.

In its official correspondence, NAB argued that Section 19 of the National Accountability Ordinance empowers NAB authorities to seek information for the purpose of evaluating as to whether there has been any contravention of the provisions of NAB Ordinance or not.

“An anomaly exists in the provisions contained in Section 216 of the Income Tax Ordinance, 2001 which restricts disclosure. This position gets further complicated where the person against whom information is sought is himself or herself not a public servant but a close relative of a public servant, thus, this office feels that sections 107 and 216 of the Income Tax Ordinance 2001 undermine the provisions of Section 19 of the NAO 1999”.

NAB said that if there was any complication in respect of amendment in sections of 107 and 2016 of the Income Tax Ordinance with regard to politically exposed persons from the stand point of discrimination in terms of Article 25 of the Constitution, perhaps an uncontentious method of dealing with matter would be to omit Section 198 with retroactive effect, covering vested rights and past and closed transactions as well.

The bureau stated that the retroactivity was necessary so that the omission clearly lifts the immunity for events or actions that may have already taken place so that NAB may inquire or investigate them.

“We are proposing that at least the following amendments may be taken up in the Income Tax Ordinance 2001, in the coming Finance Act,” according to NAB documents.

“In the Income Tax Ordinance 2001, the following further amendments shall be made which shall always deem to be in force since inception of the ordinance and shall take effect from the first day of July 2021, and shall have operation despite any vested right or rights as a past and closed transaction that may have been acquired.”

NAB believes that the access to taxpayers' records was necessary to “end corrupt practices”.

A senior government functionary said that the Punjab Anti-Corruption Department was also facing similar problems in its probe in the Rawalpindi Ring Road project. The Punjab department has also sought similar relaxations.

What are these sections?

Section 107 deals with agreements for the avoidance of double taxation and prevention of fiscal evasion. One of its clauses says, “Any information received or supplied, and any concomitant communication or correspondence made, under a tax treaty, a tax information exchange agreement, a multilateral convention, a similar arrangement or mechanism, shall be confidential.”

Section 216 says, “All particulars contained in any statement made, return furnished, or accounts or documents produced under the provisions of this ordinance; any evidence given, or affidavit or deposition made, or any record of any assessment proceedings or any proceeding relating to the recovery of a demand shall be confidential and no public servant save as provided in this ordinance may disclose any such particulars.”

Section 198 says, “A person who discloses any particulars in contravention of Section 107 or Section 216 shall commit an offence punishable on conviction with a fine of not less than Rs500,000 or imprisonment for a term not exceeding one year, or both.” NAB wants to get this section deleted.

Section 182’s serial number 14 is also related to penalties on disclosure of confidential information.

NAB version

“Today is a holiday. The response will be communicated after checking official records during office hours in due course of time,” Nawazish Ali, spokesperson of NAB, replied on Saturday morning.
 
ISLAMABAD: The Federal Board of Revenue (FBR) went over its tax collection target of Rs4,691 billion for fiscal year 2020-21 and managed to collect Rs4,725 billion.

But the FBR didn't manage to meet its initially envisaged tax collection target of Rs4,963 billion for 2020-21, which was revised downward to Rs4,691 billion in line with the IMF agreement.

Tax collections increased by 18.2% during the current financial year, FBR sources said.

Last year, the FBR had collected revenue of Rs3997 billion.

The FBR made net collection of Rs555 billion in June 2021 that helped the bureau jack up its overall collection to Rs4,725 billion on June 30, 2021 night.

The FBR’s collection stood at Rs4,170 billion during the first 11 months (July-May) period of the current fiscal year, so after adding collection of June 2021, the overall collection went up to Rs4,725 billion, The News reported.

The FBR has not so far issued a press release and the Board will make a formal announcement today (Thursday).

This is the first fiscal year where FBR has achieved net revenue collection growth in the range of 18.2%. In the first two fiscal years under the PTI led regime, the FBR’s revenue growth had remained flat in 2018-19 and 2019-20. In the second year 2019-20, the COVID-19 pandemic had negatively impacted the FBR’s growth endeavours, the publication reported.

Budget 2021-22: In final debate session, govt announces adjusted revenue measures, spending plans

“Yes, the FBR has surpassed its revised tax collection target and so far, the collection stands at Rs4,725 billion on June 30, 2021,” a senior FBR official confirmed.

The official said the FBR’s gross collection stood at Rs4,976 billion till June 30, 2021 and the Board paid refunds of Rs251 billion, so the net collection fetched Rs4,725 billion.

The FBR’s gross collection was standing at Rs4,133 billion during the last financial year 2019-20 and the Board had paid refunds to the tune of Rs136 billion in this period.

GEO
 
Last edited:
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">I commend efforts of FBR in achieving historic level of tax revenues of Rs.4732 bn in 2020-21 - exceeding target of Rs 4691 bn &18% higher than last year. This performance is testimony to the strong economic revival spurred by our government's policies.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1410823599565553676?ref_src=twsrc%5Etfw">July 2, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">I commend efforts of FBR in achieving record revenue collection in July. As of now collection is Rs.410 bn which is highest ever in month of July - & around 22% above required target for the month. This is a reflection of govt's policies for sustained economic growth & revival.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1421313651307257860?ref_src=twsrc%5Etfw">July 31, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
PTI govt drastic measures and plans to target non tax filers

Plans afoot to tighten noose on non-filers

Proposals to disconnect essential services of non-filers on cards

Shahbaz Rana

August 27, 2021

ISLAMABAD:

In a radical move, the government has proposed to disconnect mobile phones, electricity and gas connections of non-filers of income tax returns and bar businessmen from using banking instruments like cheques in its desperate attempts to broaden a narrow tax base.

The proposal also includes slapping 35% additional income tax on electricity bills of lawyers, dentists, doctors, accountants and also to share all types of data of the existing taxpayers with the National Database Registration Authority (Nadra), sources told The Express Tribune. This will take their total income tax to 43% of the billed amount.

“The drastic steps will be enforced by promulgating an ordinance and in this regard a draft bill has been sent to the law ministry this week for vetting by the Federal Board of Revenue,” they added.

The steps are being taken to broaden the narrow tax base comprising only three million income tax return filers after all previous efforts and policy actions have failed to yield the desired results.

“The most drastic measure is the introduction of compulsory digital mode payment by the corporate sector,” the sources noted. They said the step is being recommended after businessmen and companies started trading bank cheques instead of en-cashing them to avoid full disclosure of their sales.

The FBR has proposed an amendment to Section 21 of the Income Tax Ordinance that says that no deduction shall be allowed in computing the income of a person under the head “Income from Business” by a taxpayer not being a company.

Similarly, any expenditure by a taxpayer being a company for a transaction, paid or payable under a single account head which, in aggregate, exceeds Rs250,000 made other than by digital means from business bank account of the taxpayer will be treated as income instead of expenditure.

The only exemption from the digital payment will be small payments of up to Rs25,000 and expenditures on account of utility bills, freight charges, travel fare and payment of taxes. If approved by the cabinet, this move will hugely benefit the digital payments service providers.

However, the government has decided to enforce digital mode of payments without first plugging loopholes that led to creation of black money like difference between market value and FBR values of properties, agriculture income tax exemption and tax-free foreign remittances.

Disconnection of essential services

Sources said the FBR has proposed to include a new clause in the income tax law to get powers to suspend essential services being availed by those who do not file their income tax returns.

Through an Income Tax General Order, the FBR will first declare persons who are not appearing on the active taxpayers list liable to file return. If they do not file the returns, then the FBR will ask the concerned service providers to disable mobile phones service and disconnect electricity and gas connection, the sources said.

Giving NADRA access

Sources said the government has also proposed to include a new section 175 B in the Income Tax Ordinance to handover all data of existing as well as non-existing taxpayers to Nadra to broaden the tax base. Earlier, the powers were only limited to the extent of the unregistered persons.

Nadra will then develop a citizen’s portal to identify unregistered taxpayer for broadening of tax base and identify evasion or avoidance of tax by registered taxpayers.

It will also utilise information available with Nadra and data shared by the board for computing indicative income and tax liability of unregistered as well as registered person by using artificial intelligence and mathematical modeling, sources said.

The sources revealed that in 2019, FBR had discreetly handed over the tax record of income tax return filers for the period 2014 to 2018 to Nadra. Sources added that the FBR had already handed over withholding tax statements of unregistered persons to Nadra but was not willing to provide information of income tax return filers for 2019 and 2020.

There are hardly three million income tax return filers in Pakistan who often complain about undue harassment at the hands of FBR and Nadra now seems to be another entity to be added to the list.

The government was then hoping that Nadra would help the FBR enhance tax collection by analysing the information about income tax return filers. But nothing concrete could be achieved despite sharing the information with Nadra, apparently in violation of the income tax law.

For the last almost a decade, Nadra has been claiming that it can help achieve the objectives of broadening the tax base and increasing the tax collection through artificial intelligence-based mathematical models.

Additional tax

In yet another significant move, the FBR has proposed to slap up to 35% additional advance tax on professionals who are non-filers but are operating from residential premises having domestic electric connections. These professionals include accountants, lawyers, doctors, dentists, health professionals, engineers, architects, IT professionals, tutors, trainers and other persons engaged in the provision of services.

This will take the total tax on the electricity bill to 50% of the billed amount on the monthly bill of above Rs75,000, 45% on below Rs75,000 bill, 40% on Rs50,000 bill and 35% on Rs40,000 monthly bill, said the sources.

Identifying these professionals in residential areas will be a challenge for the FBR as it does not have such capabilities.

Link: https://tribune.com.pk/story/231732...YdSBQvVMIdaFc0FO1pVWgOn8QEWIr2B1BE6ISrQrNfvI0
 
Scrap the FBR, it's corrupt and self serving. Start again, pay better, use more automation and don't back down against the business community.
 
I don't think this will win him any popularity contest, but this is the only way for a country to move forward. Paying taxes is the only way a nation can spend on infrastructure, but obviously no individual or business will do it willingly.
 
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Good news on tax collection. FBR collected Rs.850 bn during July & August 2021, exceeding its own target figure by 23% & reflecting growth of 51% in revenue over same period last yr. At present rate, annual collection target of Rs.5,829 bn will be comfortably achieved InshaAllah.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1432905147399786500?ref_src=twsrc%5Etfw">September 1, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

==

Prime Minister Imran Khan on Wednesday expressed his confidence in the Federal Board of Revenue (FBR) 'comfortably' achieving its annual tax collection target of Rs5,829 billion.

The premier took to his official Twitter handle to announce that the FBR had collected Rs850 billion during the first two months of the current fiscal year, exceeding its own target by 23%.

According to PM Imran, this reflected a growth of 51% in revenue compared to the same period last year.

The FBR has exceeded its first two months target and pooled Rs850 billion at double the needed growth rate to hit the annual goalpost, strengthening the government’s case in the eyes of the International Monetary Fund (IMF).

But 55% of the total revenues or Rs458 billion were collected at the import stage, which is also becoming a reason for increasing prices of various commodities. The FBR also collected 70% or Rs458 billion in indirect taxes – general sales tax, customs duty, and federal excise duty which are the three main sources of indirect taxes.

Against the two-month target of Rs690 billion, the FBR has provisionally collected Rs850 billion during the July-August period of this fiscal year, exceeding the target by Rs160 billion, said FBR Chairperson Dr Mohammad Ashfaq while addressing his maiden press conference.
 
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">I congratulate the nation on FBR’s achievement of collecting Rs.1,395 billion in Q1 of FA 2021-22 against the target of Rs.1,211 billion. This represents a growth of 38 percent in revenues over the same period last year.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1443783519352889344?ref_src=twsrc%5Etfw">October 1, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">More good news: FBR has successfully launched its Track & Trace System. It will help boost additional revenue, digitise the economy, curb counterfeiting --- all steps towards effective & transparent governance.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1443935122680532994?ref_src=twsrc%5Etfw">October 1, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
The Federal Board of Revenue (FBR) on Monday again allowed its officers to forcefully recover disputed taxes from bank accounts of taxpayers, withdrawing over two-year old instructions that had been issued to bar taxmen from taking money without prior intimation to the account holders.

The fresh instructions would likely dent Finance Minister Shaukat Tarin’s pro-taxpayers posture while former FBR chairman Shabbar Zaidi has also publicly aired his frustration against the move. The first order that Zaidi, in his capacity as chairman FBR, had issued was to stop the FBR from attaching the bank accounts.

