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Taxation
Chief Justice Asif Saeed Khan Khosa on Monday remarked that service tax on mobile phone pre-paid cards and recharges needs to be determined as a huge sum of money is deducted from the pocket of masses due to the law. A three-judge bench headed by Chief Justice Asif Saeed Khan Khosa was hearing the issue of suspension of high tax/other charges by mobile phone companies on cell phone recharge.

On behalf of the federal government, the additional attorney general submitted a report about taxes charged by cellular service providers as well as the details of all mobile phone taxes being collected over the past one year.

During the proceedings, Chief Justice Khosa asked the additional attorney general what he would like to say about Article 184(3) of the Constitution, to which he said that ‘deduction of tax of mobile recharge does not fall in the category of people’s interest, but the Supreme Court has stopped service tax on mobile phone pre-paid credit.

The federal and provincial governments have been arguing that oversight over mobile phone taxes does not fall under the Supreme Court’s powers as defined in Article 184(3) of the Constitution.
The Article 184(3) of the Constitution states: “[…] the Supreme Court […] if it considers that a question of public importance with reference to the enforcement of any of the fundamental rights conferred by Chapter I of Part II is involved, has the power to make an order of the nature mentioned.”This prompted the top judge to say that it needs to be determined whether there is a fault with the law or there is any problem with its implementation by the government to generate revenue.

“Money is being deducted from the pocket of the masses due to wrong implementation of the law and the other issue is: can the government deduct tax in advance?” he observed.

Another member of the bench Justice Ijaz-ul-Ahsan questioned how a citizen can be forced to pay tax if he does not fall in that category, saying there should be some mechanism for the people who do not fall in the tax net.

The attorney general for Pakistan said that a consumer has to pay advance tax on mobile cards, adding if somebody does not fall under tax net, he can claim a tax refund.

This angered Justice Ahsan who asked the attorney general if a fruit vendor should approach the tax commissioner seeking refund. He said, “The state should be sincere with his people, and to say people who claim tax refund will be facilitated and those who don’t, is not that a state should opt for.”

The Chief Justice said that the government should find a solution to the issue instead of assuming that every citizen can afford to pay tax.
The hearing of the case was adjourned till Wednesday (tomorrow).

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Taxation
Investors and companies withdrew huge sums of cash from their money market accounts to make their annual tax payments ahead of the April 15th deadline, according to a private report released on Wednesday. Domestic money market fund assets tumbled by $53.19 billion, which was their biggest weekly decline in about 10 months to $3.016 trillion in the week ended April 16, the Money Fund Report said.

“The decline was driven primarily by personal and corporate tax deadlines,” it said in a statement. Total money fund assets were below a nine-year high of $3.071 trillion set in March. Taxable money market fund assets decreased by $48.01 billion to $2.883 trillion, while tax-free assets fell by $5.18 billion to $133.84 billion, according to the report, published by iMoneyNet.

The average seven-day simple yield on taxable money-market funds was unchanged at 2.06%. The weighted average maturities (WAM) of taxable money funds increased by one day to 31 days, iMoneyNet said. The average seven-day simple yield on tax-free and municipal money funds climbed to 1.16% from 1.09% the week before. The WAM on tax-free funds was unchanged at 25 days.
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Taxation
Federal Board of Revenue (FBR) and National Database & Registration Authority (NADRA) Monday agreed to carry out a ‘360-degree’ analysis of the non-filers for bringing them into the tax net.

Sources told Business Recorder here on Monday that the senior NADRA officials Monday visited FBR House to hold a meeting with FBR Chairman Mohammad Jehanzeb Khan and his team of members including FBR Member Inland Revenue Policy and FBR Member Inland Revenue Operations.

Both the sides discussed in detail the measures to broaden the tax base by sharing taxpayer’s data available with the NADRA. It has been agreed to start the exercise of searching for new taxpayers with the help of NADRA database.

