ISLAMABAD: The government may restore sales tax exemption to diplomats, diplomatic missions, and privileged persons through the next Finance Bill, 2022.

Sources told Business Recorder that the Federal Board of Revenue (FBR) held its first meeting to discuss the budget proposals and their revenue implications for the next fiscal year (2022-23).

The FBR’s budget meeting was chaired by the FBR Chairman Dr Muhammad Ashfaq Ahmed, at the FBR headquarters.

The meeting was attended by the senior tax policy officials of the Inland Revenue and Customs.

The budget proposals were mainly related to the income tax, sales tax, and federal excise duty (FED). The FBR chairman was briefed on the initial sketch of the taxation proposals and relief measures for the next federal budget (2022-2023).

Each proposal was submitted with its revenue impact (positive or negative) and revenue generation through enforcement and administrative measures.

Through the Tax Laws (4th Amendment) Ordinance, 2021, the FBR had imposed sales tax on the imports made by foreign diplomatic missions and the United Nations agencies.

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Under the said mini-budget, the sales tax exemption was withdrawn on the goods imported by various agencies of the United Nations, diplomats, diplomatic missions, privileged persons, and privileged organizations, which are covered under various Acts and, Orders, rules, and regulations made thereunder; and agreements by the federal government provided that such goods are charged zero-rate of customs duty under Customs Act, 1969, and the conditions laid therein.

Later on February 4, 2022, the FBR issued instructions to the field formations that on the request made by the Ministry of Foreign Affairs, the issue of tax exemption on imports by diplomats, diplomatic missions, and other privileged persons has been reviewed and consequently, sales tax shall not be collected on such imports covered under PCT headings 99.01, 99.02, and 99.06 of Chapter 99 of the First Schedule to the Customs Act, 1969, the FBR added.