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The leu is expected to weaken this year, underperforming Central European peers as the Romanian government’s revenue-generating measures create economic uncertainty, a Reuters poll showed on Thursday. In the Jan. 2-8 poll of 39 analysts the median forecast put the leu at 4.75 against the euro for the end of the year, a 1.6 percent fall from Wednesday levels.

The Czech crown, meanwhile, is seen gaining 1.3 percent, the zloty 1.1 percent and the forint half a percent. Analysts projected a firmer rate of 4.715 for the leu on the 12-month horizon in a survey a month ago, before the government announced a package of tax measures and changes in pension rules in mid-December.

“The political unpredictability is likely to burden the investment climate sooner or later and also the RON (leu) in the medium term,” Commerzbank said in a Jan. 8 note. The measures, which hit various business sectors including banks and energy firms, knocked Romanian shares, turning Bucharest’s main stock index into one of the region’s worst performers from one of the best.

Romanian stocks have regained some of the losses since then, but the leu touched a 7-month low of 4.6767 versus the euro on Wednesday. The Romanian central bank, which increased interest rates last year, kept them on hold at its first 2019 meeting on Tuesday as inflation has come down sharply from mid-2018 levels of around 5 percent.

But the bank’s veteran governor, Mugur Isarescu warned that the government “reckless” new measure, which links a new tax on bank assets to the level of money market rates, would compromise the efficiency of monetary policy.

“A key question in 2019 is how the NBR would respond to potential weakening pressure on the leu coming from twin deficits and exacerbated by government’s preference for low interest rates,” Erste analyst Eugen Sinca said in a note dated Jan. 8.

“We continue to favour the scenario of a modest depreciation of the leu (2-3 percent), with the exchange rate potentially playing the role of a relief valve for easing pressures in economy,” he added. While a surge in wages in the region’s tight labour markets has increased Romania’s trade deficit by boosting imports, the Czech Republic and Hungary have trade surpluses and stable state finances.

The crown is expected to be driven by expected further interest rate increases by the Czech central bank. The 25.3 rate against the euro projected for the next 12 months is weaker than 25.13 projected in a poll early last month.

Criticism of Polish central bank Governor Adam Glapinski over the pay of a key aide left no lasting mark on long-term zloty forecasts, even though it contributed to some jitters in the market in the past days. The poll sees the zloty firming to 4.25 against the euro over the coming year, compared with a 4.26 forecast a month ago.

Office of the President of Pakistan has been accused of directing the Federal Board of Revenue (FBR) employees of filing further appeals and defend cases in higher judicial forums where orders passed by the President as appellate authority under Federal Tax Ombudsman Ordinance, 2000 have been reversed by the high courts.

It is reliably learnt that Chairman Lahore Tax Bar Association (LTBA) Public Interest Litigation Committee has moved a representation to President Arif Alvi under Article 19A of the Constitution. It has been accused that the representation has been filed for providing information to determine role of functionaries representing office of President in accountability matters against severe mal-administration of justice with the innocent taxpayer citizens by Revenue Division (FBR) employees.

When contacted, Chairman LTBA Public Interest Litigation Committee observed that the office of the President cannot pressurise the FBR to file further appeals and defend cases in higher judicial forums where orders passed by the President as appellate authority under Federal Tax Ombudsman Ordinance, 2000 have been reversed by the high courts, he added.

Earlier, Lahore High Court has ruled that office of President of Pakistan has caused miscarriage of justice to entertain and pass a decision on the representation filed by the FBR against the decision of the FTO. Said petition was moved by a Faisalabad-based taxpayer through Waheed Shahzad Butt Advocate, challenging the FBR’s action to file representation before the President of Pakistan against the order passed by FTO.

Chairman LTBA Public Interest Litigation Committee Waheed Shahzad Butt in a letter to President Arif Alvi states “Being a responsible taxpayer citizen and belonging to the most vigilant community of the Country, instant request is forwarded.