According to the sources, the actionable data of NADRA would be used to carry out a ‘360-degree’ analysis of the non-filers for bringing them into the tax net. The FBR is in the process of acquiring data of up to 400,000 non-filers from NADRA for taking necessary action against them. Now, the FBR has already acquired overwhelming data which would be used for broadening the tax base. A 360-degree view would be taken of non-filers including their lifestyle, expenditures, foreign travels, purchase of properties and other data. By the end of this month, the FBR will roll out this exercise.
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Taxation
The Board-in-Council of Federal Board of Revenue (FBR) Friday reviewed progress on the implementation of the track and trace system for tobacco products and analysis of sector specialist on the said project. The Board-in-Council meeting was chaired by FBR Chairman Mohammad Jehanzeb Khan here at the FBR House on Friday.

The FBR also examined the request of the Balochistan Revenue Authority to the FBR for designing an automated system for the provincial revenue authority. The observations of the project director were discussed during the meeting. Sources said that the project director informed the FBR that for effective implementation of the track and trace system for tobacco products, the FBR should issue the draft invitation of licensing (IFL) and draft of the Licensing Rules 2019.

The Board-in-Council also decided that the Law and Justice Division should do vetting of the draft of the Licensing Rules 2019. According to sources, accompany, consortium or joint venture must have minimum annual turnover of $50 million in any of last three years or financial worth of US $25 million to qualify for seeking licence in Pakistan to provide technological solutions for high security tax stamps and electronic monitoring/tracking system for tobacco products, beverages, sugar, fertilizer and cement.

No company shall carry out electronic monitoring, tracking or tracing of specified goods unless it has obtained a licence. The FBR will set up a licensing committee which shall function in accordance with the provisions of these rules. Project director, Track and Trace System, shall be the convener of the licensing committee and its headquarters shall be located at FBR House, Islamabad.According to criteria specified by the FBR for grant of a licence, the applicant (any company or consortium or joint venture) shall be required to provide technological solutions for the high security tax stamps and related electronic monitoring and tracking system tailored for Pakistani needs on real time basis.

The applicant shall possess the following qualifications to be considered for issuance of licence:

It shall be a company duly incorporated under the Companies Act, 2017. It shall have experience and past performance in electronic monitoring, tracking and tracing of tobacco products, beverages, medicines, petroleum, etc, preferably in multiple countries.

It shall be in a financial position to undertake the project, minimum annual turnover of US $50 million, in any of last three years or financial worth of US $25 million and it shall have appropriate managerial capacity to execute and run the project.

The Track and Trace System should include following control functionalities at several level like advanced authentication of all the different profiles on the system (login and password); control of activation in the manufacturing plants and control of controller activity and planning of inspection tours.The system-based solution offered by the applicant shall be able to perform the following functions including monitoring capability on real-time basis of a minimum 50 factory premises or production lines; tracing and tracking of specified goods throughout the country from factory premises to retail level on real time basis; the ability to configure the tracking unit remotely; the system must be capable of sending alert messages and trigger alarms (visible and audible) in case of occurrence of abnormal events such as unauthorised stoppages of production, tampering with stamping machines, etc.

The applicant shall also submit a complete list of operations and maintenance required to operate the system based solution. The applicant shall specify the expected delivery and implementation time, which shall not exceed six months from the date of issuance of licence. The applicant shall also undertake to meet these timelines, the FBR added.
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Taxation
The Federal Board of Revenue (FBR) has detected massive sales tax discrepancies to the tune of Rs 7.498 billion in 6,077 cases and directed field formations to immediately process these cases through Integrated Tax Management System (ITMS) for recovery of the evaded amount.

According to the FBR’s instructions to the chief commissioners of Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) here on Friday, the information received from project director (Crest), Lahore informs about number of CREST cases still have not been assigned jurisdiction in ITMS. Resultantly, these cases remain unattended.

It is, therefore, requested that jurisdiction of such cases of registered persons may be immediately be assigned in ITMS, so that the concerned officer may view such cases through his ITMS login and may process the case to recover the evaded amount of sales tax . Reportedly, the amount of sales tax involved in these 6,077 cases is over Rs 7.498 billions, the FBR instructions said.

