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Chairman, Federal Board of Revenue and Secretary, Revenue Division, Mr. Ahmed Waqar called upon the tax machinery to gear up its efforts to improve tax-to-GDP ratio which at present was not upto the reasonable level and low even in the region.

He was addressing the senior officers of the Board at the FBR Headquarters here today.

In this regard, the Chairman directed the technical wings of FBR to study and identify the grey areas which need to be tackled effectively. "We have to improve our tax-to-GDP ratio and broaden the tax base to enable FBR to play its due role in economic development of the country", he added.

On public perception of FBR and its field offices, the Chairman stated that every possible step including improvement in the existing automated systems will be taken to root out corruption. "No compromise will be made on this issue. We have to improve our image in public," he categorically told the officials. Mr. Ahmed Waqar said that he was in favour of enforcement of tax laws but without harassment of the taxpayers.

Underlining the improvement in Board's performance, the Chairman emphasised the need to adhere to strict discipline among the FBR workforce to considerably enhance its performance and improve the image of the department amongst the stakeholders.

Chairman said that although revenue collection target of Rs. 1250 billion for current fiscal year was challenging but it will, Inshallah, be achieved with the team spirit. He told the officials that he was a pro-reforms person and played his due role in this regard wherever he served. He said that he was a strong believer of change as he believes that status-quo was not good for any institution and reforms were necessary for betterment.

Earlier, Member (FATE) & Official Spokesman of FBR, Mr. Khawar Khurshid Butt, welcomed Mr. Ahmed Waqar, on behalf of the officers of FBR & on his own behalf, on assuming the office of the Chairman and assured him all cooperation in discharging of his official duties. He also lauded the services of the out-going Chairman, Mr. M. Abdullah Yusuf during his four and a half year stay and especially for initiating the difficult task of tax administration reforms. He expressed the hope that under the able guidance of the new Chairman, FBR reforms will be completed successfully within the stipulated time.

Member (DT), Member (Customs) & Member (ST) also briefly explained to the new Chairman about their respective Wings. It was decided that detailed representations will be made by each Member separately in the next two days.
 

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)

Pakistan source income of International Finance Corporation (IFC) was exempt from tax in accordance with the provisions of proviso to section 54 of the Income Tax Ordinance, 2001. The said proviso was omitted wide the Finance Act, 2008. IFC, accordingly approached the Federal Government and claimed that in view of the agreement of 1955 and the IFC Act, 1956, the Pakistan source income of IFC is exempt from tax. The claim has been considered and found correct, accordingly, Part I of the Second Schedule to the Income Tax Ordinance, 2001 has been amended and a new sub-clause (xxi) in clause (66) has been inserted therein which exempts, any Pakistan source income of the IFC. Like-wise, a new clause i.e. (67) has been inserted in Part IV of the Second Schedule to the Ordinance which provides that IFC would not be required to withhold tax while making any payment under the different sections of the Ordinance.
 

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)

Secretary General, Revenue Division & Chairman, Federal Board of Revenue, Mr. M. Abdullah Yusuf has called for efficient use of modern technology for more revenue generation, enhancing tax-to-GDP ratio and expanding the tax base.

He was addressing the Workshop on Management Automation Projects held at the FBR Headquarters today. Among others, officers dealing with the automation work at field offices of FBR attended the Workshop.

Chairman stressed upon the officers to equip themselves with latest techniques and technologies. "This organisation has great potential. Once you are fully equipped with modern knowledge, techniques and technology, then it would not be difficult to achieve the desired results", he added. He was of the opinion that as an institution or country, we have to go for a better change. No country or organisation can grow and progress if it remains stagnant. We have to change ourselves with this rapid changing world to face the challenges of modern times, he opined.

Chairman said that although we were happy to cross the psychological barrier of Rs. One trillion in revenue collection in last fiscal year (2007-08) but, according to his judgement, still there was a gap of Rs. 400 bn to Rs. 500 billion exists today. This gap cannot be bridged until and unless we enhance our tax-to-GDP ratio from existing 11% to 15 / 16%. Its not impossible provided we have the will, commitment and tools to do it, Mr. Abdullah Yusuf observed. He, however, said that despite all constraints, handicaps and non-availability of necessary tools we have been able to expand our tax base in last four years form one million to 2.2 million taxpayers at the growth rate of 20% per annum.

Similarly, we have been able to enhance the revenue collection at an average of about 18% per annum. "This is good & fine but, we have to plug the existing gap". In next seven years, we have to achieve the target of 15 /16% tax-to-GDP ratio with an annual growth of atleast 0.5 %, the Secretary General added.

Commenting on the on-going automation projects, Mr. Abdullah Yusuf said that we have to realise the dream of making FBR a totally paperless organisation.

He asked the relevant officers and officials to make all possible efforts to achieve this goal.

