The Board-in-Council of the Federal Board of Revenue (FBR) here on Wednesday, October 5, will take decisions on reduction in the rate of withholding tax on services sector and introduction of a single rate of 5 percent on local stage of five sales tax zero-rated sectors by combining existing rate of 4-6 percent.
Sources told Business Recorder here on Tuesday that the FBR's Board-in-Council meeting would be chaired by FBR Chairman Salman Siddique. The agenda of the meeting shows that FBR Member Strategic Planning and Statistics (SP&S) will give an update on revenue collection during the first quarter of 2011-12. He would present the tax-wise breakup of revenue collection during this period and strategy to meet the revenue collection target during the second quarter of 2011-12.
The Board-in-Council would take final decision on the most important issue of reduction in withholding tax on services sector. The Board may propose reduction of 6 percent withholding tax on service providers to one percent minimum tax under section 153 (1) (b) of the Income Tax Ordinance 2001. The FBR is examining pros and cons of the proposal before notifying reduction from six percent to one percent on the minimum tax for service providers. The present status of the proposal is that the FBR has obtained the approval from the Ministry of Finance for issuance of notification. So far, the FBR has yet not issued the notification for reducing 6 percent withholding tax on all service providers to one percent minimum tax under section 153 (1) (b) of the Income Tax Ordinance 2001.
The Board-in-Council would also finalise the issue of a single rate of 5 percent on local supplies of five zero-rated sectors including textile, leather, surgical, carpets and sports goods. The FBR has in principle agreed to combine the existing rate of 4-6 percent on local supplies to unregistered persons of five leading export sectors.
Muhammad Anees, FBR Member Taxpayers Audit Wing and head of the investigation committee would inform the Board-in-Council about the latest position of the missing containers case. He would also inform the council about action taken against customs officials in the missing containers scam. So far, 28,900 commercial Afghan Transit Trade containers are missing which were disposed of within Pakistan, causing estimated revenue loss of Rs 55 billion to the national exchequer. Based on various inquiries and confirmations made so far, as many as 28900 commercial Afghan Transit Trade containers have been identified regarding which proof of their crossing the Pak-Afghan border could not be found. Since proof of their cross border could not be found on the basis of cross border certificates available in the record of border stations, prima facie conclusion is that they have been smuggled and disposed of inside Pakistan. The estimated revenue loss on these containers comes to around Rs 55 billion.
The Board-in-Council would also review the progress on the recoveries of illegal sales tax input adjustments on the basis of the computerised generated reports of the FBR Taxpayer's Audit Wing. A huge amount of sales tax is expected to be recovered from illegal sales tax adjustments.
Aminullah Khan, FBR Member Enforcement and Accounting, would make a detailed presentation on the Public Accounts Committee matters to improve compliance of FBR before the PAC. The national plan of the FBR to improve compliance at the level of the PAC would also be shared before the council. FBR Member Inland Revenue Shahid Hussain Asad would review the progress on the broadening the tax base and domestic sales tax collection during the first quarter (July-September) 2011-12.
FBR Member Legal Muhammad Aqil Usman would give a detailed presentation on the recovery of arrears stuck up in courts and results of disposal of cases through special benches in High Courts. The update on Core Reforms of Inland Revenue Service (IRS) and Customs Group would be given by Director General, Strategic Planning and Statistics.