The FBR withdrew the May 2019 instructions that “no bank accounts attachment unless the taxpayer’s chief executive officer/principal officer/owner is informed at least 24 hours prior to attachment and the chairman FBR’s approval is obtained”, according to FBR instructions issued on Monday.

“In order to implement in its true spirit and to re-vest the power vested in the institution of the Commissioners viz-a-viz action under section 140 of the Income Tax Ordinance 2001, the instructions referred supra are hereby withdrawn ab-initio,” said the FBR.

Dr Asad Tahir, FBR spokesman, confirmed that the May 2019 instructions had been withdrawn but he did not comment on the question about its implications on the finance minister’s pro-taxpayers policies.

The May 2019 orders had closed the shops of many consultants and legal experts and they would now be the happiest people after withdrawal of my instructions, Zaidi said while talking to The Express Tribune.

He noted that the May 2019 instructions had reduced tax-related litigation.

“I am personally sorry to hear the withdrawal of the first instruction issued when I joined as chairman FBR”, Zaidi tweeted while airing his frustration.

Read More: Govt extends income tax return filing deadline

He urged the premier, finance minister and FBR chairman to reinstate the May 2019 instructions.

The business community had welcomed the 2019 decision not to attach the bank account of any business house without prior notice. Under pressure to meet their monthly tax targets, the taxmen used to create demands, sometimes without solid grounds, and recover the sum from their bank accounts by using extraordinary powers.

A senior chief commissioner of a large field formation said that the May 2019 instructions were applicable only to the extent of regional tax offices, as the large tax units had already been exempted from those instructions.

He said the FBR had decided last week that no adverse action would be taken against a taxpayer until his appeal was rejected by a tax tribunal. However, the FBR has not yet issued written instructions regarding not attaching the bank accounts, if the commissioner appeal gives a decision against the taxpayer.

In recent months, the taxpayers have been complaining about the “highhandedness” by the FBR. The matter has also landed in the Senate Standing Committee on Finance that last week recommended the government to sack taxmen who made exaggerated tax demands and then rejected appeals of taxpayers under pressure from FBR headquarters.

The Senate Standing Committee on Finance gave a unanimous recommendation amid a sharp increase in tax assessment orders by the FBR against the taxpayers. This resulted in a 70% increase in litigation in relation to tax matters and the disputed amount jumped to over Rs3 trillion within eight months.

At the end of December 2020, Rs1.8 trillion was stuck in litigation, which has gone up to Rs3 trillion, an increase of Rs1.2 trillion in just eight months, according to FBR data. Eight months ago, about 76,700 cases were under litigation from commissioner appeals in the Supreme Court, which have now increased to nearly 90,000.

About 60% of the disputed tax amount is pending with the commissioner appeals, which is also a reason for bringing them under the FBR control.

The FBR had also issued instructions to the Commissioners Appeals about justifying their decisions in the tax cases before the Member Inland Revenue Operations. However, after a story appeared in The Express Tribune, the FBR had withdrawn the controversial orders at the week.

“The FBR has further clarified that in view of the increasing workload of the Commissioners IR (Appeals), the said letter is also being withdrawn to allow them to concentrate more on timely disposal of pending appeal cases,” a statement issued by the FBR at the weekend said.
 
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">FBR has received record high 2.6 M returns and Rs.48.6 B tax paid with returns as against 1.8 M returns and 29.6 B tax paid with returns on closing date, 8th Dec.2020. This signifies 45% growth in filing of tax returns while 64% growth in tax paid with returns.</p>— FBR (@FBRSpokesperson) <a href="https://twitter.com/FBRSpokesperson/status/1449160775759708160?ref_src=twsrc%5Etfw">October 15, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
Former Federal Board of Revenue (FBR) chairman Shabbar Zaidi’s instructions to stop recovery of disputed taxes from bank accounts without prior intimation to taxpayers were “illegal”, one of the top functionaries of the tax machinery said on Thursday.

The revelation was made by Member Inland Revenue Operations Qaiser Iqbal before the Senate Standing Committee on Finance.

The committee, however, unanimously stood by the side of Zaidi and recommended the government to revive the instructions which the FBR withdrew 10 days ago.

The standing committee also rejected the government’s move to bind the corporate sector to make payments only through the digital mode which, it said, would increase hardships of the taxpayers.

The digital mode of payments has been introduced without the groundwork for such a major initiative.

Headed by JUI-F’s Senator Talha Mehmood, the standing committee discussed various actions of the FBR that in recent days had caused anxiety among taxpayers, including the restoration of powers of FBR commissioners to attach bank accounts of taxpayers and recover the disputed amount.

“The act of former FBR chairman that no bank accounts shall be attached unless the taxpayer’s chief executive officer/principal officer/owner is informed at least 24 hours prior to attachment and the FBR chairman’s approval is obtained was against the law,” said Iqbal while responding to questions raised by members of the standing committee.

Iqbal said that relevant statutes, passed by the legislature, and the framed rules allowed FBR commissioners to attach bank accounts.

The FBR chairman had taken the powers of commissioners into his own hands by making it mandatory to seek his approval, said the member IR operations.

In May 2019, Zaidi had issued instructions, saying “no bank accounts attachment unless the taxpayer’s chief executive officer/principal officer/owner is informed at least 24 hours prior to attachment and the FBR chairman’s approval is obtained”.

However, the FBR has again allowed its officers to forcefully recover disputed taxes from the bank accounts of taxpayers.

FBR’s Inland Revenue Operations chief Amir Bhatti disclosed that whenever a file was received for approval of the FBR chairman to attach the bank accounts, the information was leaked to the taxpayer, who would withdraw cash from the account before any action was taken by the FBR.

However, the standing committee did not accept the justification.

If the government wanted to end harassment of taxpayers and promote tax culture, then the right way to do that was the one taken by former FBR chairman, said Senator Mohsin Aziz of the Pakistan Tehreek-e-Insaf.

The committee unanimously recommended the FBR to restore the May 2019 instructions.

The standing committee also barred the tax collection authority from influencing the FBR’s appeal commissioners. In August, the FBR had instructed the commissioners of appeals – which are a quasi-judicial forum – to justify their judgements before the chief commissioners of Inland Revenue.

Standing Committee Chairman Mehmood said that the commissioners of appeals could not be independent as long as their performance evaluation was done by the FBR’s top hierarchy and their transfers and postings were also in the hands of top brass of the authority.

“I say on oath that an appeals commissioner told me that he was under pressure to give decision against the taxpayer,” said Senator Talha.

For the past over one year, FBR has raised hundreds of billions of rupees tax demands, which has created unease among the taxpayers.

The standing committee also unanimously rejected the government’s move to bind the corporate sector to make payments only through the digital mode. Through a Presidential Ordinance, the government had made it compulsory for companies to make payments on expenditures exceeding Rs250,000 through digital mode only, according to the FBR.

Following adverse reaction from the business community and lack of preparedness of banks, the government has suspended the enforcement of the clause for 46 days, Income Tax Policy Chief Zafar Rafique told the standing committee.

Rafique said that the central bank has now issued a circular directing banks to facilitate digital payments. He said that the legal requirement was suspended till November 1.

The revenue board’s decision to move towards digitisation of the economy is a step in the right direction but it was taken in haste and without proper consultations, said Senator Farooq H Naek of the Pakistan Peoples Party.

The compulsory digital payments initiative cannot be successful due threats of hacking and the lack of awareness of the digital mode of payments, said Senator Mohsin Aziz.

Published in The Express Tribune, October 22nd, 2021.
 
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">I want to congratulate FBR for achieving tax collection of Rs 1,840bn for July/Oct, which is 37% higher than last year. Tax in October has surpassed its monthly target set. It is all due to a robust economic performance.<br>Contrary to propaganda, Income Tax also grew by 32% YoY</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1454417686193061896?ref_src=twsrc%5Etfw">October 30, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
Pakistan’s tax chief has shown his inability to bring over 4 million willful law violators to the tax net due to the revenue authority’s lack of capacity and has also said that the Federal Board of Revenue (FBR) is “better off” without a $400 million World Bank loan.

Dr Mohammad Ashfaq, who took reins of the FBR over three months ago, was candid in a public interaction, where he also talked about the International Monetary Fund’s (IMF) demands to withdraw sales tax exemptions and increase personal income tax rates for individuals.

“I cannot do anything about those 4 million people who are outside the tax net because the FBR does not have the capacity and there are legal issues as well,” the FBR chairman said on Wednesday while responding to a question at a session arranged by the Policy Research Institute of Market Economy (PRIME).

In his presentation, Ashfaq showed that against the 7.1 million taxpayers registered with the FBR, only 3.1 million filed annual income tax returns.

He said that against the 305,000 registered sales tax persons, only 191,000 filed annual returns.

“Bringing people to the tax net is a long-drawn-out process and to accomplish the task, the state has to invest in tax administration,” said Ashfaq.

“We had been promised an amount through the supplementary grant against the $400 million World Bank loan but the Ministry of Finance either gave very little last year or turned down our requests for funds this year.”

The cost of tax collection was only 0.6% of the revenue and the FBR was the most under-financed organisation in the world, the chairman remarked.

Responding to another question about whether the FBR needed the $400 million loan to introduce reforms, Ashfaq said, “I am not a great fan of Pakistan Raises Revenue project and the FBR will be better off without it.”

The loan had been negotiated by the Economic Affairs Division and the Finance Division for their needs but “the FBR has been asked to implement the project and we do not have any role in its design”, he added.

Through various reports, The Express Tribune had also highlighted that entering into the $400 million loan deal with the World Bank in the name of tax reforms would not solve the FBR’s structural problems.

The World Bank had approved $400 million, including $80 million for database and system upgrade.

Responding to a question about the worst-ever data hacking in August this year, the FBR chairman candidly said that he prepared his presentation on a “pirated software”.

The then finance minister Shaukat Tarin, who is now PM’s aide on finance, had promised to hold the people accountable but the action was limited only to the extent of removing the then FBR chairman while people working in the Pakistan Revenue Automation Limited – FBR’s data arm – were promoted to next grades and paid bonuses.

He said that besides the challenge of over 4 million people remaining outside the tax net, there was also the issue of reduction in the average tax paid by a return filer.

In 2015, the average tax paid by the return filer stood at Rs23,640, which fell to just Rs10,914 in 2019, said the chairman. However, the trend has started reversing and the figure crossed Rs17,000 by tax year 2020.

The FBR chairman also briefly talked about IMF conditions.

“The IMF has demanded a reduction in the corporate income tax rate and an increase in the personal income tax rates,” he said.

However, the increase in personal income tax is not being made this month as the chairman said that “during the second half of this fiscal year, we will discuss this issue with the IMF.”

He said that general sales tax reforms were close to the IMF’s heart. “Most of the tax exemptions are creating distortions and we will eliminate a majority of them very soon.”

Just a day ago, Tarin said that bringing the Finance Bill to parliament was a prerequisite for approval of the next IMF loan tranche.

“The IMF only asks to tax people more, either through petroleum products or other means, which in turn hurts the local industry,” said Pakistan Institute of Development Economics Vice Chancellor Dr Nadeemul Haq.

The FBR chairman said that the tax-to-GDP ratio would improve to 10.8% in the current fiscal year but it would still be lower than the 11.1% recorded at the end of fiscal year 2017-18 – the last year of PML-N government.

He also spoke about stagnation in tax collection from 2018 to 2020 – a trend that, he said, the FBR reversed in the last fiscal year.

From 2017-18 to 2019-20, additional taxes worth Rs1.5 trillion were levied but the collection remained stagnant at around Rs3.8 trillion, said Ashfaq.

The chairman admitted that over 52% of tax collection in the first four months of current fiscal year was at the import stage and one of the reasons behind it was shifting crude oil sales tax collection from the domestic to import stage.

“We are on our way to achieve Rs5.829 trillion annual tax target even after some kind of import compression,” said Ashfaq.

The FBR has discontinued the practice of taking advances and blocking refunds to inflate revenues, he said.

“The Rs1.4 trillion annual tax exemptions exist not because of the FBR but because of parliament. You elect better people and in return you will have better laws,” said the chairman.

“Rather than bringing a paradigm shift, the Pakistan Tehreek-e-Insaf (PTI) government has been tinkering with the tax system for the past three years,” said tax expert Dr Ikramul Haq while speaking on the occasion.

