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22/04/2023

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27/01/2017

FBR detects 486,238 tax defaulters in two years

Federal Board of Revenue (FBR) has detected 486,238 tax defaulters in the country during the last two years and collected around Rs 52.654 billion from them. The FBR detected a total of 242,087 tax defaulters during 2014-15 including 198,976 income tax defaulters, 42,410 sales tax defaulters and 701 Federal Excise Duty defaulters while it detected a total of 244,151 tax defaulters during 2015-16 that include 194,624 income tax defaulters, 48,765 sales tax defaulters and 762 Federal Excise Duty defaulters.

According to the information placed before the National Assembly on Thursday during the Question Hour, it was revealed the FBR collected around Rs 24.855 billion during the 2014-15 and Rs 27.799 billion during 2015-16 from the defaulters.

The FBR collected Rs 21.744 billion under the head of income tax, Rs 2.286 billion as sales tax and Rs 825 million as FED during 2014-15 and it collected Rs 15.666 billion as income tax, Rs 4.118 billion as sales tax and Rs 8.015 billion as FED during 2015-16.

To another question, Parliamentary Secretary for Finance and Revenue Rana Muhammad Afzal informed the National Assembly that the government signed a total of $5.123 billion loans with the Asian Development Bank during January 2013 to November 2016 while an amount of $2.812 has been disbursed to the government during the said period.

Elaborating terms and conditions of the ADB loan, he said the total OCR loans from January 2013 stand at 22, interest rate is LIBOR based+0.6 per cent, repayment period is 20 to 25 years while the grace period is five years.

About the Asian Development Fund loans, he said the total ADF loans from January 2013 stand at 12, interest rate is 2 per cent, repayment period is 20 to 25 years and grace period is five years. During the period from January 2013 to November 2016, total amount equivalent to $3.206 billion comprising principal $2.870 billion and interest $335 million has been paid to the ADB on account of debt servicing of foreign loan, he said.

Source: http://www.brecorder.com/taxation/181:pakistan/133571:fbr-detects-486238-tax-defaulters-in-two-years/?date=2017-01-27

27/01/2017

CPEC to open new world for customs, says FBR chief

Federal Board of Revenue (FBR) Chairman Dr Muhammad Irshad Thursday said that China Pakistan Economic Corridor (CPEC) would open a new world for Pakistani customs authorities in anticipation of huge clearances of import/export while Gwadar Port would also play a key role in customs clearance processes.

Addressing a large gathering of customs officials, diplomats, importers/exporters representatives of international donor and Law Enforcement Agencies on the occasion of World Customs Day at Model Customs Collectorate (MCC) Islamabad, Dr Irshad said the role of Pakistan's customs would be considerably enhanced under the CPEC project and CPEC is a whole new world for the customs officers.

Tax authorities asked the customs to fully prepare themselves to effectively handle the imports and exports under the CPEC.

FBR Chairman said that Pakistan's customs, which is an integral part of the FBR, is facing major challenges. The FBR is ready to resolve housing and logistic issues of the customs department by removing bottlenecks in functioning of the department. An exclusive sector/housing scheme should be developed for the customs department.

He said that the job of Pakistani customs officials is very challenging and different from rest of the world. The job of Pakistani customs officials is very difficult keeping the anti-smuggling and counterterrorism activities at ports in view. The customs is playing a key role in controlling terror financing which took place in the form of narco-trade or smuggling of drug money across borders. The lives of Pakistani customs officers are threatened at ports due to terrorism and security issues at border customs stations. There should be a specific Shuhada Fund for those customs officials who lost their lives while protecting economic borders of the country.

In this regard, he saluted lower customs staff working day and night at border areas including Chaman, Torkham and Wagha, etc, without any fear.

The chairman FBR highly appreciated the performance of MCC Islamabad in breaking all previous records of revenue collection during 2015-16 and current fiscal year. He also announced two months salary as a reward to the sepoys, who gave guard of honour at the MCC Islamabad ceremony.