There are number of CREST cases that have not been assigned jurisdiction in ITMS. CREAT project director has required FBR that jurisdiction of such cases/registered persons may be set in ITMS so that the concerned officer may view such cases through his ITMS login and may process the case to recover the evaded amount of sales tax. Therefore, it is requested that concerned technical resource may be directed to do the needful in this regard, the CREST project director added.When contacted, a tax expert said out of total detected amount of Rs 7,498 million, Lahore taxpayer amount is Rs 3,291 million (16 taxpayers); Karachi amount is Rs 3,038 million (4,089 taxpayers) and rest of the amount is Rs 1,169 million (1,972 taxpayers).

Now, the FBR vide Circular C.No.1(89)STM/2018, dated 10 April 2019, has directed to assign unattended jurisdiction cases of CREST to Integrated Tax Management System (ITMS) in order to facilitate the concerned officer against tax evasion.
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Taxation
The Amazon-Walmart battle for retail supremacy veered into a trash-talk phase on Thursday over worker pay and alleged tax shirking. Amazon was the provocateur of the latest dustup, which comes as the two companies battle increasingly hard for retail market share.

In his annual shareholder letter, Amazon Chief Executive Jeff Bezos baited his rivals – who were not named – to match a minimum wage hike to $15 an hour. “We had always offered competitive wages. But we decided it was time to lead – to offer wages that went beyond competitive,” Bezos said.

“Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage. Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone.” Walmart’s retort came from Executive Vice President Dan Bartlett, who was somewhat less coy about target of his dig.

Bartlett tweeted a link to a Yahoo Finance article picturing Bezos that cited a report from an NGO that said Amazon paid no taxes on its 2018 profit of $11.2 billion. “Hey retail competitors out there (you know who you are) how about paying your taxes?” Bartlett wrote, adding in a separate tweet that most Walmart warehouse associates have made more than $15 “for a long time.”
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Taxation
State Minister for Revenue Hammad Azhar has said that the tax amnesty scheme would be launched later this month, most probably through a presidential ordinance. Addressing a press conference here at Press Information Department (PID) on Thursday, Hammad Azhar said a final decision would be taken in this regard on April 15 after the return of Finance Minister Asad Umer from the USA. “If we are unable to get time to sail through the scheme from the Parliament, an ordinance would be promulgated. The scheme would be presented before the federal cabinet for approval.”

He said the data on the Dubai offshore properties is being compiled by the Federal Investigation Agency (FIA). As soon as Federal Board of Revenue (FBR) will receive information, FBR will start issuing notices to the owners of undeclared properties in the UAE. Responding to a query on the Benami law, he said FBR has started issuing notices to owners of benami properties under the Benami law on a daily basis.To another question, he said modalities will be finalized when IMF staff mission will visit Pakistan to finalise the programme. Answering a question, he stated that the government has not committed to the IMF that it would be increasing tax rates. About massive revenue shortfall in FBR collections, he said the FBR collects 40 percent of its total revenue at the import stage and now the imports are moving in negative direction. “Due to this we are not getting growth in revenue. However, there is an increase of 3 percent in revenue collection during current fiscal year if compared with the last fiscal,” he said. A shortfall in revenue collection has been witnessed if compared to the assigned targets.

He said the government is planning to enhance the values of immovable properties again. To a question, he said the government is forecasting a handsome growth in export during April 2019.

The integration of data mechanism is being implemented and results would be seen by the end of the current month. The non-filers’ data has been integrated with the help of information available with the FBR, State Bank of Pakistan (SBP) and FIA to bring non-filers into the tax net. Azhar said the economic indicators are moving in the right direction due to meticulous steps taken by the government. He said the government is correcting the course of economy that was destroyed by the previous government.
Rejecting the statistics given by former Finance Minister Ishaq Dar the other day, the minister of state for revenue said the external debt is increasing at half a rate compared with PML-N government’s first eight months. He said the foreign exchange reserves are increasing at a better pace than before.

