Tax Solutions Law Chamber

15/05/2023

https://customstoday.media/president-upholds-ftos-decision-against-fbr-officers-delay-in-multi-million-dollar-tax-revenue-case/

President upholds FTO’s decision against FBR officers’ delay in multi-million dollar tax revenue case
byM Hayat 13/05/2023 in Breaking News, Lahore, Latest News, Slider News
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LAHORE: The President of Pakistan Arif Alvi has upheld the decision of Federal Tax Ombudsman regarding Federal Board of Revenue (FBR’s) officers and management for their unwarranted delay in a multimillion dollar tax evasion by companies case.

The Own Motion investigation was initiated in terms of Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance), because FTO Secretariat has evidence-based information that some of the most meaningful and innovative initiatives of FBR’s own individual officers and field formations stands diluted and washed away due to follow up failure, frequent posting transfers of officers and massive changes of jurisdictions.

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Moreover through In-House Analysis FTO Secretariat has also identified that though FBR and its dozens of field formations maintain an organized web portal, rich data center, exhaustive Data Bases, elaborate and comprehensive operational soft wares and houses a full-fledged & home grown IT support system i.e. Pakistan Automation (PVT) LTD (PRAL), yet neither FBR HQs nor its any single field formation maintains; any IT based tracking system, archiving various valuable initiatives & ventures made by different FBR’s organizations, officers, teams or specially created cells from time to time, any exhaustive, fool proof and IT enabled handing over module (from predecessors to successors) for such initiatives, any institutionalized internal follow up system, or any internal evaluation mechanism to gauge whether the goals envisaged under FBR’s flagship ventures have been logically pursued & achieved.

Therefore, it was reasonably assumed that in most of the cases the good job done is wasted, diluted or compromised with the transfer of individuals dissolution of units/ cells and take over b new managers. While conducting the aforesaid In-House Analysis FTO Secretariat has information on record that a list of potential cases of tax evasion, including M/S Acid Survivors’ Foundation, along with detailed investigation Report & Case Study was prepared & shared by Directorate General (DC), BTB FBR. This valuable information was duly shared in December, 2018, with the concerned field formations for taking action against said entities for not declaring true particulars of their receipts/income and not discharging their responsibilities as withholding agents.

However, in 2019, FBR management suddenly shelved this whole BTB regime overnight: disbanding BTB Zones Islamabad, Lahore and Karachi. Office of DG BTB was relegated to a ceremonial entity assigned as additional charge. Thus in addition to losing an effective organization, the repository of the whole above data/information was suddenly rendered extinct. In view of above internal Notice under section 10(4) of the FTO Ordinance, 2000, read with Section 9(1) of The Federal Ombudsman Institutional Reforms Act, 2013 was issued calling upon FBR and its field formations to furnish Para-wise comments in the aforementioned case.

In response to the said notice the Chief Commissioner-IR, CTO, Islamabad furnished an update regarding action taken vide his letter No. 174 dated 23.12.2021. It has been informed that consequent upon receipt of Notice from FTO office; audit proceedings have been initiated for determining discharge of obligation as withholding agents. Notice under Rule 44(4) of Income Tax Rule, 2002 for Tax Year 2014 and 2015 has been issued.

Notice u/s 161/205 of Income Tax Ordinance, 2001 for Tax Years 2016, 2017 and 2018 was issued for compliance by 31.12.2021.

The aforementioned action report clearly establish that information passed by DG BTB in December, 2018 remained dormant unutilized and wasted. None of the field officers of FBR holding jurisdiction over the instant case during December, 2018 and November, 2021 was vigilant enough to initiate the action which has been initiated after 03 years and that too after the intervention of FTO Secretariat. It was found that negligence and inefficiency on the part of FBR officials in enforcing various provisions of law in major revenue potential cases is tantamount to maladministration in terms of Section 2(3)(ii) of the F TO Ordinance.

FTO recommended FBR to to direct the Chief Commissioner-IR, CTO, Islamabad to ensure that action initiated in the instant case, after 03 years delay is expedited and finalized on priority basis;identify the officers who are responsible for unwarranted delay and FBR management may be informed accordingly.

LAHORE: The President of Pakistan Arif Alvi has upheld the decision of Federal Tax Ombudsman regarding Federal Board of Revenue

15/05/2023

https://customstoday.media/dar-extends-govts-support-to-ajk-for-economic-development/

Dar extends govt’s support to AJK for economic development
byCT Report 13/05/2023 in Breaking News, Islamabad, Latest News, Slider News
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ISLAMABAD: Prime Minister Azad Jammu and Kashmir Chaudhry Anwar Ul Haq called on Minister for Finance and Revenue Ishaq Dar.

The AJK Prime Minister apprised the Finance Minister of development schemes and projects in the region and their financing.

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The Finance Minister welcomed the AJK Prime Minister and expressed the commitment of the federal government for the development and progress of all regions including Azad Jammu and Kashmir.