The WCO has devoted this year's International Customs Day to the theme "Data Analysis" with the slogan "Data analysis for effective border management." All operations managed by Pakistan Customs are incomplete without data analysis, and for an effective border management whether at sea, air or land, data collection, its analysis and an intelligent inference drawing process go hand in hand, he said.

Highlighting importance of data analysis, he said that without authentic data, customs cannot play its due role of assessment and clearances. The computerised customs clearance systems, Integrated Border Management System (IBMS) and integrated transit trade management system are some of the processes using data analysis for different purposes.

After successful operations against the terrorists, the government is moving ahead towards integrated transit trade management system, he maintained.

The FBR has witnessed growth of 20-22 per cent in revenue collection during current fiscal. He was confident that the momentum of growth would be maintained in the remaining period of 2016-17, Dr Irshad added.

Chief Collector of Customs (North), Sarwat Tahira Habib highlighted the achievements of Pakistan Customs. She also asserted the need for working even harder to achieve the parallel goals of trade facilitation and customs controls.

She said that customs as an organisation has substantial clearance data and web-based customs automation which, if analysed intelligently, can improve border management. Moreover, co-ordination with other government agencies and commercially available data can improve the effectiveness of Customs and its border controls. "Collecting data is, however, not enough until and unless we design a mechanism of systematic analysis of this data which can improve our risk assessment and risk management," she added.

She pointed out certain irritants to improved performance including lack of recruitment and slow promotion at lower grades in Customs; legacy issue of IRS - Customs Options (future of 3000+ posts hanging after 7 years) and need for Horizontal expansion especially in view of specific CPEC needs and enhanced role of customs preventive work.

She said that effective monitoring by Customs in the Northern Region resulted in increased collection of revenue, as Northern Region was able to collect Rs 38,138 million(8% increase) in 2015-16 in comparison to Rs 33,025 million collected in 2014-15. Not only there was improved revenue collection but through improved Border Controls some very good cases of currency, Gold and Narcotics smuggling were detected by customs staff stationed at Islamabad and Peshawar Airports. The detection of 8.5kgs and 4.5 kgs Gold by staff stationed at Peshawar Airport which was a result of effective monitoring of passengers by the Customs Officers. This year due to better passenger profiling at Torkham and Peshawar Airport, the Collectorate was able to seize foreign currency equivalent to Rs 72 million and Gold valuing equivalent to Rs 71 million. Similarly, currency equivalent to PKR 15 million and 21 Kg He**in and 20 liters of Ketamine smuggling were detected by MCC Islamabad. This included detection of currency concealed in folds of clothes, He**in concealed in cavities of suit cases and stitched cloths, she added.

Chief International Customs FBR, Dr Muhammad Zubair Yousfani highlighted that the data analysis would maximise the trade facilitation. The data analysis would be also instrumental in facing the challenges of enforcement at ports. He also explained in detail the benefits of risk management system and post clearance audit which are necessary for effective customs clearance system backed by data analysis.

The Collector of Customs, MCC Islamabad Dr Arsalan Subuctageen informed that with an exemplary team work, Model Customs Collectorate, Islamabad has broken all previous records in the past one year and has excelled in all fields, including tax payer and passenger facilitation, revenue generation, target achievement, anti-smuggling, recovery of arrears, auctions, follow-up of legal cases, settlement of audit paras, establishment of K-9 section of sniffer dogs and in all other areas of performance.

All customs operations are incomplete without data analysis and for an effective border management whether at sea, air or land, data collection, its analysis & an intelligent inference drawing process goes hand in hand, Collector MCC Islamabad added.

In the end of the ceremony, certificates were distributed in acknowledgement of the meritorious services rendered by outstanding officers and officials of Pakistan Customs Service.

