The Central Board of Revenue (CBR) has decided to examine the tax profiles of 100 top companies, encompassing manufacturers and importers, to verify the authenticity of their 'exemption certificates', issued by Regional Commissioners of Income Tax (RCITs), for claiming withholding tax exemption on import of raw materials and inputs. The CBR has issued instructions to all RCITs and Director-General, Large Taxpayer Unit (LTU), Karachi, to submit the profiles of all leading companies claiming withholding tax exemption at the import stage through such certificates. Official sources told Business Recorder on Monday that withholding tax collection from the imports is negligible as compared to customs duty paid on raw materials by manufacturers.
The reason behind the shortfall in withholding tax collection is that most of the importers have obtained 'exemption certificates' from income tax department. These certificates are issued under section 148 of the Income Tax Ordinance 2001. The growth in withholding tax on imports does not match the corresponding increase in customs duty as these companies imported raw materials without payment of withholding tax while paying customs duty on the raw materials.
The issue came to light when Commissioner of Income Tax, Companies Zone-V, Karachi, and Regional Commissioner of Income Tax, Corporate Region, Karachi, compared the data of withholding tax with customs duty during July-December 2004, obtained from Pakistan Revenue Automation Limited (PRAL).
The analysis revealed that Rs 43,040 million was collected as customs duty and Rs10,312 million as advance tax under section 148 of the Ordinance 2001 against the total value of imports of Rs 496,663 million.
Total imports amounting to Rs 278,276 million relate to exempted imports due to issuance of exemption certificates by the department. This volume constitutes almost 56 percent of the total quantum of import via Karachi.
The analysis pointed out that the main reason behind low growth of withholding tax on imports relates to those imports on which exemption certificates have been issued, whereas customs duty is being collected on the same imports. Therefore, the growth pattern in withholding tax on imports is not following the corresponding increase in customs duty.
The list of all importers enjoying exemption from income tax has been obtained and the respective exemption certificates issued by the department are being scrutinised to verify the authenticity of the said imports vis-à-vis issuance of exemption certificates. This exercise of verification is under process at the moment, RCITs added.
CBR WILL EXAMINE THE TAX PROFILES OF THE FOLLOWING COMPANIES, AVAILING OF EXEMPTION FROM WITHHOLDING TAX ON IMPORTS: Gandhara Nissan Diesel Ltd; Tata Textile Mills Ltd, Khi; Maple Leaf Cement Factory Limited; Petronas Carigali Pakistan Ltd; Bosicor Pakistan Limited; Azgard Nine Ltd; Premier Industrial Chemical MA; Pakistan Telecommunication Company; Bawany Metals Ltd; Gadoon Textile Mills Ltd; Oil And Gas Engineering Company; Thal Limited (Formerly: Thal J); Tapal Tea Pvt Ltd; Kohinoor Textile Mills Ltd; The General Tyre and Rubber Co; International Industries Ltd; Sapphire Fibres Ltd; United Refrigeration Industries; Fazal Cloth Mills Limited; Jamshro Joint Venture Limited; Gatron Industries Ltd; Lucky Cement Ltd; Tri-Pack Films Limited; Nishat (Chunian) Ltd; Alhamd Textile Mills Ltd; Pak Synthetic Ltd; Lakson Tobacco Company Limited; Jhelum Shipping Pvt Ltd; Siddiqsons Denim Mills Ltd; Dawlance Pvt Ltd; Pakistan Tobacco Co Ltd; Colony Weaving Mills Pvt Ltd; Packages Limited; Paktel Limited; Fazal Cloth Mills Limited; Amjad Textile Mills; Swat Shipping Pvt Ltd; Colgate Palmolive (Pak) Ltd ; Artistic Milliners; Suzuki Motorcycles Pakistan Ltd; Colony Textile Mills Ltd; Rupali Polyester Ltd; Pak-Arab Refinery Ltd; Pakistan State Oil Co Ltd; National Refinery Limited; Shell Pakistan Ltd; Trading Corpn of Pak Pvt Ltd Khi; Pakistan PTA Ltd; Pak Suzuki Motor Co Ltd; Pakistan Steel Mills Corp Ltd; Pakistan Refinery Limited; Dewan Salman Fibre Ltd; Indus Motor Co Ltd; Ibrahim Fibres Ltd;
Engro Asahi Polymer and Chemical; Caltex Oil Pakistan Limited; Pakistan International Airlines; Unilever Pakistan Limited; Ibrahim Fibres Ltd; Fauji Fertiliser Bin Qasim Ltd; Telenor Pakistan Pvt Ltd; ICI Pakistan Ltd; Hinopak Motors Ltd, Karachi; Oil and Gas Development Co Ltd; Pak China Chemicals; Pak Petro-Chemical Industries; Pak Telecom Mobile Limited; Jamshoro Joint Venture Limited; Din Textile Mills Ltd 35-A; Atlas Honda Ltd Khi;
Yunus Textile Mills; Pakistan Mobile Comm. Pvt Ltd; Siddiq Sons Tin Plate Pvt Ltd; International Industries Ltd; Saif Textile Mills Limited; Nova Tex Limited Quetta; Nishat Mills Ltd; Clariant Pakistan Ltd; Independent Newspaper Corp Pvt; Glaxo Smith Kline Pakistan Limited; Nimir Chemicals Pakistan Limited; Rahman Cotton Mills Limited; Janana De Malucho Textile Mill; Pakistan Cables Ltd; Sapphire Textile Mills Ltd; Nishat Mills Ltd; Dewan Farooque Spinning Mills; Wali Oil Mills Ltd; Syngenia (Pakistan) Ltd and Shujabad Oil Mills (Pvt) Ltd.
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