“It is high time that the individual income tax rate is reduced to 10% and the corporate income tax rate to 20%,” he said. The ratio of direct taxes should go up to 66% from below 34% of the total tax collection, he suggested.

Published in The Express Tribune, November 18th, 2021.
 
MenInG said:
Pakistan’s tax chief has shown his inability to bring over 4 million willful law violators to the tax net due to the revenue authority’s lack of capacity and has also said that the Federal Board of Revenue (FBR) is “better off” without a $400 million World Bank loan.

Dr Mohammad Ashfaq, who took reins of the FBR over three months ago, was candid in a public interaction, where he also talked about the International Monetary Fund’s (IMF) demands to withdraw sales tax exemptions and increase personal income tax rates for individuals.

“I cannot do anything about those 4 million people who are outside the tax net because the FBR does not have the capacity and there are legal issues as well,” the FBR chairman said on Wednesday while responding to a question at a session arranged by the Policy Research Institute of Market Economy (PRIME).

In his presentation, Ashfaq showed that against the 7.1 million taxpayers registered with the FBR, only 3.1 million filed annual income tax returns.

He said that against the 305,000 registered sales tax persons, only 191,000 filed annual returns.

“Bringing people to the tax net is a long-drawn-out process and to accomplish the task, the state has to invest in tax administration,” said Ashfaq.

“We had been promised an amount through the supplementary grant against the $400 million World Bank loan but the Ministry of Finance either gave very little last year or turned down our requests for funds this year.”

The cost of tax collection was only 0.6% of the revenue and the FBR was the most under-financed organisation in the world, the chairman remarked.

Responding to another question about whether the FBR needed the $400 million loan to introduce reforms, Ashfaq said, “I am not a great fan of Pakistan Raises Revenue project and the FBR will be better off without it.”

The loan had been negotiated by the Economic Affairs Division and the Finance Division for their needs but “the FBR has been asked to implement the project and we do not have any role in its design”, he added.

Through various reports, The Express Tribune had also highlighted that entering into the $400 million loan deal with the World Bank in the name of tax reforms would not solve the FBR’s structural problems.

The World Bank had approved $400 million, including $80 million for database and system upgrade.

Responding to a question about the worst-ever data hacking in August this year, the FBR chairman candidly said that he prepared his presentation on a “pirated software”.

The then finance minister Shaukat Tarin, who is now PM’s aide on finance, had promised to hold the people accountable but the action was limited only to the extent of removing the then FBR chairman while people working in the Pakistan Revenue Automation Limited – FBR’s data arm – were promoted to next grades and paid bonuses.

He said that besides the challenge of over 4 million people remaining outside the tax net, there was also the issue of reduction in the average tax paid by a return filer.

In 2015, the average tax paid by the return filer stood at Rs23,640, which fell to just Rs10,914 in 2019, said the chairman. However, the trend has started reversing and the figure crossed Rs17,000 by tax year 2020.

The FBR chairman also briefly talked about IMF conditions.

“The IMF has demanded a reduction in the corporate income tax rate and an increase in the personal income tax rates,” he said.

However, the increase in personal income tax is not being made this month as the chairman said that “during the second half of this fiscal year, we will discuss this issue with the IMF.”

He said that general sales tax reforms were close to the IMF’s heart. “Most of the tax exemptions are creating distortions and we will eliminate a majority of them very soon.”

Just a day ago, Tarin said that bringing the Finance Bill to parliament was a prerequisite for approval of the next IMF loan tranche.

“The IMF only asks to tax people more, either through petroleum products or other means, which in turn hurts the local industry,” said Pakistan Institute of Development Economics Vice Chancellor Dr Nadeemul Haq.

The FBR chairman said that the tax-to-GDP ratio would improve to 10.8% in the current fiscal year but it would still be lower than the 11.1% recorded at the end of fiscal year 2017-18 – the last year of PML-N government.

He also spoke about stagnation in tax collection from 2018 to 2020 – a trend that, he said, the FBR reversed in the last fiscal year.

From 2017-18 to 2019-20, additional taxes worth Rs1.5 trillion were levied but the collection remained stagnant at around Rs3.8 trillion, said Ashfaq.

The chairman admitted that over 52% of tax collection in the first four months of current fiscal year was at the import stage and one of the reasons behind it was shifting crude oil sales tax collection from the domestic to import stage.

“We are on our way to achieve Rs5.829 trillion annual tax target even after some kind of import compression,” said Ashfaq.

The FBR has discontinued the practice of taking advances and blocking refunds to inflate revenues, he said.

“The Rs1.4 trillion annual tax exemptions exist not because of the FBR but because of parliament. You elect better people and in return you will have better laws,” said the chairman.

“Rather than bringing a paradigm shift, the Pakistan Tehreek-e-Insaf (PTI) government has been tinkering with the tax system for the past three years,” said tax expert Dr Ikramul Haq while speaking on the occasion.

“It is high time that the individual income tax rate is reduced to 10% and the corporate income tax rate to 20%,” he said. The ratio of direct taxes should go up to 66% from below 34% of the total tax collection, he suggested.

Published in The Express Tribune, November 18th, 2021.
Click to expand...

The FBR like the Punjab Police cant be reformed. Its very existence is to fleece people. It needs to be scrapped and the whole thing started again.
 
<blockquote class="twitter-tweet"><p lang="en" dir="ltr">Congratulations to the FBR team for achieving a 35% increase in revenues in November over last year and 37% increase in the five months over last year. <a href="https://t.co/b9SfNy2OmH">pic.twitter.com/b9SfNy2OmH</a></p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1465880239712706568?ref_src=twsrc%5Etfw">December 1, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
Novel way!

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">FBR releases the much-awaited commercial going on air this evening & onwards for two months, on all mainstream TV Channels. Please share this valued information on POS prize scheme within your social networks & give them the opportunity to win prizes worth Millions. <a href="https://t.co/d3YBbcAoiD">pic.twitter.com/d3YBbcAoiD</a></p>— FBR (@FBRSpokesperson) <a href="https://twitter.com/FBRSpokesperson/status/1469565989834665995?ref_src=twsrc%5Etfw">December 11, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
ISLAMABAD: The revenue collection of the Federal Board of Revenue (FBR) has reached Rs476 billion during November 2021 against the assigned target of Rs408 billion, reflecting an increase of Rs68 billion.

The updated revenue figures compiled here on Friday revealed that the net collection for the month of November 2021 was Rs470 billion, which has been increased to Rs476 billion, reflecting an increase of Rs6 billion.

While chasing the target of Rs408 billion fixed for the month, the net collection for the month of November 2021 now stood at Rs476 billion.

The FBR’s updated collection stood at Rs476 billion during November 2021 against Rs348 billion collected in November 2020, showing an increase of 36 percent.

Now, the FBR’s net revenue amounted to Rs2,320 billion during July-November (2021-22) against the assigned target of Rs2,016 billion, reflecting an increase of Rs304 billion.

Business Recorder, 2021
 
Last edited:
The income tax collection with taxmen’s own efforts has gone done by 41% and its share in total domestic income tax collection has shrunk to less than 2% in the current fiscal year, revealed statistics compiled by the Federal Board of Revenue (FBR).

Out of the roughly Rs710 billion domestic income tax collection from July 1 to December 15 of current fiscal year, the field formations generated hardly Rs12.5 billion through the “current collection on demand”, according to the FBR figures.

Its share in the total income tax collection at the domestic stage was dismally low at 1.8%.

The remaining nearly Rs700 billion was the result of advance income tax, taxes paid with income tax returns and withholding taxes, sources told The Express Tribune.

During the same period of previous fiscal year, the collection on demand was equal to Rs21.2 billion, which has now gone down by 41%. The collection of Rs21 billion was equal to nearly 4% of the income tax collection at the domestic stage in almost six months of the previous fiscal year.

Such a poor performance by the field formations gives credence to the International Monetary Fund’s (IMF) assessment that the current exceptionally good tax collection is not sustainable in the long run and it is the result of growth at the import stage.

Out of the Rs12.5 billion, nearly Rs5 billion was generated by the Large Taxpayer Office (LTO) Islamabad alone. In addition to that, the Corporate Tax Office, Islamabad collected Rs1.1 billion through tax on demand.

LTO Karachi was another such unit that collected Rs1.6 billion through its efforts. The performance of the 22 remaining field units was dismal, to say the least. Another Rs20 billion was collected on account of previous years’ demands. The FBR chairman has diverted a majority of human resources towards the creation of income tax demand but the workforce has not lived up to his expectations.

The response of the FBR chairman was awaited till the filing of the story.

Last month, Prime Minister Imran Khan had congratulated the FBR for achieving a 31% increase in income tax collection during the current fiscal year, but a deeper dive into the numbers revealed that just like the collection at the import stage, the income tax collection was also growing automatically.

In its half-yearly tax analysis for the previous fiscal year, the FBR had acknowledged the importance of tax collection through taxmen’s efforts. “The collection on demand carries great importance as it reflects departmental efforts for revenue collection,” stated the FBR’s flagship biannual publication.

Last month, Pakistan’s tax chief expressed his inability to bring over 4 million willful law violators to the tax net due to the revenue authority’s lack of capacity.

“I cannot do anything about those 4 million people who are outside the tax net because the FBR does not have the capacity and there are legal issues as well,” FBR Chairman Dr Mohammad Ashfaq told a gathering.

In his presentation, Ashfaq showed that against the 7.1 million taxpayers registered with the FBR, only 3.1 million filed annual income tax returns. The FBR had also got the treasure trove of information in shape of data shared by the Organisation for Economic Cooperation and Development (OECD). However, this could not be fully exploited due to political expediency and the decision to give tax amnesty schemes.

Similarly, the government claimed that the National Database and Registration Authority (NADRA) had information about 7.2 million people, who enjoyed lavish lifestyles but did not pay taxes. Nothing could be done in this case too.

Source of income tax collection

Withholding taxes remained the largest source of income tax collection. This includes the collection on account of automatic deduction on conducting various transactions including payment of salaries, contracts and telephone bills.

During the current fiscal year, the FBR collected roughly Rs480 billion on account of withholding taxes, up 13% over the same period of previous year.

The withholding tax collection was equal to 68% of the total income tax collection at the domestic stage. A major chunk - Rs145 billion - of withholding taxes was collected within the jurisdiction of LTO Karachi, followed by Rs77 billion by LTO Islamabad and Rs63 billion by LTO Lahore.

PM Imran had vowed to double the federal government’s tax collection to Rs8 trillion and increase the share of direct taxes to 45% of the total collection.

During first three years of the PTI government, the collection remained at Rs4.76 trillion but the share of direct taxes went down to around 34%. Instead of taking corrective administrative and policy measures, the government took a $400 million loan from the World Bank in the name of improving tax collection. Last month, the FBR chairman said that the entity was better off without the World Bank loan.

Numbers showed that taxpayers paid Rs57 billion along with annual tax returns, up by three-fourths or Rs24 billion. Its share in total income tax collection at the domestic stage was 8%.

However, a key reason behind the surge in collection under this head was the FBR’s right decision not to give any undue extension in the dates for filing tax returns.

Under the law, the FBR collects due taxes in advance from various organisations like banks. The advance income tax collection stood at Rs159 billion, up Rs60 billion or 61%, in the first five and a half months of current fiscal year.

Its share in total income tax collection at the domestic stage was one-fifth.

The FBR collected Rs129 billion worth of withholding taxes at the import stage, up 40% compared with the same period of previous fiscal year.

Total income tax collection - domestic and imports - went up to Rs840 billion during the first half of current fiscal year, up 26%, largely on the back of measures that had nothing to do with the FBR’s performance.

Published in The Express Tribune, December 19th, 2021.
 
https://tribune.com.pk/story/2335663/sales-tax-portal-to-launch-this-week

The Federal Board of Revenue (FBR) has planned to launch Pakistan’s single sales tax return filing portal on Tuesday (December 28) without developing a legally compliant and well-integrated system.

The launching of the online portal to ensure filing of one sales tax return instead of six is part of the World Bank’s conditions for the sake of a $400 million loan. India has done it four years ago. The FBR has planned inauguration for December 28 and also informed the provincial governments – who are the main stakeholders – about the launching ceremony, according to sources and official documents of the FBR. At present, six tax authorities are operating in the country and receiving sales tax returns separately.