Source: http://www.brecorder.com/taxation/181:pakistan/133646:cpec-to-open-new-world-for-customs-says-fbr-chief/?date=2017-01-27

27/01/2017

Orange Line project: FBR grants duty exemption to Chinese contractor

The Federal Board of Revenue (FBR) has exempted customs duty on import of equipment (not manufactured locally) by a Chinese contractor for Lahore Orange Line Metro Train Project. The FBR has issued an SRO here on Wednesday. According to the notification, the federal government vide its notification number 40(I)/2017, dated 25th January 2017 has allowed exemption of whole of customs duty on import of equipment, if not manufactured locally, by M/S CR-NORINCO (Chinese Contractor) to be furnished and installed in Lahore Orange Line Metro Train Project.

This is subject to the condition that the equipment imported under this notification shall only be used in the aforesaid project. Secondly, the importer will furnish an indemnity bond in the prescribed manner and format as set out in Annex-A of the notification, at the time of import to the extent of customs duties exempted under this notification on consignment to consignment basis.

Thirdly, the Punjab Mass Transit Authority, established under the Punjab Mass Transit Authority Act, 2015, hereinafter referred as the Regulatory Authority, shall certify in the prescribed manner and format that the imported equipment is bona fide requirement of the project under the contract signed between the Regulatory Authority and the said contractor.

Fourthly, in the event a dispute arises whether any item is entitled to exemption under this notification, the item shall be immediately released by the customs department against a corporate guarantee, valid for a period of six months, submitted by the importer. A certificate from the Regulatory Authority, duly verified by the transport and communication section of the Ministry of Planning, Development and Reform, that the item is covered under this notification, shall be given due consideration by the customs department towards finally resolving the dispute. Disputes regarding the local manufacturing shall only be resolved through the Engineering Development Board of the federal government.

Fifthly, for the clearance of imported equipment through Pakistan Customs Computerised System, the authorised officer of the Regulatory Authority shall furnish all relevant information online against a specific user ID and password obtained under section 1550 of the Customs Act, 1969. In collectorates or customs stations where the Pakistan Customs Computerised System is not operational, the director reforms and automation or any other person authorised by the collector in this behalf shall enter the requisite information in Pakistan Customs Computerised System on daily basis, whereas entry of the data obtained from the customs stations which have not yet been computerised shall be made on weekly basis.

Sixthly, the equipment, imported under this notification, shall not be re-exported, sold or otherwise disposed of without prior approval of the Federal Board of Revenue (FBR). In case goods are sold or otherwise disposed of with prior approval of FBR, the same shall be subject to payment of duties as may be prescribed by the FBR.

Seventh, in case the equipment imported under this notification is sold or otherwise disposed of without prior approval of the FBR in terms of condition (f), the same shall be subject to payment of statutory rates of customs duties as were applicable at the time of import.

The equipment imported under this notification may be surrendered at any time to the collector of customs having jurisdiction, without payment of any customs duties for further disposal as may be prescribed by the FBR, the FBR said.

The FBR added that the indemnity bond submitted in terms of condition (b) by the importer shall be discharged on the fulfilment of conditions and violation of any of the above conditions shall render the goods liable to payment of statutory rate of customs duties leviable on the date of clearance of goods in addition to any other penal action under relevant provisions of the law.

Source: http://www.brecorder.com/taxation/181:pakistan/133212:orange-line-project-fbr-grants-duty-exemption-to-chinese-contractor/?date=2017-01-26

27/01/2017

901 cases of tax evasion, frauds involving Rs 53 billion detected

Directorate General of Intelligence and Investigation Inland Revenue (IR), Federal Board of Revenue (FBR) has detected 901 mega cases of tax evasion, concealment/tax frauds and cases of high net individuals involving Rs 53 billion during January-December 2016 against Rs 42 billion in 411 cases during January-December 2015.

Sources toldBusiness Recorder here on Wednesday that the record detection of high net individuals to the tune of around Rs 11 billion has been unearthed by the agency during whole year of 2016, involving 399 high net individuals. In 2015, 101 cases of high net individuals were detected involving Rs 1.22 billion.

Directorate General of I&I IR has unearthed 502 mega cases of tax evasion, concealment and tax frauds of around Rs 42.47 billion during January-December 2016 against Rs 41.96 billion in 310 cases during January-December 2015. Within the category of sales tax, the intelligence arm of the FBR has detected 643 cases involving revenue of Rs 22.376 billion during January-December 2016 against 264 cases involving Rs 3.7 billion during same period of 2015. The agency has finalised 462 sales tax cases involving Rs 27.735 billion during January-December 2016.