He extended all possible support of the Federal Government to the AJK government in its quest for economic progress and development.

Chaudhry Anwar ul Haq, Prime Minister Azad Jammu and Kashmir thanked the Finance Minister for extending support for the progress of the people of Kashmir.

ISLAMABAD: Prime Minister Azad Jammu and Kashmir Chaudhry Anwar Ul Haq called on Minister for Finance and Revenue Ishaq Dar.

15/05/2023

https://pkrevenue.com/foreign-investors-urge-pakistan-to-simplify-withholding-tax-regime/

Foreign investors urge Pakistan to simplify withholding tax regime
May 13, 2023
Foreign investors in Pakistan are urging for a simplified withholding tax regime in the upcoming budget for 2023-2024.

The Overseas Investors Chamber of Commerce and Industry (OICCI), which represents foreign investors in the country, has submitted its recommendations to the Federal Board of Revenue (FBR) for consideration in the budget.

READ MORE: OICCI proposes increase in salaried tax exempt income threshold

The OICCI highlights the current complexity of the withholding tax rates, which vary based on the nature of transactions and the legal or tax status of the parties involved, including whether they are corporate or non-corporate and active or non-active taxpayers. The chamber asserts that simplifying the withholding tax system is essential to enhance convenience and business friendliness.

The FBR’s annual yearbook for 2021-2022 reveals that there are a total of 49 sections of withholding tax under the Income Tax Ordinance, 2001, resulting in a tax collection of approximately PKR 1.534 trillion. However, the actual number of tax rates prescribed in the Ordinance is more than double that, due to various sub-classifications within sections and different rates for active and non-active taxpayers. Remarkably, only 9 out of the 49 sections contribute around 66.5% of the total revenue collected, amounting to approximately PKR 1.02 trillion.

READ MORE: PBC terms super tax as penalty on documented sector

To address these concerns, the OICCI has presented several recommendations:

01. Standardize the tax rate for services at 3% under Section 153, aligning it with the rate already applied to 29 service sectors. Currently, the high rate of 8% for service providers, classified as a minimum tax, significantly escalates the cost of doing business.

02. Categorize withholding tax rates based solely on active and non-active taxpayers, effectively reducing the number of existing rates by half.

READ MORE: PBC proposes exemption of capital gains tax on shares with 10-year holding period

03. Simplify the overall structure of withholding taxes by harmonizing rates and establishing a single rate under each section where feasible. Currently, there are approximately 200 different tax rates for 24 withholding tax sections. For example, a single rate should be imposed for section 156 (Prizes and Winnings) at 15% and section 233 (Brokerage and Commission) at 8%, among others.

04. Minimize the number of miscellaneous withholding tax sections. Sections such as 236C/236K (purchase and sale of immovable property) and 154/154A (exporters of goods and services) can be merged to streamline the system.

05. Introduce an enabling provision in section 159 of the Ordinance, granting the Commissioner the authority to issue withholding tax exemption certificates to corporate taxpayers who fulfill their annual tax liability in advance. This measure aims to promote ease of doing business and provide relief to the business community.

READ MORE: Measures proposed to tackle under-invoicing by commercial importers

Additionally, the OICCI recommends two changes regarding exemption from withholding tax under Section 148 of the Income Tax Ordinance:

01. Grant exemption based on the discharge of advance tax liability, as outlined in section 147 of the ITO, 2001, similar to the provisions in section 153.

02. Extend the adjustability of advance tax under section 148(7), currently applicable to industrial undertakings, to the service sector as well. The suggested amendment proposes that “The tax required to be collected under this section shall be the minimum tax on the income of the importer arising from the imports, subject to subsection (1). This subsection shall not apply in the case of goods on which tax is required to be collected under this section for internal consumption in the business.”

PBC proposes massive tax burden on non-filers in upcoming budget

The OICCI believes that implementing these recommendations will simplify the withholding tax system, reduce complexities, and foster a more favorable environment for businesses and foreign investors in Pakistan. The proposed changes aim to promote efficiency, transparency, and ease of doing business while ensuring adequate tax collection.

Foreign investors in Pakistan are urging for a simplified withholding tax regime in the upcoming budget for 2023-2024.

15/05/2023

https://pkrevenue.com/fbr-publishes-names-of-3-67-million-active-taxpayers-for-ty2022/

FBR publishes names of 3.67 million active taxpayers for TY2022
May 15, 2023
ISLAMABAD – The Federal Board of Revenue (FBR) Monday released the names of 3.67 million active taxpayers who have successfully filed their annual returns for the tax year 2022.

This publication is part of the FBR’s regular practice of updating the Active Taxpayers List (ATL) on a weekly basis. The latest ATL, updated until May 14, 2023, showcases the names of these active taxpayers.