These are the FBR, Punjab Revenue Authority (PRA), Sindh Revenue Board (SRB), Khyber-Pakhtunkhwa Revenue Authority (KPRA), Balochistan Revenue Authority (BRA) and Council Board of Revenue AJK (Azad Jammu and Kashmir). “The FBR intends to activate the single sales tax portal/ return for sales tax returns, while the prime minister has been requested to formally inaugurate the single sales tax portal, most probably on December 28, 2021,” according to the FBR’s meeting with the provinces on December 15.

However, sources told The Express Tribune that neither the provinces were ready to plug in to the system nor was there any portal developed that could effectively start operations by January 1, 2022. In its correspondence with the provinces, the FBR has claimed that the single sales tax portal has been prepared in pursuance of government’s desire to facilitate taxpayers, promote ease of doing business and reduce compliance costs. The tax collection department held several discussions and inked agreements with the provincial revenue authorities. Subsequently, on December 21, the FBR sent another letter to the provinces, asking them to nominate representatives for a committee for resolution of the issues arising out of Single Sales Tax Portal/ Return and harmonisation of the rules.

The launch of the portal without first developing a real one could cause embarrassment for the federal government, a provincial government representative said while speaking on condition of anonymity. The single tax portal is aimed at facilitating taxpayers to file single monthly sales tax return instead of multiple returns (six) on various portals, which will significantly reduce the time and cost of compliance. The portal would also be beneficial for tax collectors in having a 360-degree view of taxpayers’ business activities across the country in order to maximise revenue potential and tax compliance.

The single sales tax portal is extremely important for ease of doing business and resolution of interprovincial issues, said Punjab Revenue Authority Chairman Zainulabidin Sahi. But he said that the recommendation of provinces was that it should be launched in a phase-wise manner. The government is also seeking a $400 million loan from the World Bank under the Resilient Institutions for Sustainable Economy (RISE-II).

One of the conditions was that the federal and provincial finance departments should issue implementing regulations following the approval of common GST laws passed by the federal and provincial assemblies to generate a harmonised GST for goods and services across the country. Another condition is that the federal and provincial governments would adopt uniformed property valuation rates. Both these conditions remain unimplemented.

The FBR has made a plan to launch the system despite serious issues hampering the integration. The sources said that the so-called new system was aligned only with FBR law as provincial laws have not yet been amended to allow such integration. The system can only determine tax payable based on origination, which is the viewpoint of Sindh point but the system is not capable to separate services where GST tax is being collected on the point of termination, the sources said.

There was also no system to determine who would assess and audit the returns filed on the single portal. Another unresolved issue is that provincial HS codes are different from the FBR, which would have made it difficult to integrate the laws. More importantly, there are different GST rates, as Sindh charges 13% GST on services, Punjab 15% and FBR 17%. The taxpayers are registered at multiple jurisdictions.

There is no clarity who will register and de-register them after launch of the new portal. The FBR’s portal is not able to auto calculate input and output tax adjustments among six tax authorities, said the sources. But Sahi said that no information technology (IT) based system is perfect at the time of launching and the issues arising during implementation can be solved with the passage of time. The Express Tribune had sent a set of questions to the FBR spokesman Asad Tahir three days ago but he did not reply.

He was asked to comment whether it was correct that the Prime Minister would launch the single sales tax portal on December 28 to enable taxpayers to file single monthly sales tax returns instead of multiple returns. Tahir was also requested to comment whether the four provincial revenue authorities were fully on board and is FBR system aligned with all provincial authorities’ laws, to determine input tax adjustments, output tax and final payment share of FBR and relevant province.

The federal and provincial governments have not been able to resolve the dispute over property taxation. Punjab province has opposed FBR determining its own valuation rates. Punjab has proposed that instead of adopting FBR valuation tables by the provincial government, the DC valuation tables, prepared in consultation with FBR, should be adopted by FBR, according to a communication between Punjab and federal government.

The Board of Revenue, Punjab is of a view that FBR should adopt the DC valuation tables as the same are notified according to the fresh surveys of the field officers in consultation with FBR and are more accurate. Further as per the rules ibid, DC valuation tables are notified once in a year and no second revision is allowed. The FBR had recently notified new property valuation rates but it had to suspend those after serious anomalies were pointed out by the realestate sector players.
Click to expand...
 
Read a report that 70% of the Agricultural Sector and Land in Pakistan was untaxed. How can the govt fix this?
 
The Federal Board of Revenue (FBR) released its 2019 tax directory for parliamentarians on Monday, which shows that former prime minister Yousuf Raza Gillani paid no tax in the said year while Prime Minister Imran Khan paid Rs9.8 million.

According to the document, the directory was tabulated from tax returns filed manually and electronically till January 3.

"This data only includes income and tax declared in returns filed to FBR and does not include agricultural income tax paid to provinces, sales tax, federal excise duty etc," the document states.

In the foreword, Finance Minister Shaukat Tarin said that the FBR has been publishing the directory for the last six years.

However, this time special efforts were made to make the directory more informative "which will help not only in educating taxpayers but also in encouraging compliance with tax laws as a national duty," he said.

"The directory embodies the government’s policy of better governance, accountability and transparency through public access to information," the minister added.

According to the data, Leader of the Opposition in the National Assembly Shehbaz Sharif paid Rs8.2m while PPP Chairman Bilawal Bhutto-Zardari paid Rs0.53m.

PPP co-chairman Asif Ali Zardari paid Rs2.2m. Senior banker and incumbent finance minister, Shaukat Tarin paid Rs26.6m while former prime minister Shahid Khaqan Abbasi paid Rs4.9m.

Sindh Chief Minister Murad Ali Shah's tax amounted to Rs1.1m. In contrast, Punjab Chief Minister Usman Buzdar paid a measly Rs2,000.

Current Balochistan Chief Minister Abdul Qudoos Bizenjo Rs1.1m and his predecessor Jam Kamal Khan paid Rs11.8m. Khyber Pakhtunkhwa Chief Minister Mahmood Khan paid Rs66,258.

Among the members of the federal cabinet, Foreign Minister Shah Mahmood Qureshi paid Rs0.9m while Planning and Development Minister Asad Umer paid Rs4.3m. Energy Minister Hammad Azhar paid Rs29,025 in an individual capacity while his associations of persons (AOPs) tax amounted to Rs18.1m.

Muttahida Qaumi Movement-Pakistan Senator Faisal Subzwari, Punjab Education Minister Murad Raas and Punjab Prisons Minister Fayyazul Hassan Chohan were among several lawmakers that paid Rs2,000.

Leader of the Opposition in the Senate Yousuf Raza Gillani and PML-N's Azma Zahid Bokhari did not pay anything in taxes. Additionally, a PTI MNA from Karachi, Muhammad Najeeb Haroon, paid a whopping Rs140m.

Tarin calls for simplifying tax regime
Addressing a ceremony held for launching the tax directory, Finance Minister Shaukat Tarin said that it was important for parliamentarians to make their tax returns public as it would ensure transparency and set an example for others.

He also highlighted the importance of paying taxes, adding that it was imperative that everyone in the country paid taxes and that there should be no "sacred cows".

"The government is unable to help the common man because we are unable to fulfil our current expense from this revenue. So, for development expenditure we have to take loans," he said.

The minister also said that the taxation system in Pakistan had a lot of "distortions". "Some are taken at a federal level, some at a provincial level [but] we do not speak to each other," he said, adding that authorities were now moving towards "tax harmonisation".

Tarin also called for simplifying the tax system. "We take withholding taxes because we are unable to collect it from other means. We should have two kinds of taxes: income tax and consumption tax. There should be no other taxes apart from this."

The minister said that the country should move towards "progressive taxation".

He said that the government was focusing on increasing the tax net, adding that there were three million taxpayers in the country. He said that the FBR will now send notices to those who are not paying taxes based on the information from their ID cards, bank accounts and utility bills.

"This will not be harassment but we will put the facts and figures in front of them," he said, adding that this will be done in a "knowledgeable, organised and objective" manner.

DAWN
 
The government made public on Monday the income details of the members of parliament that showed a 28% decline in the taxes paid by the lawmakers and revealed that one in 10 legislators did not even file the tax returns in 2019.

In 2019, 392 members of the National Assembly and the Senate declared a cumulative income of Rs11 billion but they paid a mere Rs576 million in taxes. This means that the parliamentarians paid just 5.2% of their income – far lower than the standard maximum tax rate of 35% for a salaried person.

Prime Minister Imran Khan paid Rs9.9 million income tax, excluding the tax on agricultural income, which equalled to 22.7% of his declared income of Rs43.6 million. The premier was the 10th highest taxpayer among the 392 members of the parliament, Imran had paid only Rs282,449 tax in 2018.

The premier declared Rs38.9 million as normal income, Rs2.3 million income under the fixed tax regime and another Rs2.4 million as agriculture income. Excluding the agriculture income, Imran’s effective tax rate came to 24%.

While the government disclosed the incomes and the taxes paid by the parliamentarians, it last week introduced legislation to exempt the armed forces from a similar disclosure.

Finance Minister Shaukat Tarin launched the Tax Directory 2019 with a delay of over two years, which also revealed that the trend of filing the income tax returns by the legislators went down in the first year of the Pakistan Tehreek-e-Insaf (PTI) government compared with the last year of the Pakistan Muslim League-Nawaz (PML-N) government.

The tax directories for 2020 and 2021 are still pending.

Out of a total of 446 members of the National Assembly and the Senate, 392 filed the returns with the Federal Board of Revenue –down from 401 filed the returns in 2018. These 392 legislators paid a cumulative sum of Rs576 million in taxes against Rs800 million in the year before – showing a decline of 28%.
The fact that 54 members of parliament did not submit their income tax returns for tax year 2019 does not reflect well on the performance of the FBR. There was no statement by the FBR as to whether or not any action had been taken against these parliamentarians.

As against the past practice of only disclosing the taxes paid by the parliamentarians, this time the government decided to reveal their income under various heads to bring more transparency, said FBR chairman Dr Mohammad Ashfaq told the launching ceremony.

Tarin said that the government had the information about 15 million Pakistanis, who had lavish lifestyles but they did not pay taxes. The FBR would start sending notices to these people from this month, asking them to pay their due taxes, adding that if they had objections there would be a third-party audit.

Last week, the government introduced a legal amendment to allow the FBR to disclose assets information of the public office holders and the civil servants but exempted the armed forces from the disclosure. When asked on Monday, Tarin did not respond to the question as to why the armed forces were exempted.

A breakdown of the data showed that 80 senators paid Rs169 million in taxes on the cumulative income of Rs1.5 billion, bringing the average tax rate for the members of the upper house of parliament to 11%.
Similarly, the 312 members of the National Assembly paid Rs408 million in taxes on their cumulative annual income of Rs9.5 billion in 2019, paying just 4.3% of their income in taxes.

Since the agriculture income tax was a provincial matter, Dr Mohammad Ashfaq said that the FBR had only disclosed their income from agriculture. The FBR chairman said that the 392 lawmakers had declared a cumulative sum of Rs625 million as their agriculture income in 2019.

Provincial-wise, 44 members of the Balochistan Assembly paid Rs58.3 million in taxes on Rs944 million income at an average rate of 6.2%. The 91 members of the Khyber Pakhtunkhwa Assembly paid Rs30 million in taxes on the income of Rs720 million –just 4.2% of their declared income.

The 327 members of the Punjab Assembly declared Rs3 billion in income and paid Rs231 million tax, bringing their average tax rate to 7.7%. The 149 members of the Sindh Assembly paid Rs82.5 million in taxes on Rs1.8 billion income, bringing the average tax rate to 4.6%.

When the members of the four provincial assemblies are added to the list, the data showed that 1,003 lawmakers paid less than Rs1 billion in taxes on the cumulative income of Rs17.5 billion. The average tax rate came to a mere 5.5% for all of them.

This shows that there is a huge income-tax gap that the FBR is leaving unplugged. The FBR chairman had said a few weeks ago that he did not have the capacity to go after over 4 million people who were on the FBR’s radar but had not been filing their annual returns.

Highest Taxpayers

MNA Najeebullah Haroon paid the highest amount of Rs140.7 million tax or 7.5% of his Rs1.9 billion income. Senator Saifullah Abro came second with Rs60.7 million contributions to the national kitty on Rs213 million incomes. His effective tax rate was 28.5%, as the tax had been paid by the Association of Person in which he hasd stakes.