The detection of 901 cases involving Rs 53 billion in 2016 reflects remarkable performance of Khawaja Tanveer Ahmad, Director General Intelligence & Investigation (IR) and his expert team of intelligence officers, who managed to plug in loopholes in system. A clear and loud message has been conveyed across the country that anyone including super rich or high net individuals now cannot conceal their properties/income/ expenses. The sectors/industries involved in tax evasion have also been exposed by the persistent efforts of the agency. Besides, visible progress has been made in anti money laundering activities, enforcement activities such as raids, FIRs, arrests, etc against tax evaders.

The directorate is simultaneously carrying out investigations on several fronts including Panama leaks/offshore companies, money laundering cases and tax evasion, frauds and concealment etc. The crusade against the tax dodgers has been intensified by Khawaja Tanveer Ahmad and his team with full force.

The agency has assigned new targets to the field formations to assist the FBR in achievement of assigned revenue collection target for 2016-17. Investigations are underway to control tax evasion in cement sector, sugar mills, services sector/professionals, paper/paper board industry and cosmetic sector.

Directorate General of I&I IR took bold initiative to unearth massive concealment of income by an influential real estate developers. Through analysis and investigation of records, data exposed concealment to the tune of billions by some real estate developers. Such actions against big sectors have pointed towards the seriousness of the agency to assist the FBR in achievement of the assigned revenue collection targets for 2016-17.

Directorate General of Intelligence and Investigation IR will also take new measures to control the illicit trade of non-duty paid ci******es by strengthening the agency''s workforce and joint actions by DG I&I IR and customs intelligence.

Keeping in view sensitively of some big cases, the agency had completed the legal formalities of taking prior permission of high-ups and availability of irrefutable evidence for taking action against the units. For the first time in the history of the FBR, the Directorate General of Intelligence and Investigation Inland Revenue has continued its investigations in different sectors including real estate sector to ensure recovery of concealments involving billions of rupees. As a result of these actions, the Directorate General of Intelligence and Investigation IR has been emerged as a lead agency in detection of tax frauds in the country, sources said.

Another key initiative of the Directorate General of Intelligence and Investigation IR is the action against high net worth individuals who have made huge investments in real estate assets which involve understatements of the value and tax evasion. The agency detected tax aversion in paper and paper board sector, petroleum sector, manufacturers-cum-retailers and other sectors.

The FBR''s intelligence arm is confident to complete action against the tax evaders and those committing tax frauds to ensure recovery of the evaded amount to the tune of billions of rupees, they said.

Source: http://www.brecorder.com/taxation/181:pakistan/133230:901-cases-of-tax-evasion-frauds-involving-rs-53-billion-detected/?date=2017-01-26

13/01/2017

Financial impact of PM''s package readjusted

The Economic Co-ordination Committee (ECC) of the Cabinet has reportedly readjusted financial impact of Prime Minister''s package of incentives for exporter prepared after months of consultative process. Well-informed sources in Finance Ministry told Business Recorder that the ministry had estimated Rs 38.7 billion for garments sector at 7 percent duty drawback but after discussion the amount was slashed to Rs 37.6 billion. Likewise, financial impact on made-ups was slashed from Rs 30.3 billion to Rs 29 billion at 6 percent duty drawback.

However, the ECC did not change financial impact of Rs 8.8 billion at 5 percent duty drawback on processed fabric. The estimated financial impact of Rs 14.1 billion was reduced to Rs 12.1 billion on yarn and greige fabric at 4 percent duty drawback. The total estimated financial impact of Rs 91.9 billion was reduced to Rs 87.5 billion. The amount for non-textile sector remained unchanged at Rs 12.5 billion on basis of various rates ranging from 5 percent to 7 percent.