Admitting increase in inflation, the minister of state said it was due to depreciation of currency. However, the government is determined to bring it down for the benefit of common man. He reiterated that the next one-and-a-half years will prove to be a difficult period for the country’s economy.

He said: “We – Prime Minister Imran Khan, Finance Minister Asad Umar and myself – have all been saying this. This is because the extent of the damage to the economy was such that time will be required in its recovery.”

“We are told a lot that we must not keep referring to past mistakes and instead only talk about our own [plan]. When we are still suffering the after-effects of old [economic] policies, how can we not talk about the past?” he said.

“The policies we are drafting now are directly related to redressal of the harm done, the effects of which are still being felt. This is why we refer to the past time and again,” he added.

The minister also sought to set the record straight regarding the remarks issued by Minister for Water Resources Faisal Vawda regarding offshore oil drilling activity, which Vawda had claimed would change the fortunes of the country within a month. “A ship is drilling at a distance of 250 kilometres off Karachi’s coast. There is no doubt if gas reserves are discovered there, experts are of the opinion that it [the site] will be included among the world’s top ten reserves.””He [Vawda] only expressed hope; his style is such that he expressed it very firmly. The statement must be understood in the context it was given,” Azhar explained. During the press conference, Azhar also outrightly rejected statements given by PML-N leader Hamza Shahbaz in criticism of the economic policies of the incumbent government.

“We have depreciated the currency by 10.8 per cent. The PML-N in the first eight months of their tenure had devalued it by 10.1 per cent and in the last seven months had devalued it by 17 per cent,” he said. “So kindly refrain from concocting stories of depreciation and casting sand into people’s eyes,” the revenue minister said while addressing Hamza Shahbaz.

“Let me also go on to state for the record why we had to depreciate the currency. When your foreign currency reserves in August are depleted to the extent that you can not meet your short-term liabilities, you cannot afford to throw billions of dollars into the market to defend an over-valued currency,” said the minister. Azhar went on to say, “Today the value of the rupee stands closer to its real value.”

“The false numbers quoted by him [Hamza] today, I believe, were so that he can basically draw attention away from his case, which he made no mention of at all,” said Azhar. He termed the Opposition Leader in Punjab Assembly Hamza Shahbaz’s hue and cry over current situation of Pakistan’s economy as a tactic of shifting attention of the people and media from his money laundering case. “No matter how much you scream and shout, we will not give you an NRO,” vowed the revenue minister.
“Looking at the media reports that are emerging, which describe how the money was taken abroad and then brought back, make it abundantly clear that there is no discernible difference between the Omni Group case and the Hamza Shahbaz case,” he said. Further digging into the figures ‘misquoted’ by the PML-N leader, Azhar said that Hamza had spoken of the stock market plummeting but had “failed to mention that in the last year of their tenure, from May 2017-18, the stock market had dropped down from 53,000 points to 44,000 points and provided no reason for why this occurred.”

“If rivers of milk were flowing then why such a drop occurred?” the revenue minister questioned. To a query on taxation on tobacco sector, he said, “We will take any decision for increasing tax on cigarettes on the basis of our own calculations and credible data, but we will not increase taxes on tobacco merely on the suggestions of NGOs.”

The revenue collection from documented tobacco industry would be the highest ever during 2018-19. During the first supplementary finance bill, the FBR has considerably increased taxes on the documented tobacco industry which would result in highest amount of revenue from the tobacco sector.


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Taxation
Federal Board of Revenue (FBR) and Punjab Information Technology Board (PITB) have decided to sign a memorandum of understanding (MoU) for exchange of data for revenue mobilisation and broadening the tax base. Sources told Business Recorder that the FBR will ink the MoU with the PITB for mutual sharing of knowledge, resources, technical and expertise for data access, data sharing and data integration for enhanced revenue mobilisation.
It is expected that the MoU would be signed for a period of two years between the two sides. The integration of data between the FBR and the PITB would ensure one window facility to sole proprietors and association of persons (AOPs), access to Case Flow Management System (CFMS) for Lahore High Court (LHC), assistance in broadening of the tax net through mutual sharing of data, exchange in technical expertise in data analytics and sciences for risk-based analysis, facilitation for online payment of FBR taxes and enabling users experience for online filing of taxes on IRIS.