Senator Talha Mehmood of the Jamiat Ulema-e-Islam-Fazl (JUI-F) – the third highest taxpaying parliamentarian, paid Rs32.3 million on Rs180.3 million income at a rate of 18%. MNA Sheikh Fayyazuddin paid Rs28 million – just 1.7% of his total income of Rs1.7 billion. Still he was the fourth highest taxpayer in the category of the parliamentarian.

Finance Minister Shaukat Tarin was the fifth highest taxpayer, who paid Rs26.6 million in taxes on his Rs304 million income in 2019– at the rate of 8.7%.

PML-N President and Opposition Leader in National Assembly Shehbaz Sharif paid Rs8.2 million tax which was 14.5% of his Rs56.4 million declared income, excluding tax agriculture income.
The FBR implements a self-assessment tax regime, where the taxpayer has the liberty to declare his tax contribution. However, self-assessment is only successful if there is a strong tax audit regime.

All the successive governments, including that current one of the PTI, have shied away from strengthening the audit wing of the FBR and it does not have human resources to conduct an audit of taxpayers.

Punjab Chief Minister Sardar Usman Buzdar paid meagre sum of Rs2,000 tax on Rs938,858 normal income at a rate of 0.2%. His could be the fit case for audit because the effective tax rate of 0.2% does not seem justifiable.

Sindh Chief Minister Murad Ali Shah paid Rs1.1 million or 3.3% of his income of Rs33.5 million, which also seems too low. Shah also declared another sum of Rs24.2 million as agriculture income on which he might have paid tax in the province. After adding agriculture income, his total income for 2019 came to Rs57.7 million.

Khyber-Pakhtunkhwa Chief Minister Mahmood Khan paid Rs66,258 on Rs2.5 million income, bringing his effective rate to mere 2.6%, while, Balochistan Chief Minister Abdul Quddus Bizenjo paid Rs1.1 million tax on Rs7.9 million tax –at 13.5% tax rate.

Former president Asif Ali Zardari paid Rs2.2 million or 1.5% of his regular annual income of Rs146.6 million. After adding agriculture income, the former president’s total annual income was Rs282 million, according to the directory.

https://tribune.com.pk/story/2337060/revealed-mps-pay-less-tax-than-salaried-persons
 
MenInG said:
The government made public on Monday the income details of the members of parliament that showed a 28% decline in the taxes paid by the lawmakers and revealed that one in 10 legislators did not even file the tax returns in 2019.

In 2019, 392 members of the National Assembly and the Senate declared a cumulative income of Rs11 billion but they paid a mere Rs576 million in taxes. This means that the parliamentarians paid just 5.2% of their income – far lower than the standard maximum tax rate of 35% for a salaried person.

Prime Minister Imran Khan paid Rs9.9 million income tax, excluding the tax on agricultural income, which equalled to 22.7% of his declared income of Rs43.6 million. The premier was the 10th highest taxpayer among the 392 members of the parliament, Imran had paid only Rs282,449 tax in 2018.

The premier declared Rs38.9 million as normal income, Rs2.3 million income under the fixed tax regime and another Rs2.4 million as agriculture income. Excluding the agriculture income, Imran’s effective tax rate came to 24%.

While the government disclosed the incomes and the taxes paid by the parliamentarians, it last week introduced legislation to exempt the armed forces from a similar disclosure.

Finance Minister Shaukat Tarin launched the Tax Directory 2019 with a delay of over two years, which also revealed that the trend of filing the income tax returns by the legislators went down in the first year of the Pakistan Tehreek-e-Insaf (PTI) government compared with the last year of the Pakistan Muslim League-Nawaz (PML-N) government.

The tax directories for 2020 and 2021 are still pending.

Out of a total of 446 members of the National Assembly and the Senate, 392 filed the returns with the Federal Board of Revenue –down from 401 filed the returns in 2018. These 392 legislators paid a cumulative sum of Rs576 million in taxes against Rs800 million in the year before – showing a decline of 28%.
The fact that 54 members of parliament did not submit their income tax returns for tax year 2019 does not reflect well on the performance of the FBR. There was no statement by the FBR as to whether or not any action had been taken against these parliamentarians.

As against the past practice of only disclosing the taxes paid by the parliamentarians, this time the government decided to reveal their income under various heads to bring more transparency, said FBR chairman Dr Mohammad Ashfaq told the launching ceremony.

Tarin said that the government had the information about 15 million Pakistanis, who had lavish lifestyles but they did not pay taxes. The FBR would start sending notices to these people from this month, asking them to pay their due taxes, adding that if they had objections there would be a third-party audit.

Last week, the government introduced a legal amendment to allow the FBR to disclose assets information of the public office holders and the civil servants but exempted the armed forces from the disclosure. When asked on Monday, Tarin did not respond to the question as to why the armed forces were exempted.

A breakdown of the data showed that 80 senators paid Rs169 million in taxes on the cumulative income of Rs1.5 billion, bringing the average tax rate for the members of the upper house of parliament to 11%.
Similarly, the 312 members of the National Assembly paid Rs408 million in taxes on their cumulative annual income of Rs9.5 billion in 2019, paying just 4.3% of their income in taxes.

Since the agriculture income tax was a provincial matter, Dr Mohammad Ashfaq said that the FBR had only disclosed their income from agriculture. The FBR chairman said that the 392 lawmakers had declared a cumulative sum of Rs625 million as their agriculture income in 2019.

Provincial-wise, 44 members of the Balochistan Assembly paid Rs58.3 million in taxes on Rs944 million income at an average rate of 6.2%. The 91 members of the Khyber Pakhtunkhwa Assembly paid Rs30 million in taxes on the income of Rs720 million –just 4.2% of their declared income.

The 327 members of the Punjab Assembly declared Rs3 billion in income and paid Rs231 million tax, bringing their average tax rate to 7.7%. The 149 members of the Sindh Assembly paid Rs82.5 million in taxes on Rs1.8 billion income, bringing the average tax rate to 4.6%.

When the members of the four provincial assemblies are added to the list, the data showed that 1,003 lawmakers paid less than Rs1 billion in taxes on the cumulative income of Rs17.5 billion. The average tax rate came to a mere 5.5% for all of them.

This shows that there is a huge income-tax gap that the FBR is leaving unplugged. The FBR chairman had said a few weeks ago that he did not have the capacity to go after over 4 million people who were on the FBR’s radar but had not been filing their annual returns.

Highest Taxpayers

MNA Najeebullah Haroon paid the highest amount of Rs140.7 million tax or 7.5% of his Rs1.9 billion income. Senator Saifullah Abro came second with Rs60.7 million contributions to the national kitty on Rs213 million incomes. His effective tax rate was 28.5%, as the tax had been paid by the Association of Person in which he hasd stakes.

Senator Talha Mehmood of the Jamiat Ulema-e-Islam-Fazl (JUI-F) – the third highest taxpaying parliamentarian, paid Rs32.3 million on Rs180.3 million income at a rate of 18%. MNA Sheikh Fayyazuddin paid Rs28 million – just 1.7% of his total income of Rs1.7 billion. Still he was the fourth highest taxpayer in the category of the parliamentarian.

Finance Minister Shaukat Tarin was the fifth highest taxpayer, who paid Rs26.6 million in taxes on his Rs304 million income in 2019– at the rate of 8.7%.

PML-N President and Opposition Leader in National Assembly Shehbaz Sharif paid Rs8.2 million tax which was 14.5% of his Rs56.4 million declared income, excluding tax agriculture income.
The FBR implements a self-assessment tax regime, where the taxpayer has the liberty to declare his tax contribution. However, self-assessment is only successful if there is a strong tax audit regime.

All the successive governments, including that current one of the PTI, have shied away from strengthening the audit wing of the FBR and it does not have human resources to conduct an audit of taxpayers.

Punjab Chief Minister Sardar Usman Buzdar paid meagre sum of Rs2,000 tax on Rs938,858 normal income at a rate of 0.2%. His could be the fit case for audit because the effective tax rate of 0.2% does not seem justifiable.

Sindh Chief Minister Murad Ali Shah paid Rs1.1 million or 3.3% of his income of Rs33.5 million, which also seems too low. Shah also declared another sum of Rs24.2 million as agriculture income on which he might have paid tax in the province. After adding agriculture income, his total income for 2019 came to Rs57.7 million.

Khyber-Pakhtunkhwa Chief Minister Mahmood Khan paid Rs66,258 on Rs2.5 million income, bringing his effective rate to mere 2.6%, while, Balochistan Chief Minister Abdul Quddus Bizenjo paid Rs1.1 million tax on Rs7.9 million tax –at 13.5% tax rate.

Former president Asif Ali Zardari paid Rs2.2 million or 1.5% of his regular annual income of Rs146.6 million. After adding agriculture income, the former president’s total annual income was Rs282 million, according to the directory.

https://tribune.com.pk/story/2337060/revealed-mps-pay-less-tax-than-salaried-persons
Click to expand...

Time for a wealth tax to stop this nonsense.
 
The Federal Minister for Finance and Revenue Shaukat Tarin on Friday advised the unregistered potential taxpayers to start paying taxes as he warned them to mend their ways before “we reach you” within a couple of months with documentary evidence of assets.

“I assure the nation that change is taking place, we are utilising technology and will reach all potential taxpayers,” he said while addressing the launching ceremony of National Sales Tax Returns (NSTR), organised by the Federal Board of Revenue (FBR).

The federal minister remarked that with the help of technology, the government would reach people who are dodging taxes. He said the government would no longer have to issue notices for tax collection as it had collected data of "millions of taxpayers".

He explained that the authorities would get to the tax evaders along with their tax returns and would provide them with an opportunity to either prove it wrong by consulting a panel of auditors or pay the due taxes.

“We will not harass [them], we will tell them what they possess. If they don’t pay, then the law would take its own course,” he added.

'Single platform for tax payment'

Besides, the minister congratulated the federal and provincial revenue divisions for huddling on a single platform and making payment of revenues easy for taxpayers.

He noted that since sales tax on goods was the federal domain and the sales tax on services fell under the jurisdiction of provinces, taxpayers were facing problems. However, he added, that now under the single platform, the taxpayers would be facilitated.

He pointed out that in the previous system, a company operating in all the provinces had to navigate through around seven agencies for filing returns with chances of errors plaguing it. However, he added, they would be now required to file a single tax under the new system.

He said that the government was also working on further harmonization of the system to facilitate taxpayers and expressed the hope that ease in the tax deposit system would help enhance revenues.

The minister said that there was no other way, if the country had to progress and prosper, there is a need to enhance revenue collection.

He cited the example of Germany where he said there was no representation without taxation.

He lamented that there were only 3 million taxpayers out of 220 million population in the country.

He said, out of around Rs18 trillion retail sales, only Rs 3 to Rs 4 trillion were captured and Rs14 million sales are still missing from the tax system.

Speaking at the occasion, Chairman FBR Dr Muhammad Ashfaq Ahmad said that currently, taxpayers were facing different issues due to multiple sales tax registration and payments to 07 different tax agencies, which was enhancing the compliance cost as well enhancing the chance of errors.

Prior to the launching of the NSTR, there was no automatic system among these agencies for sharing tax data, he said adding that the absence of a solution based on technology was creating unending disputes and litigation, besides delaying refunds and adjustments.

He informed that FBR had initiated the NSTR aimed at to development of national income tax returns, constituting inter-agency forum to resolve any issue and simplification of NSTR to further improve the system as well as leveraging data to broaden the tax base for enhancing tax to GDP ratio up to 15% over the short term.

He further said that the initiative would also help in developing single national sales tax registration profiling and automatic compliance management system, besides developing automatic input credit and refund verification as well as distribution of due taxes amongst all revenue collecting authorities.

Dr Muhammad Ashfaq further said that the development of the NSTR system would also help in promoting standardization of taxability and tax rates, besides minimizing human interaction and promoting national harmony and cohesion.

He said that it would also help to create ease of doing business and enforcement of tax compliance.

https://tribune.com.pk/story/2337701/tarin-warns-defaulters-against-dodging-taxes
 
LAHORE – The Federal Board of Revenue (FBR) has served a notice on famous singer Aima Baig for non-payment of Rs 85 million tax.

According to the FBR, Aima Baig has not paid income tax for 2018, 2019 and 2020.