The sources said the Ministry of Finance had estimated financial impact of withdrawal of duty and sales tax on cotton imports at Rs 5 billion but the ECC increased it to Rs 10 billion. However, the financial impact of withdrawal of duty on manmade fibre (other than polyester) and zero rating of textile machinery imports would remain at Rs 3 billion and Rs 7 billion respectively.

The Finance Division informed the ECC that despite a significant improvement in the country''s macroeconomic framework, one sector that was lagging behind was the exports sector. In the past two years, exports had declined from high $25 billion to around $22 billion. It was felt that unless the declining trend in exports was arrested, it may soon begin to adversely affect the balance of payment position of the country. The exporters were demanding incentives to offset the rising cost compared to their competitors'', largely a result of incentives offered to rivals by their countries. They had been citing most recent concessions given to the exporters by the governments of some regional countries that are directly competing with Pakistan''s exports.

The Finance Division further said the government had held consultations with the relevant stakeholders during the last several months. With a few to mitigating exporters'' difficulties, a set of incentives had been formulated. The package, which was primarily on duty drawbacks and some other initiatives, was applicable for exports Goods Declaration (GDs) filed on or after January 16, 2017 till June 30, 2018. However, the package for fiscal year 2017-18 would be available to only those exporters who would achieve an increase of 10 percent in their exports as compared to their exports of fiscal year 2016-17. The package would have estimated financial/ budgetary impact of Rs 180 billion. The official documents reveal that total financial impact for one year has been calculated at Rs 132.5 billion after readjustments in amount expected to be extended to the exporter in the name of duty drawback.

The final package approved by the ECC is as follows:

====================================================================

PM''s Package of Incentives for Exporters:

====================================================================

Sector Rate of Duty Estimated Annual

Drawbacks Financial Impact

(Rs Billion)

====================================================================

TEXTILE

--------------------------------------------------------------------

Garments 7% 37.6

Made-ups 6% 29.0

Processed Fabric 5 8.8

Yarn and Greige Fabric 4% 12.1

--------------------------------------------------------------------

NON-TEXTILES

--------------------------------------------------------------------

Sports goods incl. gloves & footballs 7% 2.7

Leather manufactures including garments 7% 4.2

S Leather tanned 5% 1.9

Footwear 7% 0.9

Surgical Goods 5% 1.9

Cutlery 5% 0.3

Carpets & Rugs 6% 0.6

--------------------------------------------------------------------

Total 100.0

====================================================================

====================================================================

OTHER INCENTIVES:

====================================================================

SNo Subject Estimated Annual

Financial Impact

(Rs Billion)

====================================================================

1. Withdrawal of duty & sales tax on cotton imports 10.0

2. Withdrawal of duty on MMF (other than Polyester) 3.0

3. Zero rating of textile machinery imports 7.0

--------------------------------------------------------------------

Total: 20.0

====================================================================

Estimated Financial Impact for 12 months = Rs 120 billion

Estimated Financial Impact from 16-1-2017 till 30-6-2018 = Rs 180 billion.

Source: http://www.brecorder.com/taxation/181:pakistan/122824:financial-impact-of-pms-package-readjusted/?date=2017-01-13

13/01/2017

Chief Commissioners asked to verify exemption certificates

The Federal Board of Revenue (FBR) has decided to verify exemption certificates (section 148 of the Income Tax Ordinance 2001) issued by the field formations by constituting teams of senior tax officials in large taxpayer units (LTUs) and regional tax offices (RTOs) to conduct field visits for verification exercise across the country. In this regard, the FBR issued instructions to the chief commissioners of LTUs/RTOs here on Thursday to verify each exemption certificates issued by the field formations.

According to the FBR, the Chairman FBR pointed out during last chief commissioners' conference that a number of exemption certificates issued during current fiscal year (2015-16) were much higher. Consequently, it has impacted the collection of taxes u/s 148 of the Income Tax Ordinance 2001. The chairman FBR and FBR Member (IR Operations) showed their concern in this regard and stated that due care should be exercised while issuing exemption certificates in accordance with the laid down procedure. It was accordingly decided that the field formations shall be extra vigilant in issuance of the exemption certificates.

