Taxation

KTBA recommends amendments to Sindh WWF Act

Karachi Tax Bar Association (KTBA) has strongly in a letter to the Sindh government has recommended that a suitable amendments to the Sindh Workers Welfare Fund Act (WWF) 2014 be made to allow the WWF exemption to the industrial establishments owned by federal government.

In a letter sent to the secretary of Sindh Labour and Human Resources department, the KTBA said that under the Sindh WWF Act, every industrial establishment located in Sindh was required to pay WWF. However, the term ‘located in Sindh’ has not been further elaborated that led to problems in computing the WWF in several cases.

It said that industrial establishments, which had registered office in Sindh but its factory, outlet, branches were in other provinces, were facing problems in computing and paying WWF on profit attributed to Sindh office. Similar problem is also being experienced by the banks, which had branches located across the country and had either registered or had principal office in Sindh or outside the province.

Therefore, the KTBA has suggested issuing clarification to address the aforesaid issues after consultation with the FBR and suitable amendment should be made to the Sindh WWF Act to explain the term “located in Sindh” so that taxpayers do not face any ambiguity in this regard.

It further said that under the federal WWF ordinance, any concern or industrial establishment owned by the government or by a corporation established by the government or where the majority of shares in such corporation were owned by the government was exempted from levy of WWF.

However, similar provision has been made in Sindh WWF Act and industrial establishments owned/established by the government are exempted from WWF but the term ‘Government’ means ‘Government of Sindh.’ Resultantly, industrial establishments owned by federal government cannot avail such exemptions as the definition of government given in said Act does not include ‘federal government.’

Therefore, the KTBA has recommended the Sindh government to make suitable amendments in Sindh WWF Act to allow the exemption to industrial establishments owned by federal government, as well.

In another letter to the secretary of Sindh Labour and Human Resources department, the KTBA further advised to prescribe proper mechanism/procedure for allocation/attribution of profits to workers in case the operations and organization of the company, which is not limited to the province of Sindh. It further said that such procedure should be laid down in consultation with federal and other provincial authorities to avoid any future dispute.

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