In case of non-payment of income tax, the vehicle she has shown in her tax returns will be confiscated. In this regard, a notice has been issued to her.

Baig is one of the most popular female voices in Pakistan. In the last seven years, she has recorded several hits and has won local and international awards.

The singer has been in the headlines these days as she has been picked along with popular singer Atif Aslam to sing this year's anthem of the Pakistan Super League (PSL). She was also featured in last year’s 'Groove Mera'.

https://en.dailypakistan.com.pk/14-...-to-aima-baig-for-not-paying-rs85-million-tax
 
The National Accountability Bureau (NAB) has served call-up notices on nearly half a dozen top taxmen for not providing legally protected information that a taxpayer had shared with the Federal Board of Revenue (FBR) under the 2019 offshore assets tax amnesty scheme.

The anticorruption watchdog had sought the information about seven people, belonging to a political family of Khyber-Pakhtunkhwa, according to the documents of NAB and the FBR.

The name of the taxpayer had surfaced in Panama Papers. NAB is conducting an inquiry into the alleged accumulation of assets beyond known sources. “Income tax returns of the individuals made certain disclosures to the FBR about their foreign assets,” stated NAB while sharing names of the seven people.

“Please clarify who amongst the following individuals disclosed any domestic or foreign assets under the provisions (of) Voluntary Declaration of Domestic Assets Act 2018 or Assets Declaration Ordinance 2019.” The FBR informed NAB that the law stopped its people from sharing the tax and asset information of those who availed the amnesty schemes. The Law Division also backed the FBR’s position.

But NAB has served the call-up notices on member information technology, member operations, member administration, member legal and member headquarters of the FBR. The fresh notices in an old case were served last month - days before the planned meeting of the high-powered board that was scheduled to take up promotion cases of civil servants from Grade 21 to Grade 22.

However, subsequently, the prime minister, who chairs the board meeting, postponed the meeting again.

Incidentally, those who have received call-up notices are eligible to be promoted and their names have been communicated to the Establishment Division for consideration by the promotion board.

Sources said that the Establishment Division had received a list of 26 people for promotion to Grade 22 against three positions of the FBR’s Inland Revenue Service.

FBR Chairman Dr Mohammad Ashfaq is also among the 26 potential candidates for the promotion but his name is at number 18th in the seniority list.

Except one, all of those who received NAB notices are senior to chairman FBR

Prime Minister Imran Khan has shown the resolve to promote only clean and competent people but five taxmen are facing NAB notices just because they tried to uphold the law passed by parliament.

The documents, including the legal opinion given by the Law Division, suggest that under the Tax Amnesty Schemes of 2018 and 2019 the FBR cannot disclose the names of those who will avail the amnesty scheme.

The first tax amnesty scheme had been given by former prime minister Shahid Khaqan Abbasi after Panama Papers leaks and the second one was introduced by Prime Minister Imran Khan.

Public office holders were not eligible to avail the tax amnesty scheme.

The member information technology of the FBR had refused to provide the information due to legal obstacles.

Sources said that out of the seven members of the political family, only one person had availed the tax amnesty scheme and he was not a public office holder.

According to the call-up notice issued to one of the Grade-21 officers, NAB informed the officer that it was investigating a case against an accused on allegations of assets beyond means and money laundering. NAB asked the persons to appear before it on December 23 for “non-provision of information”.

The information technology wing of the FBR had sought opinion of member legal, FBR, who stated that “a plain reading of Section 11 of the Voluntary Declaration of Domestic Assets Ordinance 2018 and Section 14 of the Assets Declaration Ordinance 2019 makes it evident that the said confidentiality provisions are applicable on the NAO, 1999 and NAB has no inherent power to proceed in this regard,” showed the official documents.

NAB has also served the call-up notice on member legal for not providing the required information. The officer is part of the panel but his name is at the bottom of the seniority list. Tax amnesty laws had provided complete protection to those who availed the amnesty schemes.

The law says that no tax amnesty declaration can be used as evidence against the declarant. It also says that the amnesty law will override any other law for the time being in force.

In order to resolve the legal issue of provision of relevant record, opinion of the Ministry of Law and Justice had been obtained whether the exclusive jurisdiction granted to NAB vide Section 27 of NAO 1999 overrides the confidentiality provisions of Section 11 of the Voluntary Declaration of Domestic Assets Ordinance, 2018 and Section 14 of the Assets Declaration Ordinance, 2019, according to the sources.

The Law Division informed the FBR that the tax amnesty details could not be shared with NAB, as the amnesty law, which came later, would take precedent over the National Accountability Ordinance of 1999.

The income tax law also bars the taxmen from disclosing taxpayers’ information. However, this clause has now been amended to the extent of high public office holders and civil servants.

The FBR had communicated its stance to NAB first in 2019, then in 2020 and finally in 2021.

NAB is of the opinion that under Section 27 of the National Accountability Ordinance 1999, the confidentiality clause contained in the Voluntary Declaration of Domestic Assets Act, 2018 is inapplicable to the NAB Ordinance because it has an inherent power to proceed in this regard, according to the documents.

NAB stated that the NAB chairman has an overriding effect over other fiscal enactments, consequently NAB can seek the requisite information and ask for record and in case of non-cooperation resort to remedies provided under the NAO, 1999.

The official version of NAB was awaited till the filing of the story.

Published in The Express Tribune, January 16th, 2022.
 
The Federal Board of Revenue (FBR) exceeded its seven-month tax collection target by Rs262 billion but missed the monthly goal for the second month in a row due to poor domestic sales tax collection and a slowdown in imports.

Still, the FBR bagged nearly 53% of the total collection at the import stage, which helped camouflage its weaknesses in the area of domestic sales tax.

Against the original, relatively low tax target of nearly Rs3.1 trillion, the FBR provisionally collected Rs3.35 trillion during July-January of current fiscal year, according to an FBR’s statement.

The collection was Rs780 billion, or 30%, higher compared to the collection of Rs2.57 trillion in the same period of previous year.

The FBR said that it paid Rs182 billion in tax refunds, up 36%. Official statistics showed that while sales tax receipts at the import stage increased 69%, the domestic sales tax collection shrank nearly 10%, which speaks volumes about the inefficiency of the tax department.

The domestic sales tax collection dipped despite the fact that the nominal gross domestic product (GDP) growth rate was estimated at 16%.

The FBR has not revised upwards its monthly targets so far despite imposing 17% sales tax on almost every consumable item, including pastries, bread and food sold at restaurants.

Under a deal with the International Monetary Fund (IMF), the current target of Rs5.829 trillion will go up to Rs6.179 trillion, which will also bring changes to the monthly targets.

The IMF’s scepticism about the consistency in FBR’s performance over the long term due to the possibility of a slowdown in imports has again proved to be correct, as the FBR missed the monthly target for the second time in a row in January 2022.

It missed the monthly tax target by Rs27 billion. Against the target of Rs457 billion, the tax authorities provisionally collected Rs430 billion in January, according to the provisional results.

Read FBR reluctant to implement FTO’s recommendations

In January, the FBR missed the targets of sales tax, federal excise duty and customs duty. But the income tax collection target was surpassed by Rs15 billion.

The FBR missed the chance to introduce some structural changes during the time it was getting windfall gains due to steep currency devaluation and higher imports.

Tax authorities may now face some challenges once the target is officially adjusted upwards and imports stabilise.

Year-to-date performance

There was no change in the contribution of various taxes to the total tax collection and indirect taxes remained a predominant source of revenue generation despite Prime Minister Imran Khan’s focus on widening the tax base.

Overall, the FBR collected 65%, or Rs2.2 trillion, in indirect taxes - general sales tax, customs duty and federal excise duty, which were the three main sources of indirect taxes.

Similarly, Rs1.75 trillion, or 52.5%, of the total collection was at the import stage.

The reliance on indirect taxes has increased inflationary pressure at a time when the country is witnessing rupee depreciation. There are hardly any goods consumed by the children and adults that have not been taxed in the mini-budget.

The FBR collected Rs1.18 trillion in income tax in the first seven months of current fiscal year, up Rs229 billion, or nearly one-fourth, over the same period of previous year.

Over Rs164 billion worth of income tax was collected at the import stage, which was higher by Rs19 billion than the target set for July-January FY22. The share of income tax in total revenue stood at 35%, which placed increased burden on people who had lower payment capacity. The Pakistan Tehreek-e-Insaf (PTI) election manifesto had promised to increase the share of direct taxes to 45% from 38%.

The FBR recorded 35% growth in sales tax collection in the July-January period due to heavy reliance on import taxes. It collected Rs1.45 trillion in sales tax, up Rs374 billion.

The total increase in sales tax collection was lower than the jump in sales tax receipts at the import stage due to negative growth in domestic sales tax collection.

The FBR collected Rs423 billion in domestic sales tax compared with Rs468 billion last year, a dip of 9.6%.

Contrary to that, sales tax collection at the import stage stood at Rs1.02 trillion in the first seven months of FY22 against Rs609 billion last year. There was an increase of Rs419 billion, or 69%, in sales tax collection at the import stage.

As compared with the target, the total sales tax collection was higher by Rs190 billion, thanks to higher imports.

Federal excise duty collection amounted to Rs172 billion, which was higher by Rs23 billion than the corresponding period of previous year.

Customs duty collection increased to Rs548 billion, higher by Rs152 billion, or 38%. It was Rs55 billion more than the target.

Published in The Express Tribune, February 1st, 2022.
 
MenInG said:
The Federal Board of Revenue (FBR) exceeded its seven-month tax collection target by Rs262 billion but missed the monthly goal for the second month in a row due to poor domestic sales tax collection and a slowdown in imports.

Still, the FBR bagged nearly 53% of the total collection at the import stage, which helped camouflage its weaknesses in the area of domestic sales tax.

Against the original, relatively low tax target of nearly Rs3.1 trillion, the FBR provisionally collected Rs3.35 trillion during July-January of current fiscal year, according to an FBR’s statement.

The collection was Rs780 billion, or 30%, higher compared to the collection of Rs2.57 trillion in the same period of previous year.

The FBR said that it paid Rs182 billion in tax refunds, up 36%. Official statistics showed that while sales tax receipts at the import stage increased 69%, the domestic sales tax collection shrank nearly 10%, which speaks volumes about the inefficiency of the tax department.

The domestic sales tax collection dipped despite the fact that the nominal gross domestic product (GDP) growth rate was estimated at 16%.

The FBR has not revised upwards its monthly targets so far despite imposing 17% sales tax on almost every consumable item, including pastries, bread and food sold at restaurants.

Under a deal with the International Monetary Fund (IMF), the current target of Rs5.829 trillion will go up to Rs6.179 trillion, which will also bring changes to the monthly targets.

The IMF’s scepticism about the consistency in FBR’s performance over the long term due to the possibility of a slowdown in imports has again proved to be correct, as the FBR missed the monthly target for the second time in a row in January 2022.

It missed the monthly tax target by Rs27 billion. Against the target of Rs457 billion, the tax authorities provisionally collected Rs430 billion in January, according to the provisional results.

Read FBR reluctant to implement FTO’s recommendations

In January, the FBR missed the targets of sales tax, federal excise duty and customs duty. But the income tax collection target was surpassed by Rs15 billion.

The FBR missed the chance to introduce some structural changes during the time it was getting windfall gains due to steep currency devaluation and higher imports.

Tax authorities may now face some challenges once the target is officially adjusted upwards and imports stabilise.

Year-to-date performance

There was no change in the contribution of various taxes to the total tax collection and indirect taxes remained a predominant source of revenue generation despite Prime Minister Imran Khan’s focus on widening the tax base.

Overall, the FBR collected 65%, or Rs2.2 trillion, in indirect taxes - general sales tax, customs duty and federal excise duty, which were the three main sources of indirect taxes.

Similarly, Rs1.75 trillion, or 52.5%, of the total collection was at the import stage.

The reliance on indirect taxes has increased inflationary pressure at a time when the country is witnessing rupee depreciation. There are hardly any goods consumed by the children and adults that have not been taxed in the mini-budget.

The FBR collected Rs1.18 trillion in income tax in the first seven months of current fiscal year, up Rs229 billion, or nearly one-fourth, over the same period of previous year.

Over Rs164 billion worth of income tax was collected at the import stage, which was higher by Rs19 billion than the target set for July-January FY22. The share of income tax in total revenue stood at 35%, which placed increased burden on people who had lower payment capacity. The Pakistan Tehreek-e-Insaf (PTI) election manifesto had promised to increase the share of direct taxes to 45% from 38%.

