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Draft of new tax ordinance: Govt revisiting certain clauses

  • The Law Division high-ups are also engaged in the drafting of the clauses related to the broadening of tax base
Updated 02 Sep 2021

Islamabad: The government is revisiting certain clauses of the draft of the Tax Laws (Third) Amendment Ordinance, 2021, to review new measures for broadening the tax base.

Sources told Business Recorder that the Tax Laws (Third) Amendment Ordinance 2021 will amend certain clauses of the Finance Act 2021.

Certain clauses of the Ordinance are being reviewed which has resulted in delay in the promulgation of the Presidential Ordinance.

The Law Division high-ups are also engaged in the drafting of the clauses related to the broadening of the tax base. The FBR is not solely engaged in the drafting of the said ordinance.

Recently, a summary was moved to the prime minister on the Ordinance but it apparently requires further deliberations and review.

According to the sources, the Prime Minister’s Office has also reviewed the said Ordinance and submitted its observations on the provisions relating to the broadening of the tax base.

“Whether any political government can introduce such harsh measures during its remaining last two years for broadening the tax base is yet to be seen,” sources said on the condition of anonymity said.

The government is reviewing whether it is practically possible to implement measures such as disconnection of mobile phones, electricity, and gas connections of non-filers of income tax returns.

The proposal of additional taxes on the electricity bills of professionals such as lawyers, dentists, doctors, and accountants is also under revision.

Tax Laws (2nd Amendment) Ordinance, 2021: 76 corporate IT exemptions withdrawn

Sources said that the Tax Laws (Third) Amendment Ordinance 2021 may also allow access of the Federal Board of Revenue (FBR) data of taxpayers to the National Database and Registration Authority (Nadra) for broadening the tax base.

However, it has yet not been decided whether the punishment for tax officials in case of leakage of taxpayers’ information would also apply on the Nadra officials.

If the Ordinance makes Nadra officials as custodian of taxpayers’ data, the same penal provisions of the Income Tax Ordinance 2001 should apply on them in case of leakage of taxpayers’ information, they added.

Through the new Ordinance, sources said the FBR will also give legal cover to the foreign remittances received through foreign currency accounts of Overseas Money Service Bureaus (MSB), Exchange Companies (ECs), and Money Transfer Operators (MTOs) for granting income tax exemption under Section 111(4) of the Income Tax Ordinance, 2001.

Sources said that the Tax Laws (Third) Amendment Ordinance 2021 will provide right of appeal to the importers against valuation ruling with the FBR Member Customs Policy.

The Ordinance has also proposed to provide temporarily clearance of goods against submission of bonds/financial securities to the Independent Power Producers (IPPs).

Steel, oil & ghee industry supplies: New tax law may grant exemption from 3pc further GST

Sources said that the Ordinance would also introduce a provision relating to the re-assessment or re-opening of Goods Declarations (GDs).

Tax Laws (Third) Amendment Ordinance 2021 will withdraw 17 percent sales tax on fat-filled milk sold in retail packing under brand name.

After promulgation of the Ordinance, fat-filled milk sold in retail packing under brand name would be subjected to sales tax zero-rating.

The FBR will also propose to change certain Pakistan Customs Tariff headings to rectify the errors in the Finance Act 2021.

Certain procedural changes have also been proposed in the Income Tax Ordinance 2001 and Sales Tax Act 1990.

Under the proposed Ordinance, the FBR has proposed to facilitate the ghee and cooking oil industry by granting exemption of three percent value addition sales tax at the import stage.

Moreover, the government may also exempt three percent further sales tax on the supplies made to the unregistered persons.

Similar kind of relief is expected to be announced for the steel sector and their supplies would also be exempted from “further sales tax.”

Copyright Business Recorder, 2021

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