GST rate on supplies of goods in Pakistan

The standard rate of GST or sales tax in Pakistan is 17% ad-velorem on imports and supplies of goods all over Pakistan with the exception of few supplies which are charged to tax at reduced rate ranging 5% to 10% and few other supplies subject to extra and fixed rate of sales tax depending upon their features and/or values e.g. confectioners and cell phones etc.

Supplies referred in 6th schedule of the Sales Tax Act, 1990 (1990 Act) and those declared as such through issuance of notification by the Federal government are exempt from sales tax.

Exports of goods from Pakistan to abroad including supplies of goods referred in the 5th Schedule to the 1990 Act and those declared as such through issuance of notification by the federal government are chargeable to sales tax at the rate of 0%.

FBR Date Extended till 30th Novemeber 2018 to Become Filer

This is the best time to become active tax filler to get huge benefits and making your wealth legalise through tax amnesty. As per FBR press release date is further extended to 30 November 2018.

Federal cabinet, on the recommendations of the Finance Minister, has approved extension of closing date of tax amnesty schemes for declaration of foreign assets and domestic income and assets till July 31st, 2018. This has been effected through a Presidential Ordinance.

The deadline for filing amnesty declarations was June 30th, 2018. However, during last week a large number of representations have been received from trade bodies, professional associations and general public for extending the closing date due to short operational period after clearing legal and procedural challenges. The extension was also needed to remove ambiguities through clarifications and explanations required to provide certainty to the general public and to ensure effective implementation of the schemes. In addition, declarants of foreign assets faced problems in the payment of tax on foreign assets and repatriation of liquid assets.

The Finance Minister recommended extension of the cut-off date for availing amnesty schemes as there has been an overwhelming demand and response which is on the rise. The date has been extended by one month to enable general pubic to file declarations for undeclared foreign assets and undeclared domestic assets and income and thereby get their tax affairs in order. It will also help the government in bringing undocumented persons, assets and income into the documented sector. Depending on flows, the schemes have potential to bring in macroeconomic and fiscal stability in the economy.

Tax Amnesty scheme 2018 sees massive response

With days to go before its end, the tax amnesty scheme announced by the Pakistan Muslim League-Nawaz government has seen a surge of interest. According to multiple well-placed sources in the Federal Board of Revenue, so far Rs21 billion has already been raised under it in the form of taxes till June 21.

The tax amount created through the amnesty declaration and deposited in the banks stood at nearly Rs5bn, while the remaining tax amount of Rs16bn has been created in the FBR online system through the submission of challans.

The deadline of the scheme is June 30 which, according to the law, is non-extendable. Pressure is mounting on the government from various sides to extend the deadline.

Rs21bn tax raised thus far; according to law, June 30 deadline can’t be extended

Looking at the numbers of declarations coming in, and those in the pipeline, the sources in the FBR and finance ministry said the total amount of tax paid on assets declared under the scheme could well go as high as Rs100bn, though it was too early to properly calculate this number at this stage.

The details of tax amount created so far were shared with caretaker Finance Minister Dr Shamshad Akhtar on Thursday for approval before sharing it with the media. The minister received the figures, but directed top officials of the FBR not to disclose them to the media at this stage.

It was in this background that FBR spokesperson Dr Muhammad Iqbal at a press conference on Friday did not disclose the tax figure created officially, preferring to say only that the response thus far had been “encouraging”. He went on to claim that its success would help resolve the current account deficit and balance of payment issues. He said the number of beneficiaries of the scheme was increasing every day, and categorically stated that the FBR had no power to extend the deadline.

The scheme became effective from April 10 and expires on June 30. It allows people to voluntarily declare domestic as well as foreign assets that had till April 10 been held beyond the tax authorities’ knowledge and reach. It offers varying rates that will be charged on these assets, ranging from 2 to 5 per cent, depending on whether it is a domestic or foreign asset, the asset class, and whether or not it is being repatriated to the country or now. This is the fourth in a series of amnesty schemes announced by the PML-N government in five years, and comes at a time when many holders of black money abroad are already very concerned about the OECD tax information treaty that Pakistan has signed which will enable automatic sharing of information with many other countries. That automatic sharing is set to begin on Sept 1 of this year.

The FBR spokesperson said the response from people increased overwhelmingly after remarks from Chief Justice of Pakistan Saqib Nisar that the bureau could pursue the scheme. A Supreme Court bench was hearing the case on the matter at its Lahore registry.

A source in the finance ministry told Dawn that after green signal from the Supreme Court, Finance Minister Shamshad Akhtar held several meetings with top officials of the FBR to energise the scheme.