The FBR recorded 35% growth in sales tax collection in the July-January period due to heavy reliance on import taxes. It collected Rs1.45 trillion in sales tax, up Rs374 billion.

The total increase in sales tax collection was lower than the jump in sales tax receipts at the import stage due to negative growth in domestic sales tax collection.

The FBR collected Rs423 billion in domestic sales tax compared with Rs468 billion last year, a dip of 9.6%.

Contrary to that, sales tax collection at the import stage stood at Rs1.02 trillion in the first seven months of FY22 against Rs609 billion last year. There was an increase of Rs419 billion, or 69%, in sales tax collection at the import stage.

As compared with the target, the total sales tax collection was higher by Rs190 billion, thanks to higher imports.

Federal excise duty collection amounted to Rs172 billion, which was higher by Rs23 billion than the corresponding period of previous year.

Customs duty collection increased to Rs548 billion, higher by Rs152 billion, or 38%. It was Rs55 billion more than the target.

Published in The Express Tribune, February 1st, 2022.
Click to expand...

The FBR is useless. Our tax collection should be well over 10 trillion.
 
The Federal Board of Revenue (FBR) on Tuesday launched the ‘Automated Currency Declaration System’ (ACDS) to facilitate taxpayers and passengers flying in and out of the country.

The new digital system has been developed with the assistance of the National Database and Registration Authority (Nadra) and the Federal Investigation Agency (FIA), said a press release, adding that it would be deployed at all international airports.

Finance Minister Shaukat Tarin inaugurated the ACDS at a ceremony at the FBR headquarters. FBR Chairman Dr Ashfaq Ahmed, NADRA Chairman Tariq Malik and FIA Director General Sanaullah Abbasi were also present on the occasion.

Addressing the inauguration ceremony, Tarin said that the government was focusing on the documentation of the economy to broaden the tax base. “This aim can only be achieved through the use of technology and automation with review of existing procedures and processes,” he added.

“To achieve the goal of documentation of economy and to bring more transparency in the economic transactions, documentation of flow of foreign currency in and out of the country is pivotal,” the minister further said.

Read More: President apologises to elderly taxpayer over FBR’s ill-treatment

The minister stressed the need for inter-agency coordination and cooperation for the success of all efforts of business process, re-engineering and adoption of new framework for implementation of rules and regulations.

At present, the currency declarations are obtained randomly from the passengers, coming to or going out the country through airports. The currency declarations are manually secured in the shape of hard copies and then entered into the system manually in batches.

Since the current currency declaration system was not working to achieve the goal of complete documentation of foreign currency movement, a new system was envisaged by FBR. Tarin said that the new system would be hassle free, time-saving and a one-stop solution for all the passengers.

Earlier, the FBR chairman explained the scope and significance of the ACDS. He reiterated that FBR had been swiftly moving towards automation and digitisation to promote transparency and reliability. He added that the new system would save time and ensure credibility, the press release said.

https://tribune.com.pk/story/2341538/fbr-digitises-currency-declaration
 
A new tax scam has surfaced in the Federal Board of Revenue (FBR) where tax authorities illegally paid over Rs16 billion in sales tax refunds to hundreds of big retailers in the past five months.

According to government sources and a list of beneficiaries of the illegal input tax adjustments, the payments were made between September 2021 and January 2022 in violation of the Sales Tax Act and Sales Tax General Orders (STGOs) issued during the period.

Tax authorities failed to implement at least four orders that had disallowed 60% input tax adjustments for those large retailers who did not integrate with the tax system through Points of Sale (POS), according to the sources.

It is the biggest scam that has surfaced in the FBR during the tenure of Pakistan Tehreek-e-Insaf (PTI) government. The matter has already been brought to the notice of Finance Minister Shaukat Tarin and the FBR chairman has formed an inquiry committee.

FBR Chairman Dr Mohammad Ashfaq told The Express Tribune that an inquiry committee had been constituted to ascertain whether it was deliberate or negligence of the officers of Pakistan Revenue Automation Limited (PRAL) or the FBR. PRAL is a subsidiary of the FBR that handles its database. To a question whether the loss to the exchequer was in the range of Rs16 billion to Rs19 billion, the chairman said that nothing could be said until the inquiry committee finalises its report next week. But he disputed that the amount was that much high.

“Our own system detected the input tax adjustments for the non-integrated tier-I retailers and I immediately ordered an inquiry that should be appreciated,” said Ashfaq.

A grade-20 officer from the FBR’s operations wing has been authorised to conduct the inquiry. However, this cannot be considered an independent inquiry as the operations wing along with the policy and POS cell and PRAL are responsible for implementation of the law.

The chairman stressed that whosoever was found involved in it would not be spared.

Through the Finance Act 2019, the government had decided that those tier-I retailers that would not integrate with the FBR’s online system would be penalised by denying them refunds of up to 15% of their claims. This ratio was increased to 60% through the Finance Act 2021.

To implement the law, the FBR issued various STGOs from August 2021 to December 2021. But the record showed that the FBR did not implement these STGOs and allowed illegal sales tax adjustments for hundreds of retailers.

The FBR issued the first STGO in August 2021 and put 6,762 retailers on a five-day notice to either integrate or lose 60% of refunds against the amount claimed.

The second STGO was issued in September, mentioning 466 names while the third STGO was issued in October having 1,230 names. The fourth STGO was issued in November carrying 605 names.

However, except for a few who integrated with the system, the FBR allowed full sales tax adjustments to the rest of the retailers that caused a colossal loss, which was estimated at Rs16 billion at the time of ordering the inquiry. Sources said that the figure further jumped to Rs19 billion.

FBR officials said that the STGOs issued since December had now been implemented. But details showed that even on January 18, Rs2.4 million was paid illegally to a trader.

A tier-1 retailer was paid Rs320 million in illegal refunds - the highest amount. However, one retailer got over Rs770 million in illegal refunds between September and November in four tranches.

Enhancing revenue collection through linking POS with the FBR database was the biggest initiative announced by Finance Minister Shaukat Tarin in the budget.

The minister also pitched the POS initiative to the International Monetary Fund (IMF) as the biggest revenue generator in the current fiscal year.

Tarin said that he would connect 500,000 POS with the FBR system and collect Rs100 billion worth of taxes from the retailers in two years.

At the end of last fiscal year, about 11,000 POS had been registered with the FBR that have now increased to around 15,000.

Fingers are also pointed towards the development team of PRAL for its failure to upgrade the system in line with the new legal requirements. PRAL Chief Executive Officer Ahmad Nawaz did not reply to the question as to why FBR’s instructions were not implemented.

Sources said that there was mala fide intention from day one as the change request form that PRAL received on July 30 called for disallowing 60% “output adjustment” instead of “input adjustment”.

They said that the first list was given to PRAL on August 25 - seven days after the retailers had already claimed input tax adjustment for July.

Quantum of losses

Officials of the information technology wing of the FBR dispute the figure of Rs16 billion, saying the loss to the exchequer had been worked out on the basis of accumulated credit. After excluding this, the potential loss could be around Rs9 billion, said the sources.

They said that some of the distributors were also included in the list of ineligible retailers. However, the STGO provides a 10-day window to those whose names are included wrongly in the list.

Published in The Express Tribune, February 6th, 2022.
 
The government has quietly withdrawn the 17% sales tax that it had imposed last month through the mini-budget on imports by foreign diplomatic missions and the United Nations agencies after a warning from the Foreign Office (FO) that other countries may take Pakistan to the International Court of Justice over the move.

The Federal Board of Revenue (FBR) apparently made an illegal move by withdrawing the tax through simple “instructions” instead of getting the Sales Tax Act of 1990 amended by the National Assembly.

Through the February 4 instructions, the government also withdrew the 17% sales tax imposed last month on the imports made by the President of Pakistan, Prime Minister of Pakistan and provincial governors. Where the FBR has withdrawn the sales tax on the country’s top rulers, it has maintained it on bread and other edible goods sold in bakeries and at restaurants.

“On the request made by the Ministry of Foreign Affairs, the issue of tax exemption on imports by diplomats, diplomatic missions and other privileged persons has been reviewed and consequently sales tax shall not be collected on such imports covered under PCT headings 99.01, 99.02 and 99.06 of Chapter 99 of the First Schedule to the Customs Act, 1969,” according to the instructions that the FBR issued last week on Friday.

These instructions have been forwarded to all the customs offices in Pakistan for implementation.

The customs tariff heading 99.01 covers goods imported by various agencies of the United Nations under the United Nations Privileges and Immunities Act, 1948 and the heading 99.02 is about goods imported by diplomats, embassies, consulates under the Diplomatic and Consular Privileges Act, 1972.

As part of the Rs360 billion mini-budget, the government had imposed 17% GST on goods imported by various agencies of the United Nations, diplomats and the diplomatic missions.

Through the same mini-budget, the government imposed taxes on bread, bakery items, children’s milk, raw materials of medicines and all types of imported machinery while also increasing taxes on cellular calls.

But the tax can only be withdrawn either through a Presidential Ordinance or by an act of parliament and the move to withdraw the levy is legally not attainable, according to independent tax experts.

Despite repeated attempts, the FBR spokesperson did not reply to the questions whether tax could be withdrawn through a clarification or an administrative order. He also did not respond to the question whether the board was above parliament and the Constitution that it could overrule an act of parliament through simple instructions.

The FBR has also withdrawn the 17% GST imposed last month on goods imported under the President’s Salary, Allowances and Privileges Act, 1975, goods imported under the Prime Minister’s Salary, Allowances and Privileges Order,1975, goods imported under the Governor’s Salary, Allowances and Privileges, Order,1975 and goods imported under the Acting Governor’s (Allowance and Privileges) Order,1978.

Similarly, furniture, and spare parts in respect of official cars, river craft or air craft imported or purchased out of bond for the president, prime minister, governor or acting governor has also been exempted from the 17% GST, according to the FBR documents.

Sources said that it was an unwise move by the FBR to slap 17% tax on imports by foreign diplomats, diplomatic missions and the UN agencies.

The sources said that the FO told the FBR that its decision to withdraw tax immunity available to the foreign missions and their diplomats was in violation of the Vienna Convention on Diplomatic Relations of 1961 and 1972.

The FBR spokesperson also did not reply to the questions whether it was the inefficiency on part of the FBR that it didn’t carefully assess the impact of imposition of GST on diplomats who were protected under the Vienna Convention?

In a correspondence, the Ministry of Foreign Affairs intimated the FBR that legally the diplomatic missions and the United States may invoke jurisdiction of the International Court of Justice, the sources said. The FO also warned that the other countries could also take similar retaliatory measures against Pakistan, they added.

To a question whether it was correct that on February 1, 2022, the FO informed the FBR that the UN agencies and diplomatic missions may invoke jurisdiction of the International Court of Justice if Pakistan did not withdraw 17% GST on imports by diplomats and foreign missions, the FO spokesperson Asim Iftikhar said, “What I know is that the matter has since been addressed and swiftly resolved.”

It is not the only move that the FBR has made during the last few months without thoroughly reviewing the implications.

One of the reasons for such moves that this time put Pakistan’s relations with other countries at stake is that the FBR’s affairs are now handled by relatively inexperienced and junior officers. The FBR spokesperson did not reply about its carelessness that caused international embarrassment for Pakistan when foreign missions threatened to take Pakistan to the International Court of Justice over the imposition of tax.

He also did not answer the question about handing over such serious policy matters to inexperienced officers.

https://tribune.com.pk/story/2342535/fbr-withdraws-17-tax-on-diplomats-imports
 
Finance Minister Shaukat Tarin on Wednesday directed taxmen to step up efforts to achieve the revised revenue target of over Rs6.1 trillion after they missed previous two months’ targets and projected losing more money due to the government’s policies.

Tarin held his first face-to-face meeting with chief commissioners of the Inland Revenue Service (IRS), who had been given upward revised individual targets in the light of an agreement with the International Monetary Fund (IMF).

Chief commissioners head field offices of the FBR that are responsible for tax collection.

Against the earlier target of Rs4.9 trillion for the IRS, the department has now been tasked to achieve the new target of Rs5.1 trillion. In addition to this, Pakistan Customs’ tax target has also been revised upwards to over Rs1 trillion against the original target of Rs917 billion.