Without any iota of doubt, peoples of Pakistan especially taxpayer citizens of this country have complete confidence on President’s esteemed personality and administrative skills. Article 19-A of the Constitution enabled every Citizen of Pakistan to become independent of power centre to seek information on matters of public importance, therefore, in the light of Article 19A of the Constitution read with PLD 2012 SC 292, PLD 2008 Karachi 68, 2012 PLC (C.S.) 566, PLD 2016 (Lahore) 872, President good office is requested to provide following information:

“Number of cases where office of President had issued instructions/guidance/intimation to FBR to file/prefer further appeals in cases where orders passed by President as an Appellate Authority under Section 32 of the FTO Ordinance, 2000 have been reversed/modified by the High Courts during the period (i) August 11, 2000 to January 25, 2016 and (ii) January 26, 2016 to December 04, 2018 “

The data will expose that in how many cases President office has directed the FBR to file appeals against High Courts orders during the period of August 11, 2000 to January 25, 2016 when compared with January 26, 2016 to December 04, 2018. Required information may be provided at earliest to compare data, LTBA chairman added.

Insufficient release of Public Sector Development Programme (PSDP) funds has hit revenue generation due to slow economic activities, said the Federal Board of Revenue (FBR) sources.

FBR sources said the province of Punjab has been hub of economic activity over the last 15 years out of the funds released under PSDP by the PML-N government. However, the present government is very cautious towards release of PSDP funds that has slowed down economic activity, and ultimately the revenue generation.

The government has disbursed Rs187 billion (27.7%) under the Public Sector Development Programme (PSDP) 2018-19 which includes foreign Rs57.4 billion foreign aid for various development projects. As per latest data released by the Ministry of Planning Development and Reform regarding PSDP 2018-19, the government disbursed Rs79.06 billion including Rs6 billion foreign aid for development projects of several ministries, divisions and related departments out of Rs291.55 billion budgeted allocation, reports an English daily. No funds have been released by the government till now for the commerce division, inter-provincial coordination division and religious affairs and inter-faith harmony division.

According to FBR sources, the development activities in the province of Punjab was main driving force behind the economic wheel of the country and former Chief Minister Shahbaz Sharif was spending heavily out of development funds, both from the PSDP as well as the Annual Development Programme (ADP) of his government. Moreover, there was no uncertainty and everyone had a clear idea about the continuity of the government, a fundamental factor behind the economic activity in the country.

Also, a large number of projects were installed in various sectors that triggered massive activity at that time.

The present government has stalled whole range of economic activities and release of funds from the PSDP is very meager if one compares it with the previous regime of PMLN, said sources and added that no revenue generation is expected until release of development funds is back to normal pace. “Taxpayers could only pay income tax if they are generating income,” the FBR stressed.

It may be noted that the government leads the economy from the front by initiating development works that kick start productivity of some 40 industries relating to development work. Furthermore, a backlog of utility charges has also contributed to slowing down of economy as the previous kept utility charges unchanged since 2015 due to political expediency arising out of Panama scandal and other issues. This situation led to a huge loss to the utility agencies and the present government had no option but to increase tariff after taking charge of the government.

The Federal Board of Revenue (FBR) has said it enjoys powers to raise immediate demand and effect recovery on provisional basis in case of government confiscated local assets under Section 123 of the Income Tax Ordinance. The scope of this Section is proposed to be extended to discovery of undeclared offshore assets through the current Finance Bill. Now the demand and recovery of tax on such persons can be executed immediately after receipt of information in suitable cases.

The measure is necessary to enable FBR to recover tax provisionally before the money moves out of bank accounts and the regular proceedings, which take about a year or two, follow. The FBR has further said that it can also request assistance in recovery of such taxes from foreign jurisdictions wherever it has bilateral and multilateral agreements.

This will ensure that FBR can request freeze of offshore accounts to other countries by conveying demand to such countries.

The FBR is already in possession of information of bank accounts of Pakistanis from 26 countries and this provision will enable FBR to move swiftly in the direction of taxing people involved in holding of offshore assets. As such, this measure has been introduced in addition to measures already available in Income Tax laws, Anti-Money Laundering Act and FIA/NAB laws and, in no way, precludes or overlaps the jurisdiction of such laws and institutions.-PR

Minister of State for Revenue Hammad Azhar Friday said no proposal of tax amnesty scheme is under consideration in the Federal Board of Revenue (FBR) or the Finance Division; however, a five-year tax and tariff plan will be unveiled soon to provide consistency in policy to the investors.

“At present neither has the government any intention to offer any amnesty scheme nor has FBR received any such instruction from the Ministry of Finance,” said the minister in response to a question at a roundtable seminar on “Economic Reforms: Way Forward,” organised by Sustainable Development Policy Institute (SDPI).