It was further decided that the chief commissioners shall submit a detailed report regarding cases where exemption has already been granted by 20.01.2017. For future, a team of officials headed by an officer not below BS-18 shall be constituted, which would conduct field visit for verification of the facts in each case where exemption has been sought. Names of team members shall be communicated to the board. Progress report of all application received for grant of exemption shall be submitted by 25th of every month, the FBR maintained.

All exemption certificates must be issued in strict accordance with relevant provisions of law and SROs issued by the FBR. During the conference, the chairman FBR highlighted the urgent requirements of conducting desk audits, field-audit of withholding taxes, monitoring of new taxation measures such as real estate taxation, monitoring of non-filers and detailed scrutiny of the registered persons to whom the supplies have been shown. He instructed the field formations to ensure that exemption certificates were issued with utmost care and after observing all necessary verifications as enjoined by Law and FBR circulars. He further stated that monitoring of withholding taxes with the AG offices must be improved with the help of newly-developed software, the FBR added.

Source: http://www.brecorder.com/taxation/181:pakistan/122860:chief-commissioners-asked-to-verify-exemption-certificates/?date=2017-01-13

13/01/2017

Life, heath insurance services: SRB issues two notifications regarding ST exemption

With the approval of the Government of Sindh, Sindh Revenue Board has issued two notifications on Thursday, in relation to exemption of Sindh sales tax on the services of life insurance and health insurance.

Through the notification No SRB-3-4/2/2017, all life insurance services as are provided or rendered during the financial year 2016-17 have been exempted from the levy of Sindh sales tax. Previously too, Sindh sales tax was not levied on life insurance services. This exemption shall now continue for a period up to June 30, 2017.

Through the other notification No SRB-3-4/3/2017, Sindh sales tax has been exempted on such of the health insurance services as are provided or rendered to individual persons. However, the group health insurance services provided or rendered to persons other than individuals shall continue to be levied.-PR

Source: http://www.brecorder.com/taxation/181:pakistan/122892:life-heath-insurance-services-srb-issues-two-notifications-regarding-st-exemption/?date=2017-01-13

13/01/2017

RTO and LTU need to formulate coherent strategy: FBR

Source: The Federal Board of Revenue (FBR) has observed that a huge number of cases are pending in courts involving huge amount of revenue which requires a comprehensive strategy by each RTO/LTU to liquidate pendency and recovery of the unpaid duties and taxes. The FBR has issued instructions to the chief commissioners of LTUs/RTOs here Thursday.

According to the FBR, it was pointed out during the last chief commissioners' conference that the representation of FBR cases at higher judicial forums was weak and not up to the mark. Moreover, a number of cases are pending involving considerable amount of revenue which requires formulating a coherent strategy by each RTO/LTU in order to liquidate this pendency and realise the due/legitimate revenue of the state.

Tasnim Rehman, CCIR, RTO Lahore, suggested during the conference that besides formulating a clear-cut strategy at the level of each field formation, the number of "advocates on call" must be increased to four or five for Lahore. The FBR Member (IR-Operations) instructed the CCIRs at Lahore to nominate the best lawyers to the board for their nomination in this regard.

It was stated that the jurisdiction assignment of directors of corporate cases was not complete in certain cases, in general, and where a person is director in one or more companies falling in different field formations, in particular. It was decided that PRAL shall devise an IT-based solution for assigning accurate jurisdiction of the directors of corporate cases. It was also decided that the issuance of notification of rates in respect of section 236V of the Income Tax Ordinance, 2001 will be ensured at the earliest.

The FBR Member (IR-Operations) thanked all the CCIRs for their active participation and appreciated their dedication to undertake that forthcoming targets shall be achieved with 30% increase so that the deficit could also be covered. The chairman FBR expressed his gratitude and highlighted the fact that this was his last collective interaction with the participants.

Source: http://www.brecorder.com/taxation/181:pakistan/122918:rto-and-ltu-need-to-formulate-coherent-strategy-fbr/?date=2017-01-13

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