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ISLAMABAD: The caretaker government has delayed the promulgation of an Ordinance for the integration of data of all federal/ provincial departments for the documentation of the economy.

Sources told Business Recorder that the promulgation of the ordinance has been delayed due to the uncertainty concerning the fate of the law after the expiry of its 120-day validity.

The caretaker government is authorized by the Constitution to introduce a money bill through an ordinance to impose wealth tax on movable assets, having validity for 120 days and can be extended for a similar period through a resolution to be adopted by the National Assembly.

Caretaker setup is ‘empowered’ to bring economic reforms: Solangi

This second ordinance has yet to be finalised keeping in view the time constraints hampering the promulgation of the first Ordinance on documentation of the economy.

It is learnt that the present government was drafting an ordinance for making it mandatory for all institutions and departments at federal and provincial levels to integrate their data on a regular basis to register new filers of income tax returns.

The caretaker government analysed that many departments and institutions at federal and provincial levels are not sharing their data with the FBR in regular and desirable format, making it impossible to convert data into taxability.

To document all kinds of financial transactions for broadening of the narrow tax base, the government is considering promulgating an ordinance. The FBR identified the departments that are not sharing their data on a regular basis.

It raises the need for binding all departments through a Presidential Ordinance seeking data on a regular basis.

The time-bound ordinance would remain valid for a period of 120 days.

Therefore, the ordinance has been delayed due to time constraints. The Ministry of Finance stated in its monthly Economic Update and Outlook of September 2023 that the key measures under the economic revival included revenue enhancement strategies including tax revisions in sectors such as retail, agriculture, and real estate, alongside a wealth tax on movable assets, as deemed appropriate.

However, legal experts stated that all of the said measures can only be taken through amendments to the existing tax laws, enacting a new law and through promulgation of an ordinance to impose wealth tax on movable assets.

As the National Assembly is now in recess and the Election Commission of Pakistan (ECP), which recently announced that the general elections will be held in the last week of January 2024 without specifying the date.

An ordinance lapses after 120 days of its promulgation and it is further extended for the same period of 120 days under proviso to sub-paragraph (i) of paragraph (a) of clause (2) of Article 89 of the Constitution.

According to parliamentary sources, a resolution is to be tabled in the National Assembly to extend the ordinance for a further period of 120 days.

According to the experts, legislation for imposition or alteration of a tax falls within the category of a money bill and Article 73 of the Constitution provides the mechanism and procedure for introduction and passing of money bills.

Under this Article, a money bill has to originate and be passed by a simple majority in the National Assembly.

Under Article 89 of the Constitution, the president can promulgate an Ordinance on the matters covered under a money bill.

The tax experts further said that the Income Tax Ordinance, 2001, deals with the imposition of taxes on income and not assets. In the past, wealth tax was payable on movable and immovable assets under the repealed Wealth Tax Act of 1963. The wealth tax was not imposed under the income tax law.

In budget (2023-24), the Reforms and Revenue Mobilization Commission (RRMC) had proposed Minimum Asset Tax (MAT) at an agreed tax rate on the value of movable and immoveable assets (including agricultural property, business property etc) located in Pakistan held and/ or owned by a resident individual, where the asset value of the resident individual exceeds PKR 100 million for a given tax year. This shall be done by extending the ambit of the current CVT provision (Section 8 of the Finance Act 2022) to assets held and/or owned in Pakistan by resident individuals.

The value of the asset shall be the value at the end of the tax year. As such, the MAT on foreign assets shall be adjustable from tax liability on foreign income. Similarly, the MAT on domestic assets shall be adjustable from the tax liability on domestic income.

The MAT would not apply to individuals in the two tax years when the individual was not a resident individual in any of the four tax years preceding the first tax year in which the individual became a resident and the individuals becoming resident due to employment in Pakistan, the RRMC added.

Copyright Business Recorder, 2023

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Tulukan Mairandi Oct 07, 2023 10:22am
Why? Because it'll expose all the rat holes
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Mubashir Munir Oct 07, 2023 07:07pm
Mafia mafia on control of Pakistan why every good work isdelayedjustice delayed is justice denied
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