Azhar also acknowledged that FBR capacity eroded over the years due to political interference and people are not willing to become filers because of fear of harassment at the hand of tax officials after becoming filers. The government, he said, has decided to make an independent board of Pakistan Revenue Automaton Limited (PRAL) for making its full utilisation. The government will also introduce five years tax and tariff plan to ensure consistency in policy to the investors.

He further stated that the government is bringing a mechanism in consultation with the Pakistan Telecommunication Authority (PTA) to deal with Rs 150 billion mobile phone smuggling. “We will try to limit the budget deficit to 5.6 percent in the current fiscal year,” he said, emphasising that provinces need to fulfill their commitment made under the 7th National Finance Commission (NFC) Award for help in increasing the country’s tax-to-GDP ratio.

“We are also taking a proposal to the Parliament for approval in the Supplementary Finance Amendment Bill 2019 with regard to simplification of tax return to broaden the tax base and a pilot project for small traders and shopkeepers would be launched in the federal capital and it will subsequently be implemented across the country.

The minister said that economic reform package is neutral in terms of revenue (no loss, no gain) but has been designed to revive and facilitate the investments and growth.

The minister said that loose fiscal and monetary policy with huge deficit during the last ten years in general and in the last fiscal year of Pakistan Muslim League (N) administration, in particular, with Rs 2,300 billion or 6.6 percent deficit against the target of 4.9 percent led to consumption based growth. The purpose of economic reform investment and industrialisation package is to move towards supply side of the economy through enhancement in domestic production and exports. Additionally, he said that his government has also proposed a simplified and friendly tax regime to ensure ease of doing businesses.

Chairman Board of Investment (BoI) Haroon Sharif said that all foreign state visits of Prime Minister were fundamentally meant to reach out investors and investments to get economy out of the crisis. He said, “At BOI our objectives are four folds – increasing productivity, technology transfer, facilitating investments that support the export sector and job creation, and concrete proposals from China, Saudi Arabia, United Arab Emirates, Malaysia and Korea in the sectors of oil, renewable energy, hospitality and tourism have been received.

Directorate General Customs Valuation (DGCV) has revised the customs values of various spices and nutmeg under sub-section (7) of the section 25 of the Customs Act, 1969. According to details, the customs values of various spices and nutmeg were earlier determined through valuation ruling no 1047 in 2017.

There were several representations from importers and clearance formations, wherein they contended that customs values determined in the existing valuation ruling were not reflective of prices in international markets. Therefore it has required to be revised in line with the prevailing prices in the international market.

Keeping the said in view, the Directorate has initiated an exercise for re-determination of customs values of various spices and nutmeg under section 25-A of the custom Act 1969. For the purpose, several meetings with stakeholders including importers and representatives from field formations were held where importers said that the customs values of various spices and nutmeg determined vide the exiting valuation ruling were high and required fair revision in line with the prevailing prices in the international market.

The importers of various spices and representatives from Pakistan Kiryana Merchants Association (PKMA) and field formations, who attended the meetings, said the values of different spices especially black pepper and white pepper had reduced in the market and therefore, the existing ruling needed to be rationalized accordingly.

The PKMA also submitted proposals regarding the values of subject goods and requested for the early issuance of the notification as the importers were suffering hardships during assessment due to high customs values. The Directorate after using all relevant methods – valuation method, transaction value method, identical goods value method and deductive value method determined the customs values of various spices and nutmeg under sub-section (7) of the section 25 of the Customs Act, 1969.

The Federal Board of Revenue (FBR) has directed field formations to urgently issue Refund Payment Orders (RPOs) of admissible sales tax refund claims or reject inadmissible claims before issuing the first batch or promissory notes (refund bonds) by February 14, 2019. The FBR has issued instructions to all Chief Commissioners of Large Taxpayer units and Regional Tax Offices Friday.

The FBR instructions to the field formations are related to the sales tax refund liquidation.

According to the FBR, the government intends to clear existing sales tax refund pendency by the end of this year through issuance of promissory notes. First batch of promissory notes is to be issued by 14th February, 2019 as announced by the finance minister in his speech on January 23, 2019 while tabling the Finance Supplementary (2nd Amendment) Bill, 2019. However, the data of refund payment orders (RPOs) as generated after the issuance of aforesaid letter dated 20.12.2018 reveals that 2,274 RPOs have been generated involving an amount of Rs 7.912 billion which is not found satisfactory. Till data, existing pendency still shows huge outstanding amounts as attached. Further, the progress reports as sought vide Board”s letter dated 31.12.2018 have not been received.