On the occasion, the Chairman reminded FBR employees of their responsibilities towards making FBR a most progressive and efficient organisation. He added that the special treatment being given to FBR employees, in perks and privileges, by the Government was not for all times to come " We have to prove through our actions and achievements that we fully deserve for this treatment," he remarked.

Earlier, in his welcome address, Director (Projects), FBR, Mr. Muhammad Asghar Chaudhry informed that currently four pilot automation projects were in the process of development and implementation. They are; "Human Resource Management Solution (HRMS)" "Electronic Correspondence Management System (e-Dox),' "Budget & Accounts/Inventory Management System- SAP" and "e-Archiving." All these projects are at different stages of implementation at FBR Headquarters. After their completion, they will be replicated in the field offices of the Board, Mr. Chaudhry added. He said that these systems will bring transparency and efficiency in the overall administration and management system of the Board.

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)

 
Secretary General, Revenue Division/Chairman Federal Board of Revenue Mr. M. Abdullah Yusuf has called upon the businessmen, traders and industrialists to take full advantage of the newly announced amnesty scheme "Tax Investment Scheme 2008" for legalisation of their hidden assets by paying just 2% tax.

Speaking at a ceremony held in connection with formal launching of the scheme at the Islamabad Chamber of Commerce & Industy last evening, the Chairman said that the scheme is applicable for both registered and un-registered persons. On a query regarding ascertaining of the value of the hidden / undeclared assets, the Chairman said that it would be accepted on the basis of "fair market value of the assets as declared by you."

He told the ICCI members that if any one declares assets of greater value, he can take its advantage from the banks for further promotion of his business. FBR Chairman said that the amnesty scheme was a major initiative of the present Government and the business community needs to respond it in a big way. He was confident that the Islamabad Chamber, being a proposer of this scheme and a model chamber, would take lead and show 100% compliance.

Stressing on the enhancement of tax-to-GDP ratio, the Chairman underlined that we need to raise the existing ratio of 11% to 15%. Had it been the 15% tax-to-GDP ratio today, the revenue collection for the year 2007-08 would have reached to Rs. 1.4 trillion. In his opinion, there was a gap of Rs. 400 billion in revenue collection due to lower tax-to-GDP ratio.

Referring to the opportunities available in the country and the challenges faced by the business Community, the Chairman hoped that they will take all advantage of the opportunities and help to improve revenue collection and expand tax base.

On the occasion, Mr. Abdullah Yusuf also referred to the recently announced "Tax Arrears Settlement Incentive Scheme (TASIS)' of the Government which allowed the taxpayers to settle their tax arrears, including additional tax and penalty for non-payment. He hoped that the taxpayers would also take benefit of this scheme and pay their outstanding due without any penalty within the specified period.

Earlier, in his welcome address Mr. M. Muhammad Ijaz Abbasi, President of ICCI, congratulated FBR Chairman, Mr. M. Abdullah Yusuf and members of his team, for crossing the psychological barrier of Rs. One trillion in revenue collection. "This is an outstanding performance. Credit goes to Mr. Abdullah Yusuf and all of his team members," he added. He also thanked the Chairman for accepting their proposal of the amnesty scheme.

FBR's Member (DT), Mr. Usman Khalid Mirza was also present on the occasion.
 

-Sd-

(Muhammad Hafeez Mughal)

Secretary (PR)

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)

In order to facilitate the taxpayers to pay their due taxes, all authorized branches of State Bank of Pakistan and National Bank of Pakistan will remain open till 6.00 p.m. on Saturday & Sunday, the 28th & 29th June, 2008 and uptill 10.00 p.m. on Monday, the 30th June, 2008.

Accordingly, all Income Tax Offices will remain open till 8.00 p.m. on Saturday & Sunday, (28th & 29th June) and till 12.00 midnight on Saturday, the 30th June, 2008. They will receive CPRs (challans) and arrange collection of tax and facilitate the taxpayers.

These measures have been taken by the Federal Board of Revenue as a part of its policy to extend all possible help and cooperation to the taxpayers in meeting their tax obligations.
 

National Assembly of Pakistan today approved the Finance Bill for financial year 2008-09. Out of total 76 amendments, proposed by the Senate of Pakistan, 51 proposals have been accepted. The remaining 15 proposals will be duly considered during the course of the year.

Major Amendments made in the Finance Bill, passed by the National Assembly today, concerning Sales Tax & Federal Excise are as under:

• Definition of cottage industry has been amended to provide that those manufacturers shall fall within the purview of cottage industry whose annual utility bill is below seven lac rupees and annual turnover is below Rs. Five million. Earlier the utility bill limit was six lac rupees. It may be noted that supplies of cottage industry are exempt from payment of sales tax.

