To promote documentation of trading of gold, the Securities and Exchange Commission of Pakistan (SECP) has strongly proposed reduced tax rate on import of gold @ of 0.1 percent of the import value in cases where the gold is imported by a corporate member for trading at the Commodity Exchange.
Sources told Business Recorder, here on Monday that the SECP has submitted budget proposal to the Federal Board of Revenue (FBR) with the detailed rationale behind reduction of tax on the import of gold. According to the SECP, the tax on import of gold was imposed in FY 2006-07 @1 percent of the import value. Since the imposition of this tax, the volume of gold imported through proper channel has decreased drastically and the amount of tax collected under this head is also insignificant.
The SECP said that a reduced tax rate on import of gold @ of 0.1 percent of the import value is proposed, provided the gold is imported by a corporate member for trading at the Commodity Exchange. The proposed reduction in tax rate will encourage legally imported gold viable to compete with illegally imported gold. As the Commodity Exchange provides a regulated market place to buy and sell gold at transparent market prices, it would discourage manipulation by gold traders in the open market.
It would promote documentation of trading of gold, in comparison to the current huge parallel economy in undocumented trading and resultantly, would increase government revenues from documented import of gold.
The proposal was also presented last year as desired by Revenue Advisory Council (RAC) proposed mechanism to curb misuse of the facility was also submitted that include a certification containing detail information from PMEX to avail the tax rebate at import stage and periodic reporting of all gold imports through PMEX to the FBR for comparison with customs data. The proposed change will be in Clause (13G) (iv) of Part II of Second Schedule to the ITO, 2001, SECP added.
The SECP has proposed amendment in the clause (13G) (iv) of Part II of Second Schedule to the Income Tax Ordinance 2001. Under proposed amendment, "(13G) Tax under section 148 on the following item shall be collected @ of 1 percent of their import value as increased by [customs-duty, sales tax and federal excise duty, if any levied thereon:
iv. Gold: Provided that if gold is imported by any corporate member of any commodity/mercantile exchange of Pakistan (the Commodity/Mercantile Exchange) for the purpose of trading at the Commodity/ Mercantile Exchange then tax under section 148 on the import of gold shall be collected at the rate of 0.1 percent of the import value", proposed amendment added.