One of the major objectives for accessing data is to bring new taxpayers into the tax net with the help of data available with the PITB. The data available with the PITB would be accessed by the tax authorities for the purpose of expanding the tax net.

According to the sources, the Punjab Information Technology Board is implementing a product-based solution having functions related to judiciary Case Flow Management System (CFMS) for Lahore High Court (LHC).

The PITB has worked very closely with Lahore High Court to leverage IT such that the judicial processes are made more efficient, transparent and effective. A state-of-the-art enterprise solution has been rolled out to achieve this objective.

Recently, the FBR held a session for the leading tax consultants, tax managers and businessmen and Punjab Information Technology Board (PITB), to create awareness about recent tax reforms undertaken by the FBR for ease of doing business. These reforms contain number of facilities introduced by FBR for the medium- and small-sized companies which include payment of income tax, sales tax and customs duty online through Alternate Delivery Channel (ADC).
The ADC includes payment through ATM, mobile banking and online banking. Online payments of pension contributions and social security contributions have also been introduced by Employees Old-Age Benefits Institution (EOBI) and Punjab Employees Social Security Institution (PESSI).

Another reform undertaken by FBR is the introduction of Virtual One Stop Shop (VOSS) whereby a company and its directors get registered with FBR by getting NTN at the time of registration of company with Securities and Exchange Commission of Pakistan (SECP).

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Taxation
The government is seriously considering clearing outstanding amounts of duty drawback of exporters including Drawback of Local Taxes and Levies (DLTL) scheme through issuance of bonds from the FBR Refund Settlement Company (Private) Limited.

Sources said that a meeting was held at the Finance Division to discuss the issue of settlement of outstanding claims under the scheme of duty drawback of taxes order 2017-18 through FBR Refund Settlement Company (Private) Limited.

The government intends to expedite release of verified refund claims of around Rs 36 billion on account of DLTL drawbacks.

On issuance of promissory notes for release of refunds, sources said that so far 78 sales tax refund claimants opted for Rs 15 billion bonds.

FBR Refund Settlement Company (Private) Limited, registered with the Securities and Exchange Commission of Pakistan (SECP), has been empowered to pay sales tax refund bonds to exporters having bonds values in multiples of Rs 100,000.
The sales tax refunds payable may also be paid through sales tax refund bonds to be issued by FBR Refund Settlement Company (Private) Limited, in book-entry form through an establishment licensed by the Securities and Exchange Commission of Pakistan as a central depository under the Securities Act, 2015, in lieu of payment to be made through issuance of cheques or bank debit advice.

The Board shall issue a promissory note to FBR Refund Settlement Company Private Limited (company), incorporating the details of refund claimants and the amount of refund determined as payable to each for issuance of sales tax refund bonds, hereinafter referred to as the bonds, of the same amount.
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Taxation
On the directives of Chief Commissioner Inland Revenue, Regional Tax Office (RTO) Peshawar, Qaiser Iqbal recovery campaign against tax defaulters has been accelerated. In this connection, Assistant Commissioner, Inland Revenue Usman Asif while using his legal powers arrested tax defaulter, Suleman Irshad son of Haji Mohammad Irshad, resident of Kachi Mohallah (Lahori Gate) for outstanding tax arrears of Rs.10,865,956/- and put him in the lock off of Police Station, University Town.

The Regional Tax Office has further directed the University Town Police for producing the tax defaulter before the Assistant Commissioner Inland Revenue, Usman Asif on Thursday (today) for further proceedings. Meanwhile, the Chief Commissioner Inland Revenue, RTO Peshawar, Qaiser Iqbal and Commissioner Inland Revenue, Peshawar Zone, Abid Mahmood has warned tax defaulters to pay all outstanding arrears in head of tax against them in national interest to avoid stern action for recovery of tax by the authorities.
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