• Exemption from payment of sales tax has also been granted by amending Sixth Schedule of Sales Tax Act, 1990, to hospitals owned by federal or provincial government, hospitals of statutory teaching universities having two hundred or more beds and charitable hospitals having fifty or more beds.

• The services of property developers and promoters have been subjected to federal excise duty by amendment in First Schedule. The development of plots shall be subject to FED at Rs. 100 per square yard and construction of residential and commercial units shall be subject to FED at Rs. 50 per square foot of covered area.

  The duty structure for cigarettes has been changed to reflect increase in prices of cigarettes. The new structure shall be effective from 22nd June 2008.
  
  
  Amendments pertaining to Customs include the reduction of import duty on sulphonic acid from 15% to 10%.
  
  
  INCOME TAX :
  
  Earlier, the definition of urban area for the purpose of CVT, apart from rating areas, also included the following extended areas:

  I. In respect of Karachi, 40 kms from the outer limit of rating area or Cantonment Board.
  
  II. In respect of Faisalabad & Lahore, 30 kms form the outer limit of rating area or Cantonment Board.
  
  III. In respect of other cities, 10 kms form the outer limit of the rating areas.

  
  Now, the urban area for the purpose of CVT has been restricted to rating areas only and the above limits have been withdrawn.

  2. In Finance Bill, a proposal was included whereby the limit of donation to charitable institutions, educational intuitions and hospitals etc were reduced from 30% and 15% to 10% of the taxable income in respect of individuals and companies. By making amendment in the Finance Bill this reduction in donation for the purpose of tax credit to a donor has been withdrawn.
  
  3. One time collection of Withholding Tax (WHT) on purchase of new cars has been reduced substantially. The rate of WHT on purchase of new cars will now be as under:

       4. Exemption form Withholding Tax (WHT) in respect of the following categories of exporters   
         has been allowed:

i) Direct & Indirect exporters covered, by DTRE scheme.

ii) Goods temporarily imported into Pakistan for the purpose of re-export.

iii) Manufacturing bonds.

Further, WHT on import of cotton lint, cotton yarn, and fabrics will be subjected to 1% WHT. The anomaly has been removed by bringing it at par with five (5) zero-rated sectors in Sales Tax.


5. Earlier, the senior citizens of age 60 and above were allowed a 50% rebate on tax liability if their total taxable income was upto Rs. 400,000. This limit has been increased to RS. 500, 000 to give relief to the senior citizens.

6. Earlier fixed tax was imposed on builders and developers. Now this tax has been withdrawn as income tax and the Federal Excise duty on services of property developers and builders has been levied.

Several other changes of editorial nature have also been made on the basis of the discussion in the Parliament on the Bill.
 

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)

It has been decided that FBR Helpline will remain open from 09.00 A.M. to 09.00 P.M. from 11th to 30th June, 2008 to facilitate the taxpayers regarding their queries about taxation measures / changes in respect of Income Tax, Customs, Sales Tax and Federal Excise proposed in the Federal Budget 2008- 2009.
Officers and staff will be available at FBR Helpline to answer queries on budgetary measures immediately after the conclusion of Budget Speech. Taxpayers can seek help and assistance at FBR’s Toll-Free Help line number 0800-00 227 and 051-111-227-227. FBR’s website www.fbr.gov.pk  is also accessible for free downloading of Budget 2008-2009 after the conclusion of Budget Speech on 11th June 2008.

- Signed-
(Khawar Khurshid Butt)
Member. FATE / Official Spokesman, FBR

-Sd-
Usman Khalid Mirza
Member (Direct Taxes)

FBR has surpassed the revenue target of Rs. 84.8 billion assigned for May 2008.

2. The provisional tax collection for May 2008 has achieved an overall growth of 30.3%. The net collection during May 2008 has been Rs. 86 billion against Rs. 66 billion during May 2007. The revenue on account of direct taxes has risen from Rs. 20 billion last May to Rs. 24.1 billion in May 2008 reflecting a growth of 20.3%. The sales tax collection has jumped to Rs. 38.5 billion as against Rs. 27.4 billion of last May showing a growth of 40.3%. While sales tax on import stage has increased by 16.8%, the increase in the domestic component is 76%. The collection of federal excise duties has increased by 15.9%, increasing from Rs. 7.3 billion to Rs. 8.5 billion. Finally, a healthy growth of 33.3% has been recorded in the collection of customs duties where the net receipts have reached Rs. 14.9 billion against Rs. 11.2 billion of last May.

3. The July – May collection of FBR now stands at Rs. 849.6 billion as against Rs. 722.5 billion of corresponding period of last year showing an overall growth of 17.6%.

4. The provisional figures for the month of May are expected to increase further during the next few days.

-Sd-
(Khawar Khurshid Butt)
Member (FATE)
Official Spokesman of Federal Board of Revenue
Dated: 02-06-2008

-Sd-
(Muhammad Hafeez Mughal)
Secretary (PR)