All field formations are once again advised to expedite processing of pending sales tax claims through STARR and reduce the refund pendency by half through generation of RPOs for admissible amount and rejection of inadmissible amounts by 10th February 2019. A detailed progress report in the matter may be furnished to the Board by January 31, 2019, the FBR added.

The Federal Board of Revenue (FBR) has directed its field formations to ensure that businessmen who availed Income Tax Amnesty Scheme and completed all codal formalities will not be harassed by the taxmen. In this regard, the FBR has issued instructions to the field formations here on Thursday.

According to the FBR, refer to the Prime Minister’s Office letter received from Deputy Secretary (EA-II), Prime Minister’s Office, Islamabad and to say that directive i.e. Businessmen who availed Income Tax Amnesty Scheme and completed all codal formalities will not be harassed by FBR or FIA, may be implemented in letter and spirit, the FBR added.

The decision of majority members of the Alternative Dispute Resolution Committees (ADRCs) on tax disputes between the FBR and taxpayers would be considered as final decision of the committee, the Federal Board of Revenue (FBR) said.

According to the SRO 69(I)/2019 issued by the FBR here on Thursday, decision of its majority members shall be construed decision of the committee and the committee shall decide the dispute within 120 days from the date of receipt of order of withdrawal from the Board and communicate the same to the Board, the Commissioner and the applicant.

In a major development to facilitate taxpayers, the decision of the committee shall be binding on the commissioner and the aggrieved person, the FBR added. The “dispute” between FBR and taxpayers means any grievance of the applicant pertaining to the liability of tax against the aggrieved person, or admissibility of refunds, as the case may be; the extent of waiver of default surcharge and penalty; or any other specific relief required to resolve the grievance.

Any person or class of persons interested for resolution of any dispute under section 134A shall submit a written application for alternative dispute resolution to the Board in the form as set out in Part I of the Schedule to this rule.

The Board, after examination of the contents of an application by a taxpayer and facts stated therein and on satisfaction that the application may be referred to a Committee for the resolution of the hardship or dispute, shall appoint and notify a committee, within a period of 60 days from the receipt of application.

The members of the committee included an officer of Inland Revenue not below the rank of commissioner to be nominated by the Board; a person nominated by the applicant in the form mentioned in sub-rule (3) from a panel notified by the Board, comprising senior chartered accountants and senior advocates having experience in the field of taxation; reputable businessmen as nominated by chambers of commerce and industry and a retired judge not below the rank of district and sessions judge, to be nominated.

The members of the committee appointed shall decide through consensus the third member for nomination from a list notified by the Board, whereafter, the appointment of the three-member committee shall be notified by the Board.

The Board shall notify a panel of a retired judge not below the rank of district and sessions judge, senior chartered accountants, senior advocates and reputable businessmen in accordance with eligibility criteria specified in Part-II of the Schedule to this rule. The retired judge appointed under shall be the chairperson of the committee.

After notification of the committee, the applicant or the commissioner or both, as the case may be, shall withdraw any appeal relating to the dispute pending before any court of law or an appellate authority in the form as set out in Part-III of the Schedule to this rule.

The committee appointed and notified shall commence proceedings after receipt of order of withdrawal of appeal from the Board. The chairperson of the committee shall be responsible for deciding the procedure to be followed by the committee.

He would decide about the place of sitting of the committee, in consultation with the chief commissioner having jurisdiction over the applicant; specify date and time for conducting proceedings by the committee; supervise the proceedings of the committee; issue notices by courier or registered post or electronic mail to the applicant; requisition and produce relevant records or witnesses from the commissioner or other concerned quarters; ensure attendance of the applicant for hearing either in person or through an advocate, representative or a tax consultant; consolidate decision of the committee and communicate it to the Board, the commissioner and the applicant and for any other matter covered under these rules.

The committee may conduct inquiry, seek expert opinion, direct any officer of Inland Revenue or any other person to conduct an audit and make recommendations to the Committee in respect of dispute or hardship. The committee may determine the issue and may thereafter seek further information or data or expert opinion or make or cause to be made such inquiries or audit as it may deem fit, to decide the matter.

