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10,000 retailers to be brought into tax net, Senate body told

10,000 retailers to be brought into tax net, Senate body told

ISLAMABAD: Federal Board of Revenue (FBR) Chairman Tariq Bajwa has informed the Senate Standing Committee on Finance that top 10,000 retailers will be brought into the tax net under the new scheme proposed through Finance Bill (2014-15). Briefing the Senate Standing Committee here, Mr Bajwa informed that currently more than 2.5 million retailers were operating across the country, adding that of the total number only 8,000 were registered with the Sales Tax Department.

The country’s tax collection arm’s top boss maintained that the government had initially set the target of bringing top 10,000 retailers into the tax net, adding that a new scheme for the retailers had been drafted in consultation with the relevant trade bodies of retailers. Under the new scheme, the tax department would register the retailers in chain stores, shops in air-conditioned buildings and those accepting credit and debit cards with the tax department while a two tier regimes for sales tax has been proposed for retailers. He revealed that the first tier would be comprise of retailers who are part of national or international chains, or are located in air-conditioned shopping malls, or having credit or debit card machines, or having electricity bill exceeding Rs50,000 per month for the past 12 months. They will be required to pay sales tax under the normal regime and to install Electronic Cash Registers. The remaining retailers will fall in the second tier, who will be charged sales tax through their electricity bills at the following rates – 5 percent of monthly electricity bill up to Rs20,000 and 7.5 per cent of monthly electricity bill above Rs20,000.

The FBR chairman said that the FBR had paid income tax refund of Rs60 billion during the first 11 months of 2013-14 against Rs43.5 billion paid in the corresponding period of previous fiscal year reflecting a handsome growth of 32 per cent. When asked about tax exemptions available to the telecom sector, an FBR Member informed the committee that no exemption was available to the telecom sector. The FBR has not given any special tax treatment to the telecom sector.

On the occasion, the Senate committee members recommended that regulatory duty may be imposed at 25 percent as valorem on export of re-melted lead to save local battery manufacturing industry. The SRO 594(1)/2009 dated June 25, 2009 was amended vide SRO 578 (1)/2012 dated June 1, 2012, thereby, imposing regulatory duty at 25 percent on export of lead under DTRE scheme. The Engineering Development Board (EDB) has fixed input-output ratio of recycled lead recovery from used batteries at 100:55, whereas, the leading exporters are mis-declaring recovery of recycled lead from used batteries at 88 percent, thus evading duty on export of differential quantity of 33 percent (88pc-55pc) purchased from local market. The exporters in the DTRE are importing scrape batteries and Exporting Lead at under invoiced value, causing huge losses to national exchequer.

It was informed that at the time of export of lead, exporters declare lower weight than actual quantity exported, so that their manufacturing bond remains in surplus to scrap batteries imported. The above duty was imposed on June 1, 2012 and on August 9, 2012, within two months the provisions of SRO 594 were again invoked and regulatory duty on export of lead in the DTRE Scheme has been withdrawn.

The committee vehemently recommended that duties/taxes/GST should be withdrawn on green houses equipment, high efficiency irrigation system and solar panels and pumps. It is roughly estimated that about 40pc of Pakistan production of fruit and vegetable has been lost mainly due to lack of storage facilities. It is therefore, suggested that the National Assembly should provide tax relief on cold chain development and cold storage facilities.

Meanwhile, the FBR chairman said that the FBR will consider those persons as non-compliant taxpayers, whose names do not appear in the list of Tax Directory for imposing withholding taxes at double rates. He said the persons whose names are present in the Tax Directory are compliant taxpayers.

These persons will be subjected to normal rates of withholding taxes as per the law. The persons, whose names are not mentioned in the Tax Directory, would be considered as non-compliant taxpayers. This category of persons will be subjected to double withholding tax rates proposed through Finance Bill (2014-15), the FBR chairman added.