READ MORE: Foreign investors urge Pakistan to simplify withholding tax regime

Since March 1, 2023, approximately 460,000 individuals and corporate entities have filed their tax returns to attain the status of active taxpayers. In March 2023, the FBR released the previous ATL for the tax year 2022, which featured 3.21 million active taxpayers. Last year’s ATL, for the tax year 2021, included returns filed until February 26, 2023, and encompassed a total of 4.19 million taxpayers.

READ MORE: OICCI proposes increase in salaried tax exempt income threshold

FBR officials have announced that taxpayers, including salaried individuals, business owners, associations of persons, and companies with a special fiscal year, filed returns until September 30 for the tax year 2022. However, companies with a normal accounting year must file their annual returns by December 31. It’s important to note that taxpayers who filed their returns on or after December 15, 2022, along with the required surcharge payment, are eligible for inclusion in the ATL. Those who failed to file their tax returns for the tax year 2022 will not benefit from reduced rates of withholding tax starting from March 1, 2023.

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The ATL serves as a transparent record of online Income Tax Return filers for the previous tax year. It is published annually on March 1 and remains valid until the end of February of the following financial year. In 2018, the FBR introduced a provision through the Finance Act, which stated that a person’s name would not be included in the ATL if they failed to file their tax return by the due date. However, the Finance Act of 2019 allowed for the inclusion of a person’s name in the ATL, even if they filed their tax return after the specified due date set by the Income Tax authorities.

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The ATL plays a crucial role in monitoring and managing the tax system by allowing tax authorities to ensure compliance with tax laws and regulations. It aids in the identification of taxpayers who have fulfilled their tax obligations, providing a clear picture of the tax base.

Compliance with tax laws and regulations is vital for all taxpayers as it helps them avoid penalties and contribute to the development of the country. The release of the updated ATL by the FBR represents a significant step towards strengthening the tax system and fostering transparency in the country’s tax administration.

FBR Monday released the names of 3.67 million active taxpayers who have successfully filed their annual returns for the tax year 2022.

15/05/2023

https://www.brecorder.com/news/40241932/lto-islamabad-fto-unearths-wrongdoing

ISLAMABAD: The Federal Tax Ombudsman (FTO) has unearthed a wrong act committed by the Large Taxpayer Office (LTO) Islamabad by framing an illegal case of ‘Inactive’ status to a company without issuing/serving statutory notices under the Income Tax Ordinance, 2001.

Earlier, Islamabad High Court (IHC) has referred a case to Dr. Asif Jah to investigate the allegations of maladministration by Commissioner, Member Information Technology-FBR, and LTO Islamabad officers and submit a report within three months. FTO has submitted a 10 pages report before the IHC wherein the FBR lawyer seeks time to procure FTO report.

It is reliably learnt that a petition was moved in IHC through tax lawyer Waheed Shahzad Butt, against the LTO Islamabad and Member IT. The petition was filed by a taxpayer seeking income tax refunds from LTO Islamabad and implementation of an order issued by ATIR, Islamabad to highlight the role of some LTO/ PRAL/ IT-Wing employees in maltreatment, who allegedly changed ATL status of taxpayer, to block income tax refunds. The FTO report stated that “the hearings conducted were joined by Naeem Hassan, CIR, Hassan Bin Izhar, Shakeel Ahmad Babar, Engineer Iftikhar Ali and Zaheer Ahmed from FBR, PRAL. Tax laws like all other streams of law give conclusive weightage to the proper service of notices. It is a fact conceded by PRAL that assignment Notice u/s 120(3) in the instance case was not electronically delivered in the folder of the taxpayer. Department has failed to prove that the notice in question was served. Department instead of shouldering responsibility for non-service of said notice preferred to hide behind IT system failure. All legal powers rest with tax authorities and not with the support wings/staff. It can be concluded that PRAL’s stance on this material issue is riddled with contradictions. Tax authorities/officers passing legal orders are responsible for proper service of notices and any hiding behind software glitches and failures is not justifiable”.

The FTO report questioned that how the name of Ahmed Shakeel Babar DCIR was appearing on the notice when the said officer was never posted in the said unit. Each act of fraud is certainly aims at some illicit benefits or has some specific ulterior motives to achieve through said act of fraud. Department couldn’t explain any plausible reason for incorporation of the name of an unrelated officer in the notice and termed it a mere IT distortion. Departmental position vis a viz invalidation of tax return for TY 2019 (without ascertaining proper service of notice) and visible loopholes in delivery of notice dated 20th October, 2020 is not defendable.

03/04/2023

Tax Solutions Law Chamber has been shifted from Office No.116-117, Subhan Center, Farid Court Road, Lahore.

To

Chamber No. 9, Ground Floor, Street No.2, Sham Nagar Road, Chowk Choburji, Lahore.

11/05/2022

Attending Executive Committee Meeting at Lahore Tax Bar Association

23/04/2022

12/03/2022

Tax Solutions Law Chamber