However, Customs officials are not willing to accept the new target due to contraction in imports.

In a briefing on the Rs5.1 trillion IRS target, the FBR informed Tarin that there were two key challenges – slowdown in imports and reduction in sales tax on petroleum products, sources told The Express Tribune.

According to them, the FBR stated that the two developments could undermine the tax collection efforts on the part of IRS by around Rs250 billion and the major hit would come from the petroleum products.

Sources stated that the finance minister was told that some of the revenue losses due to these policy measures would be offset by the estimated revenue collection of Rs75 billion from the pharmaceutical sector.

The government has introduced a Rs360 billion mini-budget, including the imposition of 17% sales tax on the raw material of medicines. However, revenue estimates of Rs75 billion from medicines, prepared by the FBR’s Karachi office, appeared to be on the higher side, the sources added.

The government has promised to release tax refunds for the pharmaceutical sector within 72 hours.

Import contraction and almost zero sales tax on petroleum products may slash the revenue by Rs275 billion to Rs300 billion, said Tarin while talking to The Express Tribune.

The minister was hopeful that the tax target of Rs6.1 trillion would be achieved and cited that he had asked the IRS to collect about Rs5.2 trillion.

Tarin said that the FBR’s target had now been revised and he directed the IRS officers to recover the stuck revenue in cases related to the telecom and banking sectors.

“Overall revenue of about Rs3 trillion is stuck in litigation and I have also directed the FBR to use the Alternative Dispute Resolution Committees (ADRCs) to expedite the resolution of the matter,” he said.

Under a deal with the IMF, the current target of Rs5.829 trillion will go up to Rs6.129 trillion, which will also bring changes to the monthly targets.

Tarin visited the FBR headquarters days after the tax department missed its monthly target for the consecutive second month.

Overall, the FBR exceeded its seven-month tax collection target by Rs262 billion but it missed the monthly goal for December and January, raising concerns about its ability to achieve the revised target.

The FBR missed the January tax target by Rs27 billion. Against the target of Rs457 billion, the tax authorities provisionally collected Rs430 billion in January.

Last month, the FBR missed the targets of sales tax, federal excise duty and customs duty. But the income tax collection target was surpassed by Rs15 billion.

The finance minister was informed that if the current trend of slowdown in imports continued, there could be a significant shortfall in the tax revenues. This will mainly hurt the collection of field offices that heavily rely on import-related taxes.

However, some of those losses would be compensated due to the mini-budget, the minister was informed.

“We do not have any option but to achieve the target, although the Rs6.129 trillion figure appears to be difficult in the changing circumstances,” a senior FBR official said on condition of anonymity.

According to the sources, Tarin told the chief commissioners that they get increments in salaries based on their performance. He is also expected to meet Customs officials next week to review their performance.

Customs authorities collected Rs548 billion in taxes in seven months, higher by Rs152 billion, or 38%. It was Rs55 billion more than the target.

However, Customs too missed its monthly target for the first time after imports reduced by $1.7 billion in January.

Published in The Express Tribune, February 10th, 2022.
https://tribune.com.pk/story/2342815/govt-policies-hurt-tax-revenue-fbr
 
The Federal Board of Revenue (FBR) has raised over Rs287 billion in indirect taxes from petroleum products during the first seven months of the current fiscal year -up by 72%, indicating that petroleum products still remain a key source for revenue generation.

The taxes were collected from July to January of fiscal year 2021-22 on account of customs duty and general sales tax, showed the figures compiled by the FBR. Although the customs duty rates remained unchanged after the government doubled those in the budget, Prime Minister Imran Khan shifted the sales tax rates during fortnightly reviews of the prices. But still, the government has pooled Rs287 billion under the heads of customs duty and sales tax on petrol, crude oil, high-speed diesel and furnace oil.

The collection was Rs120 billion or 72% higher than the corresponding period of the previous fiscal year. During the first seven months of the ongoing fiscal year, the country spent Rs1.4 trillion on the import of four petroleum products -which was Rs750 billion or 120% higher than the comparative period of last fiscal year. The data suggested that the taxation on petroleum products along with the increase in their prices in the international market remained key factors behind record per litre price hike in petrol and high-speed diesel.

Prime Minister Imran Khan deferred the proposed increase in the petroleum products’ prices with effect from February 1 and instead, called for reduction in the petroleum levy and sales tax rates. The sales tax on petrol has been further slashed to Rs0.79 per litre against the standard 17% while it is reduced to Rs3.17 per litre on high-speed diesel. However, one of the major reasons behind the higher collection was the imposition of 17% sales tax on crude oil at the import stage and increase in customs duty on import of petrol from 5% to 10% in the budget.

The government has not changed these rates since June. The seven-month customs duty collection on the import of these four petroleum products stood at Rs84.4 billion -higher by Rs48 billion or 133%. Similarly, the sales tax collection at the import stage on these items also increased to Rs163 billion against last year’s figure of Rs70 billion. In addition to that, Rs40 billion sales tax was also collected at the local stage, which was 35% lower than previous year because of change in taxation from domestic to import stage in the budget. The Rs287 billion collection was equal to 8.5% of the total taxes that the FBR collected during the JulyJanuary period.

Last year, this ratio was 6.5%, showed the numbers. The data compiled by the FBR relating to duties and taxes highlights heavy indirect taxation that has been hurting the consumers badly. Due to the increasing share of the import taxes, the share of the indirect taxes in overall tax collection has gone up to 66%, which is hurting the poor and middle-income groups more than the rich class. In July-January, the FBR collected Rs70 billion in taxes on the import of petrol on account of customs duty and sales tax. This was higher by nearly one-third or Rs17 billion. The customs duty collection on petrol import was Rs36 billion in seven months, which was higher by nearly 290%, thanks to the government’s decision to double the customs duty rate to 10% in July last year.

The crude oil imports fetched over Rs92 billion in taxes at the import stage alone, up by 536% or nearly Rs78 billion after the government slapped 17% general sales tax on crude oil import in the budget. Out of Rs92 billion, the sales tax collection was close to Rs80 billion. The FBR collected over Rs59 billion on import of high speed dieselhigher by 100% or Rs30 billion. These numbers suggest that the import taxes were one of the key reasons behind historically high petroleum product prices in Pakistan. The depreciation of the rupee against the US dollar also added fuel to the fire.

The higher prices of diesel are also causing inflation as there has been an increase in transport fares and an upsurge in the cost of agriculture produce in areas where the canal water is not available. The government also collected Rs25 billion on the import of furnace oil, which was also higher by 184%. The furnace oil import significantly increased due to the government’s decision to use it for running power plants after LNG became expensive. In a briefing to the finance minister this week, the FBR said that it was facing two key challenges - slowdown in imports and reduction in sales tax on petroleum products - to meet this year’s revised tax target of over Rs6.1 trillion.

However, the numbers indicated that despite the reduction in rates, the FBR was enjoying windfall gains of the global commodity prices. But the government has taken a hit of Rs205 billion on account of petroleum levy collection during the first half of the current fiscal year. The Ministry of Finance reported this week that during the July-December period, the petroleum levy collection stood at Rs70 billion as against Rs275 billion in the last fiscal year. But levy collection has nothing to do with the FBR’s targets.
 
For the first time, the government has started taxing the income of offshore companies owned by Pakistanis, beginning the journey towards collecting taxes from the wealthiest families that route their local income through foreign channels to avoid paying taxes.

The step, taken last week by the Automatic Exchange of Information (AEOI) Zone of the Federal Board of Revenue (FBR), may eventually cause a crack in the web of domestic and offshore companies that have been created by at least 39 wealthiest Pakistanis to legally avoid taxes, sources told The Express Tribune.

They said that the FBR had passed at least two orders last week to recover Rs287 million in taxes on foreign income that the taxpayers had claimed to be exempted in the income tax returns.

The FBR has now imposed tax at the rate of 15% under Section 109A of the Income Tax Ordinance that deals with the Controlled Foreign Companies, said the sources.

A controlled foreign company is one that is directly or indirectly owned by a resident Pakistani.

The income had been earned in Pakistan and transferred abroad legally by paying 15% dividend tax in the country. However, the FBR decided to amend the law so that the taxpayer was also forced to pay another 15% dividend tax on its foreign income under Section 109A of the law.

Around 387 members of the 39 wealthiest families have disclosed in the Securities and Exchange Commission of Pakistan (SECP) that they have stakes in offshore companies, according to the sources.

A legal amendment had been introduced in 2018 to tax the passive income of offshore companies owned by Pakistani residents in Pakistan.

Before 2018, the income of foreign company was taxable only if the dividend was paid to the person who directly or indirectly owns the firm. Usually, these foreign companies do not pay dividends to the people residing in Pakistan.

Now, the tax is payable on the attributable income before it is paid by the foreign company to the resident persons, according to the tax authorities.

The first two orders by the FBR in case of controlled foreign companies may eventually lead to correcting the wrongdoings committed 30 years ago when former prime minister Nawaz Sharif had enacted the Protection of Economic Reforms Act 1992 in the name of “creating a liberal environment for savings and investments in Pakistan.”

After its enactment, the industrialists and politicians had legalised their illegal money, according to court records and statements of that period.

But the individuals and businesses, with the help of tax consultants and chartered accountants, have structured their transactions in a manner that there is the lowest incidence of tax on their activities.

In this case, the taxpayers paid very low personal income tax, although their companies paid the dividend tax.

Tax authorities believe that a significant portion of dividend that is repatriated every year abroad is actually going back to Pakistanis who have brought in their own money as foreign direct investment.

The foreign exchange regime that is now in practice promotes free movement of funds in and out of Pakistan.

Businessmen have their own reasons for parking their money abroad and treating it like foreign direct investment due to historical blunders like the nationalisation of 1971 and the freezing of foreign currency accounts in 1998.

The State Bank of Pakistan (SBP) data showed that during July-December 2021, about $891 million was repatriated from Pakistan as dividend on foreign investment.

A major chunk $170 million was repatriated to the United Kingdom. During the first half of the fiscal year, Pakistan had received $1 billion in foreign direct investment, according to the SBP.

The FBR has passed the order in case of a foreign holding company of a Pakistani subsidiary company that is registered in the British Virgin Island.

The Pandora Papers, the good work by the International Consortium of Investigative Journalists, further unmasked the layers of secrecy and pointed towards the grave problem - the stashed assets by individuals in offshore territories, known as tax havens.

Under the Companies Act, every substantial shareholder or officer of a company incorporated under the Company Law, who is a citizen of Pakistan including dual citizenship holder whether residing in Pakistan or not having shareholding in a foreign company or body corporate shall report to the company his shareholding or any other interest as may be notified by the Commission.

When contacted, an SECP spokesman said that the beneficial ownership register information is “not public information, thus it cannot be disclosed/shared with media”.

This information can only be shared with the FBR or any other agency, authority and court, it added.

But the sources said that so far about 387 individuals had declared that they had stakes in offshore companies. The FBR had unearthed the tax avoidance scheme while probing the income of amnesty assets in subsequent years, said the sources.

Published in The Express Tribune, February 15th, 2022.


https://tribune.com.pk/story/2343468/fbr-starts-taxing-offshore-firms
 
<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">FBR has successfully knocked down Feb revenue target of Rs. 441 billion, posting robust growth of 28.5 percent, and up to the month growth of over 30 percent. Because of this performance of FBR we are able to subsidise petrol, diesel and electricity and give relief to our people.</p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1498897292304302080?ref_src=twsrc%5Etfw">March 2, 2022</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
 
You must log in or register to reply here.

Similar threads

MenInG
[VIDEO] Babar Azam and Naseem Shah in the Pepsi ad....
Replies
17
Views
2K
Nikhil_cric
N
MenInG
  • Poll Poll
Imran Khan and Bushra Bibi convicted in £190m Al-Qadir Trust case [Update@ Post#68]
2 3
Replies
185
Views
9K
Ball Blazer
Ball Blazer
MenInG
Incredible Athleticism! 211 shots in this Badminton rally
Replies
15
Views
1K
SalimBhai
SalimBhai
TSA321
Clashes in Melbourne, Australia between Khalistanis and Indians
2
Replies
87
Views
8K
daytrader
daytrader
MenInG
[VIDEO] Maryam Sharif to interviewer "Isko Video to naheen kar rahay? band kardain"
Replies
54
Views
3K
Waseem
W
Back
Top