For past few months Federal Board of Revenue unilaterally issuing notifications which have created problems in tax compliance by tax payers –
Karachi, July 29, 2013 (PPI-OT):
For the past few months FBR had been unilaterally issuing notifications which have created problems in tax compliance by tax payers.
A plethora of SROs have been issued which have created confusions and have made the Sales Tax compliance nearly impossible, particularly for those operating under SRO 1125.
The latest in this series is the NOTIFICATION (Sales Tax) issued on 26-07-2013 FBR website. Following serious issues are seen to be developing if this SRO is implemented:
1. By creating a HUGE DIFFERENCE of 15% between Sales rate applicable on SAME GOODS shall create a huge opportunity for dis-honest and fraudulent elements to once again involve in flying invoices business, showing excessive consumption in units (which enjoy 2% Stax rate facility), thereby, pushing honest commercial importers completely out of business.
2. The new condition as per para IV-(e)/(ixa) does not specify how it can be confirmed that goods supplied are for the manufacture of goods specified in Table I and II. This shall open massive avenues for corruption and fraudulent practices, as every manufacturer (operating any sector) may claim that he is involved in manufacturing of goods specified in Table I and II and on the other hand the Stax department/auditors shall claim to exclude every buyer from the purview of this condition (ixa).
The solution in our view is to revert to condition in ORIGINAL SRO 1125, where Registered person of five export sectors are to be levied sales tax @2% all other registered manufacturers to be levied sales tax @5% unregistered buyers to be levied sales tax @5%.
Kindly note that in this way Govt shall not lose revenue as manufacturers operating in other sectors shall despite getting input @5% have to pay output @17%, thus ensuring full revenue for the exchequer.
“After SRO 1125, an amnesty scheme was issued to textile sector due to misuse of 2% tax facility (as there was 3% difference between registered and unregistered manufacturers). Thus through SRO 154 FBR tried to remove difference in taxation between registered and unregistered person. Now once again a difference of 15% has been created which will surely create a huge incentive for misuse. Hence we request to keep difference between registered and unregistered person at minimum.”
For more information, contact:
Pakistan Chemicals and Dyes Merchants’ Association
Chemical and Dye House, Rambharti Street,
Jodia Bazaar, Karachi-74000
Tel: +9221 32432752, 32439124
Fax: +9221 32430117