The government has announced a new facility for services sector to either pay reduced rate of 2 percent minimum tax and provide accounts for audit for the Tax Year 2016 or pay 8 percent minimum tax with carry forward facility. One of the committee members assigned to review minimum tax told Business Recorder that the first option is to pay 2 percent minimum tax with the condition to provide accounts for audit. This facility would only be available to 12 corporate service sectors.
When contacted, Ishfaq Tola, a renowned tax expert and member of the committee told Business Recorder that the committee has a trade-off win-win situation for corporate service providers and the exchequer. The Finance Minister held a meeting here Saturday at Ministry of Finance to consider options regarding minimum income tax on various corporate service sectors which was attended by representatives of twelve. Finance Minister decided that the 12 corporate service sectors would have one of the following two mutually exclusive options:
(a) to opt out of minimum tax as referred to in clause-b of the sub-section 3 of section 153 of Income Tax Ordinance 2001 and present their accounts for audit by giving an irrevocable undertaking in writing by the date specified by the government for tax year 2016; (ii) provided that in such case, tax liability shall not be less than 2% of the gross turnover, or
((b) to pay minimum tax @ 8% of the gross turn over and entitled to carry forward this minimum tax if it exceeds the actual tax payable after assessment. However, the unadjusted amount of tax shall be carried forward and adjusted against tax liability of subsequent years up to a maximum of 5 years. Freight forwarding services(sea), Air Cargo services(air freight), Courier services, Manpower outsourcing services, Hotel Services, Security guard services, Software services, Tracking services, Advertising services, Share registrar services, Engineering services and car rental services. The representatives of the Corporate Service sectors agreed to recommendation that the Committee proposed. The Finance Minister assured the representatives that after completion of due codal formalities, requisite notifications shall be issued effective November 1, 2015.
A committee was constituted to review taxation under section 153(1)(b) of the Income Tax Ordinance 2001. The five member Committee was headed by Special Advisor to Prime Minister on Revenue Haroon Akhtar Khan. The Committee invited all the stakeholders who had approached FBR through their representatives to discuss the issue with the support financial data. Twelve Corporate sectors had approached the FBR and presented their case for redressal of their grievances.
Each Corporate Service Sector was heard by the Committee and financial data discussed. The gist of the representation of nearly all the aggrieved sectors was that they operate on very low margin of profit and 8% minimum tax cannot be absorbed by them. The Committee after having discussions with the representatives of the corporate service sectors submitted its report to the Finance Minister.
They thanked the Finance Minister for giving them a patient hearing to arrive at an amicable decision regarding minimum tax. They assured of full support in the Government's resolve to promote tax culture and improve tax to GDP ratio of Pakistan. The SAPM on Revenue, Haroon Akhtar Khan, Chairman FBR and other senior officials of Ministry of Finance and FBR were also present.
Comments
Comments are closed.