FBR launches scru­tiny of chem­i­cal im­ports to de­tect mi­suse of zero-rated fa­cil­ity

Enterprise - - National news -

The Fed­eral Board of Rev­enue (FBR) has launched scru­tiny of all chem­i­cal im­ports to de­tect mi­suse of zero rat­ing al­lowed to five ex­port sec­tors.

Data of chem­i­cal im­ports has been re­trieved from the Cus­toms au­thor­i­ties for analysing the sup­plies in the lo­cal mar­ket. Al­most all the chem­i­cals im­ported dur­ing the last six months had availed of zero-rat­ing fa­cil­ity.

From July 1, 2016, the gov­ern­ment had rein­tro­duced the sales tax zero-rat­ing regime for five ex­port-ori­ented sec­tors, tex­tiles, leather, car­pets, sur­gi­cal and sports goods. The zero-rat­ing was re­vived on the de­mand of ex­porters on the grounds that their huge amount was stuck up in re­funds.

How­ever, the re­vival of zero-rat­ing fa­cil­ity has heav­ily im­pacted the sales tax col­lec­tion of the

FBR since July 1, 2016, while rev­enues of around os17 bil­lion had been lost due to zero-rated sales tax fa­cil­ity.

Sources in the FBR said that un­doc­u­mented size of the econ­omy is huge and it is not pos­si­ble that the en­tire im­ports of chem­i­cal had been con­sumed or sup­plied to reg­is­tered tax­pay­ers. The Fed­eral Board of Rev­enue of­fi­cial said that the goods dec­la­ra­tion of chem­i­cal im­porters would be an­a­lysed on the ba­sis of ex­emp­tion cer­tifi­cates is­sued by re­spec­tive tax de­part­ments.

Chem­i­cals had been used in many sec­tors of the econ­omy, ex­clud­ing five sec­tors; there­fore, chances of mi­suse are im­mi­nent.

A meet­ing of se­nior of­fi­cers of Pak­istan Cus­toms and In­land Rev­enue was held in the first week of Jan­uary 2017 to dis­cuss the is­sue.

Fol­low­ing the gov­ern­ment de­ci­sion, the FBR on June 30, 2016, is­sued amended SRO 112R (I) L 2011, un­der which zero-rat­ing sales tax had been al­lowed to im­port for in­house con­sump­tion by reg­is­tered man­u­fac­tur­ers of the five sec­tors; com­mer­cial im­ports at zero-rated sales tax meant for reg­is­tered per­sons in the five sec­tors; and sup­plies to reg­is­tered or un­reg­is­tered per­sons of the five sec­tors, ex­clud­ing sales of fin­ished fab­ric.

As per the law, the sale of im­ported goods will at­tract 17 per­cent when it sup­plied to per­sons out­side the five ex­port sec­tors.

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