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Taxation
Federal Board of Revenue (FBR) has started budget consultative process with chambers and trade bodies to take their input on budget proposals for 2019-20 and meetings would be held from Monday (April 1) here at the FBR House.

Sources told Business Recorder that presidents of different chambers/trade bodies would start meeting tax authorities from Monday (April 1). Presidents of Islamabad and Rawalpindi chambers would meet on coming Monday. Other chambers including Sialkot, Faisalabad, Gujranwala and Sukkhar, etc, are scheduled to meet tax authorities next week at the FBR House.

According to the letter of the FBR addressed to presidents of chambers and trade bodies, the budget exercise for 2019-20 has been initiated and process of formulation of budget proposals has to be completed in the context of current tax and economic practices in vogue. The Board has already invited budget proposals from all stakeholders; however, in view of the critical importance of the task it has been decided to hold meetings with the chambers and federations at the FBR House. This policy level interaction of trade bodes with FBR reflects seriousness of tax authorities in drafting viable budget proposals for 2019-20.
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Business

TOKYO: Sony chairman Kazuo Hirai, who led a major and successful overhaul at the Japanese electronics giant, announced Thursday he would be leaving the firm after 35 years.

The company said that Hirai would retire as chairman but would continue to provide “counsel as requested by Sony’s management team.”

The 58-year-old had already stepped down from the key chief executive role last April after spending the previous six years pulling the firm out of deep financial trouble.

The company veteran was tapped in April 2012 to revive the once-iconic manufacturer of the Walkman, which was then suffering from huge losses largely tied to a hard-hit consumer electronics business.

Hirai led an aggressive restructuring drive at Sony, cutting thousands of jobs while selling business units and assets.

“I have decided to depart from Sony, which has been a part of my life for the past 35 years,” said Hirai.

He had handed over last year as CEO to Kenichiro Yoshida, whom he praised for his “strong leadership” that was to lead to an “even brighter future for Sony”.

Last month, Sony reported that its nine-month net profits had jumped 63 percent year-on-year, led by its games and music divisions.

However, it lowered its annual sales forecast, citing slower-than-expected sales in a range of fields including the key semiconductor unit.

In recent years, smartphone components and the top-selling PlayStation 4 games console have boosted its bottom line.

During his tenure, Hirai repeatedly shrugged off pleas to abandon Sony’s television unit, which he insisted was central to the firm’s core business.

He also tried to capture the youth market, notably with moves such as reviving the firm’s robot dog “Aibo”, to great fanfare

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Global

SAN FRANCISCO/DUBAI (Reuters) – Global ride-hailing firm Uber Technologies Inc will spend $3.1 billion to acquire Middle East rival Careem, buying dominance in a competitive region ahead of a hotly anticipated initial public offering.

 

Uber said late on Monday night it would pay $1.4 billion in cash and $1.7 billion in convertible notes in a deal that gives it full ownership of Careem. The long-expected agreement ends more than nine months of start-and-stop negotiations between the two companies and hands Uber a much-needed victory after a series of overseas divestments.

The notes will be convertible into Uber shares at a price equal to $55 apiece, Uber said, marking a nearly 13 percent increase over Uber’s share price in its last financing round, led by SoftBank Group Corp more than a year ago.

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Taxation
Federal Board of Revenue (FBR) Chairman Mohammad Jehanzeb Khan Tuesday said that the FBR will assess the number of sales tax refund claimants, who have chosen the option to avail sales tax refunds through bonds.

On the conclusion of the Public Accounts Committee (PAC) meeting here at the Parliament House on Tuesday, he told Business Recorder that under the first phase, refund claimants have applied to the FBR for sales tax refund bonds. Those who have chosen for the option by March 25 would be issued bonds. The remaining would be issued bonds in the next phase. The refund payment through promissory notes will commence by April 2019.
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Taxation
A parliamentary panel has directed the Federal Board of Revenue (FBR) to bring about practical reforms in the organisation, saying current dubious system is not serving the national interests. The subcommittee of the Public Accounts Committee (PAC) met here with MNA Syed Naveed Qamar in the chair Tuesday. While taking up the audit paras of the FBR for the year 2016-17, the panel observed that there were many loopholes not only in the policy but also in its implementation.

The panel directed the Auditor General of Pakistan (AGP) to direct all the field audit officials to carry out audit of all the entities on transparency, fairness and unbiased basis, as during the discussion and review, it has been observed that some audit paras are mala fide ones.

The panel gave these remarks after undertaking an audit para wherein it has been reported that a loss of Rs 11.88 billion in revenue incurred due to non-imposition of fine and penalty to importers and exporters.

The director general (DG) AGP told the panel that the said para is seemingly mala fide and the AGP is taking up the issue with the officers who conducted the audit. The DG said that of Rs 11.88 billion, an amount of Rs 10.47 billion was settled in the Departmental Accounts Committee (DAC) of the FBR as it was established that the amount was not due.The committee further directed the DG audit to investigate all such audit paras wherein any mala fide intention is emerging and take serious action against the officials concerned.