On receipt of the committee’s decision, the applicant shall make payment of income tax and other taxes as specified by the committee in its decision and the commissioner shall modify order as per decision of the committee. The chairman of the committee appointed shall be paid a lump sum one-time remuneration of seventy-five thousand rupees or four percent of the disputed tax demand, whichever is less.

The member of the committee appointed shall be paid a lump sum one-time remuneration of fifty-thousand rupees or three percent of the disputed tax demand, whichever is less. The remuneration shall be paid by the Board from its budget allocation within fifteen days of the receipt of the order, the FBR added.

Minister of State on Revenue Hammad Azhar said Thursday that the amendment made in the Income Tax Ordinance 2001 through Finance Supplementary (Second Amendment) Bill, 2019 relating to the provisional assessment of offshore assets discovered is not an amnesty scheme. According to a tweet of Hammad Azhar, the amendment was not an amnesty scheme. He tweeted, “In fact its the opposite. It enhances powers of FBR for provisional assessment of tax evasion in offshore assets cases.”

The state minister also added that no changes have been made in the existing laws related to money laundering and money smuggling, etc. Earlier, the opposition parties raised objection over the amendment to the Income Tax Ordinance, 2000. Senator Sherry Rehman of the PPP tweeted that the name of beneficiary of this clause was obvious – without naming anybody. “The budget with a quiet amnesty clause for undeclared offshore wealth. No prizes for guessing who this will serve… the Senate is still working,” she tweeted.

On Wednesday last, PML-N Spokesperson Marriyum Aurangzeb soon after the amended budget was presented, said that FBR has been empowered to regularise any overseas properties under this ‘mini-budget’. Tax expert explained that where a concealed asset of a person is impounded by any government agency which, in the opinion of the Commissioner, was acquired from any taxable income, the commissioner has powers to pass a provisional assessment order before making a final assessment. However, the Commissioner shall finalise the provisional assessment as soon as practicable.

The bill proposes where any “offshore asset” is discovered, the Commissioner may issue a provisional assessment order before issuing a final assessment order for the last completed tax year of the person. For example, if an offshore asset is discovered in Tax Year 2019, Tax Year 2018 will be provisionally assessed, he added. Currently, the section 123 (1) of Income tax Ordinance allows the income tax commissioner to issue a provisional assessment order for the last completed tax year regarding concealed asset.

The amendment made in the Section 123 with the addition of clause 1A is -Where an offshore asset of any person, not declared earlier, is discovered by the commissioner or any department or agency of the federal government or a provincial government, the commissioner may at any time before issuing any assessment order issue a provisional assessment order for the last completed tax year of the person taking into account the offshore asset discovered.

Another chartered accountant said that the process of provisional assessment which was earlier limited to assets which could have been impounded has been extended to undeclared offshore assets of any person. This extension has been made in order to encompass the right of provisional assessment on assets which could not have been impounded by the government of Pakistan on account of being held outside Pakistan. This amendment has been apparently made to avoid unnecessary delay in the recovery of taxes due from the offshore assets which have been discovered by the government, he added.

An official of the Federal Board of Revenue said that addition in the income tax law was inclusion of foreign assets under the domain of FBR. “Now after the amendment is approved, the FBR will be able to issue tax notice to such people whose overseas assets were not declared,” he said. He said that obtaining details of overseas bank accounts and properties has become legally possible due to Organisation for Economic Cooperation and Development (OECD) and Financial Action Task Force (FATF).

The FBR official said, “Now we can request the home country to block the bank account, transfer or sell the property of the person against whom the tax theft notice has been issued. The person will either pay tax or move to the court and it will eventually discourage flight of ill-gotten money to other countries, besides even the bank details will be shared among the OECD members, which will help probe money trail, etc”.

The OECD is an intergovernmental economic organization. It launched a programme in July 2018 to support Pakistan in implementing new international tax standards, with key focus on Tax Inspectors Without Borders (TIWB) to enhance FBR’s capacity and also be part of the international efforts to contain tax evasion and movement of that capital to other countries.

Another expert said that the controversy has erupted over the new clause in the Finance Supplementary (Second Amendment) Bill, 2019, allowing tax authorities to issue notices for undeclared overseas properties.