Several technical flaws were discovered in the scheme meant for declaration of foreign assets which needed clarification and improvement along the way. “We have addressed almost all queries and issues raised by intended people who want to declare their foreign assets,” the FBR source told Dawn. These apprehensions were removed in consultation with chartered accounts that are in direct contact with intended clients.

The FBR spokesperson said that several legal measures were already taken in the last budget to penalise those people who would not avail this scheme. He said it would be difficult for people, especially for those who did not disclose their foreign assets.

In the 1958 amnesty scheme, an amount of Rs1.12bn was recovered from undeclared assets, followed by Rs920m in 1968, Rs1.5bn in 1976, Rs10bn in 2000 and Rs3.16bn in 2008. There are several other schemes which were also offered in 1985, 1991, 1998, 2012 and 2016. However, the FBR did not disclose their revenue recovery or beneficiaries.

Resource:

Originally Published in Dawn, June 23rd, 2018

https://www.dawn.com/news/1415559/amnesty-scheme-sees-massive-response

 

How to file Tax returns in Pakistan 2018

Once you’ve registered, you can send your tax return using HM Revenue and Customs’ (HMRC) free Self Assessment online service.

See this video to Become filer in Pakistan with FBR:

There are different ways to register if you’re:

  • self-employed or a sole trader
  • not self-employed
  • registering a partner or partnership

You can get help filling in your return.

You then have to pay your bill by the deadline.

Using software or paper forms

You can choose to send any Self Assessment return using software or paper forms.

You must use one of these options to send returns:

  • for a partnership
  • for a trust and estate
  • if you get income from a trust
  • if you lived abroad as a non-resident
  • if you’re a Lloyd’s underwriter

ant to be an Active Filer in 2018??  Contact us to become Active tax filer in Pakistan

 

Budget 2018-19 Key Insights[What Tax Relief you can Avail]

Budget 2018-19 announced with some tax relief to common Pakistani people.According to an informal study by Dawn, Pakistani middle class families fall in the monthly income bracket of Rs75,000-180,000. At the lower end of this income band the annual tax liability has been brought to Rs1,000 while at the higher end the tax will be less than half of the year before because of the sharp cut in rates.

Check Key insights of Budget 2018-19 for an Ordinary Paksitani with some Tax reliefs on Declared assets.

The upward salary/pensions revision by 10pc and increasing of the minimum family pension at the lowest rung from Rs4,500 to Rs7,500 will generate political capital for the party in power.

After a detailed exercise Dawn last year identified seven broad categories of family spending with weightage. The new budget has created some fiscal space to add a new category of miscellaneous with 5pc weight. The figure shows how average families are expected to consume money they will save from lower tax liability and increase in their income.

The kitchen budget might increase more than the rate of inflation to improve the quality of intake. Rentals are not expected to increase as real estate measures can bust the property price bubble. Transport and utility cost may increase marginally while additional family resources can provide a buffer to better manage health and education needs of children.

For citizens the litmus test is their personal experience and the perceived impact of budgetary policies on the wellbeing of their families. As the proposed measures translate into a hike in the disposable income of urban households, they will support it

The government had to retract the change in income tax exemption limit. In the recent economic package the limit was raised from Rs0.6 million to Rs1.2m. Dr Miftah, in his budget speech proposed a flat tax of Rs1,000 per annum on income in the band of Rs0.4m to Rs0.8m and Rs2,000 per annum for income brackets of Rs0.8m-Rs1.2m.

Besides the financial cost, if implemented, the earlier proposal would have halved the number of income tax payers that are already shamefully low at 1.4m to 0.7m in a population exceeding 200m.

In comparison to urban dwellers, the rural population was not offered direct benefits in the form of increase in support prices though some measures were announced to moderate the cost of farming by duty cuts on key inputs such as fertiliser and seeds. It is, therefore, difficult to project increment in their monthly income.

“The sense of freedom is valuable for argumentative Pakistanis but for the majority struggling for a decent life the baseline is economic. For people it is probably the quality more than the pace of growth that matters.

A classic example of voters’ behaviour from the region is the 2004 BJP election debacle in India following the party’s high growth glorification through the ‘India Shining’ campaign”, commented an expert.

Some economists dismiss the thrust of the current proposals as ‘expenditure centred’ and ‘populist’ citing weak fundamentals. Mounting twin deficits, piling debt, weakening currency and draw down on reserves pose a risk, they say, to the sustainability of the 13 year high real sector growth.