Member Committee Hina Rabbani Khar said seemingly the matters are not going smoothly in any of the public sector department and there is a dire need to fix and reform every department. The FBR chairman said that department has drafted a reforms policy which will be followed after getting approval from the competent authority.

Rabbani observed if the FBR officials start collecting taxes honestly, the country will not need to consult with the global lending organisations like the World Bank, International Monetary Fund and others. She further said that half of the amount collected on account of various taxes goes directly into the pockets of the tax collecting authorities, so bringing a simple but transparent tax system is need of the hour.

The DG audit also requested the committee to direct the Ministry of Finance for the release of budgetary amount required to conduct revenue related audit of the FBR as after the passage of five year as per law, the department could not carry out the audit. The DG further said that on expenditure side audit of any period can be carried out at anytime of any period but on revenue side there is five years time limit.

The committee on the appeal of the AGP directed the Ministry of Finance to release required funds to the audit department so that timely audit of under discussion department can be carried out.
The committee also directed the FBR and AGP to not rely on the courts for the recovery of outstanding amounts against various departments, entities, businessmen and others as the court cases are only delaying the recovery of amount.

The panel further asked the FBR to treat every citizen of Pakistan equally by eliminating all kinds of discrimination at all the levels, saying it has been observed that those having strong connections manage to get benefits while those don’t are even unable to get their due rights. The chairman committee directed the AGP and FBR to hold a DAC on the pending audit paras and bring the report to the committee within a month with clarity.
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Global

Credit and debit card transactions in Brazil are likely to grow 16 percent in 2019, reaching 1.8 trillion reais ($465 billion), industry group Abecs said on Tuesday in a statement.

In 2018, card transactions went up 14.5 percent, as more Brazilians used cards instead of cash to pay for goods and services.

Abecs said card transactions are expected to reach 40 percent of Brazilian families’ consumption in 2019, up roughly 2 percentage points from the last three months of 2018

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Taxation
Economists and tax experts have opposed the proposal by the Economic Advisory Council to transfer collection of agricultural income tax from provinces to the Federal Board of Revenue (FBR).

Strongly opposing the proposal of granting such powers to the FBR, former Finance Minister Dr Salman Shah told Business Recorder here on Monday that the federal government has no clue about agriculture land holdings and details at a local level. Local governments at provincial levels must be empowered to collect and recover agricultural income tax. Local governments are working at the grass root level and they have the best knowledge about the size of land holdings and income of the land owner. However, federal government does not have such kind of information about agriculture lands.

Salman Shah added that the work of recovery of agricultural income tax could be undertaken by allowing local governments to do so. Presently, provincial governments provide funds to local governments for undertaking different projects. Local governments can generate maximum revenue at its level by collecting agricultural income tax, which could be effectively utilized at the local level.

Dr Ashfaque Hassan Khan, Principal and Dean, School of Social Sciences & Humanities, National University of Sciences & Technology (NUST) and a member EAC said that globally income is a federal subject. Irrespective of source of income, agriculture income tax should be collected by the federation. The government can prescribe an exemption threshold for excluding small farmers from the ambit of agriculture income tax.

Shahid Jami, a tax consultant stated that instead of entrusting the levy and collection of agricultural income tax to FBR, it would be appropriate to keep the status quo whereby Provincial Boards of Revenue (PBRs) are authorized to collect the said tax. However they have neither the requisite infrastructure nor the skills to assess agricultural income, despite having record of land-holding.

As per Sr.No.47 of the Fourth Schedule of the Constitution, enumerating the Federal Legislative List, the levy of tax on income other than agricultural income is the mandate of the federal government. Thus, the levy of income tax on the agricultural income is only the right of provincial governments.

He said that as per Article 260 of the Constitution, agricultural income means “agricultural income” as defined for the purpose of law relating to income tax.

The said definition of “agricultural income” is presently contained in section 41 of the Income Tax Ordinance, 2001. He said that all provincial governments enacted provincial agricultural Income Tax Acts. For example the Punjab Agricultural Income Tax Act, 1997 was enacted and initially the agricultural income tax was levied on fixed basis on landholdings. Later, in 2001 the tax was levied on agricultural income above Rs 80,000. The levy and collection of this tax has been entrusted to the provincial revenue department which was maintaining record of land-holdings.

Since then, the legal framework and the administrative structure to levy and collect income-based agricultural income tax exists in all the four provinces but due to political reasons the enforcement is lacking and provincial revenue departments are not issuing notices to the cultivators and the landholders to file their income-tax returns, the format of which is on the pattern of Federal Income Tax Return, he said.

During 2000, all four provinces through Provincial Ordinances levied sales tax on services which under the Constitution is a provincial subject. However, the levy and collection of the same was entrusted to the federal government and it was enforced through the FBR’s field formations till creation of provincial revenue authorities in 2012 onwards.

At present, provincial revenue authorities are fully functional and collecting sales tax on services and have also established field offices. In the presence of provincial revenue authorities, proposal to levy and collect income tax on agricultural income to the federation would be a step backwards. This is also contrary to the Constitutional mandate as well as the concept of provincial autonomy protected in the Constitution and backed by the 18th amendment.

Therefore, provincial revenue authorities should levy and collect provincial agricultural income tax, Shahid Jami concluded.
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