For citizens, who often find it hard to demystify economic jargon, the litmus test is their personal experience and the perceived impact of budgetary policies on the wellbeing of their families. As the proposed measures translate into a hike in the disposable income of urban families — through direct salary increase, subsidies, price control and cut in income tax — they will support it.

If implemented, the Abbasi government’s budget will be well received by ordinary people, most businessmen, traders, bankers and brokers. Realtors are understandably irked and people associated with the construction industry complain of not getting the attention their sector deserved.

Source: Dawn.com

What Benefits you can get from tax amnesty Scheme?

Tax Amnesty scheme 2018 announced by Govt. of Pakistan can help individuals and AOPs to get huge benefits.You can talk to the Tax expert for free consultation to convert your black money into white money by regulating it under this scheme.

The government’s tax amnesty could relieve fiscal and external pressures on the economy “if successful”, said Moody’s, the premier credit rating agency in a release early on Friday. “The credit-positive scheme is part of the government’s broader tax reform package” the release noted.

 

Assistance in registration of the prospective beneficieries with the tax authorities;

Correct computation of value of the assets to be declared to avail amnesty;

Tax avoidance by availing tax cusions available under the amnesty ordinance;

Filing of incom tax returns of the proposed declarants and getting them in ‘Active Taxpayers List’ to avoid excess payment of tax on business and domestic transactions;

Advising on prospective tax effective investment opportunities.

President Mamnoon Hussain Defended Tax Amnesty Scheme

President Mamnoon Hussain on Monday defended the tax amnesty scheme, saying that it would help prevent money laundering and bring back the foreign assets for the best interest of the nation.

Talking to media persons during his visit to the Directorate General of Immigration and Passports (DGIP), Hussain, who promulgated four ordinances to give effect to the tax amnesty scheme for whitening of local and offshore hidden assets, said similar schemes have been successful in Malaysia and Indonesia.

He rejected the opinion that all wealth stashed abroad by Pakistani nationals was achieved through ill-gotten means. “Most assets are a result of hard-earned money of Pakistanis, and it was not correct to target them across the board,” he added, justifying the incentives given to declare foreign assets and pay nominal tax on them.

On inter-institutional relations, President Mamnoon said every institution should work within its own ambit to avoid such a situation, which could be detrimental to the country’s future. When asked if he would like to play a role in minimising the rift, he said he believed all were mature enough to sort things out on their own in the national interest.

Source: Pakistan Today

He mentioned that the country was headed towards prosperity as projects under the China-Pakistan Economic Corridor (CPEC) gather pace, adding that it requires a joint effort of all stakeholders.

Talking about the upcoming 2018 general elections, the president also said he was hopeful for timely elections.

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How Faxton Consulting can help in Business Strategic Planning

·            Formulating effective and tax-efficient cross-border strategies for both inbound and overseas investments.

·            Capitalizing on planning opportunities presented by local tax law as well as treaty network.
·            Structuring acquisitions, divestitures and corporate reorganizations for tax optimization.
·            Staying abreast of new developments within the international arena that affect clients’ businesses, both globally and locally.
·            Advance rulings to lend an element of certainty to non-resident investors in their proposed transactions in Pakistan.

Consulting and advisory

  • Analyzing the tax impact of transactions holistically having regard to direct tax, indirect tax, regulatory and transfer pricing implications.
  • Providing opinions on transactions from a domestic law and tax treaty viewpoint.
  • Identifying tax planning opportunities and addressing potential problem areas in the course of undertaking day to day business activities.

 

Business restructuring

  • Conceptualization of the proposed structure in the light of business objectives.
  • Structuring the reorganization – merger, spin off, acquisition or capital arrangement – from a tax and regulatory perspective.
  • Implementation support to put the structure in place having regard to tax efficiencies, regulatory procedures and intended timeframes.

 

Strategic planning for your business in Pakistan

Strategic planning is one of the most missing part of most businesses in Pakistan.You can reduce risk while pre planning of your business financial and physical assets.You can avail expertise to get risk free assessment for your business that will help you save millions.

How Faxton Consulting International can help in Strategic Planning

 

  • Formulating effective and tax-efficient cross-border strategies for both inbound and overseas investments.

 

 

  • Capitalizing on planning opportunities presented by local tax law as well as treaty network.

     

  • Structuring acquisitions, divestitures and corporate reorganizations for tax optimization.Staying abreast of new developments within the international arena that affect clients’ businesses, both globally and locally.

     

 

 

  • Advance rulings to lend an element of certainty to non-resident investors in their proposed transactions in Pakistan.