Only one percent Pakistanis pay tax: FBR

ISLAMABAD: The Federal Board of Revenue (FBR) on Wednesday told the Senate Standing Committee on Finance that only one percent people in Pakistan pays taxes while ratio of taxpayers in India is 4 percent.

Meanwhile, after making formal protest over absence of minister and secretary unanimously, the Senate Standing Committee on Finance has rejected PTI government’s move for provisional assessment of offshore assets and disallowing tax incentives for PSL franchises for sports.

The Senate panel also recommended amendment for allowing non-filers to buy 800cc cars instead of 1300cc as proposed into finance supplementary (second amendment) bill 2019 laid down by the PTI government before the Parliament.

The panel also rejected tax cuts for banking sector from 39 to 20 percent for diverting credit line towards agriculture, SME and low cost housing and asked the FBR to come up with direct subsidy for borrowers of these three sectors.

The government informed the committee that the smuggled phones in the range of $1.5 billion were coming into Pakistan and with registration of all phones and clubbing all taxes the government could generate Rs50 billion revenues on per annum basis.

The Senate Standing Committee on Finance held its meeting under chairmanship of Farooq H Naek here at the Parliament House on Wednesday, however, the committee unanimously postponed meeting twice, first for one hour and then for two hours because Minister for Finance Asad Umar, Secretary Finance Arif Ahmed Khan and Chairman FBR were not present for participating into deliberations.

Senator Sherry Rehman and Senator Sirajul Haq criticised the non-serious attitude of the government and said that disrespect to the Parliament had become routine of this regime.

The second session of Senate panel kick-started its deliberations at 2.30 pm after participation of Minister of State for Revenues Hammad Azhar, Special Secretary Finance Umar Hameed and Chairman FBR Mohammad Jehanzeb Khan.

On the provisional assessment for offshore assets, the committee rejected the proposal with majority of 4/2 as four members including Sherry Rehman, Atteeq Shaikh, Taleh Mehmood and Imanuddin Shouqeen while Senator Mohsin Aziz and Dilawar khan supported the government’s move.

Senator Sherry Rehman said that the provisional assessment of offshore assets would regularise income. Senator Atteeq Shaikh said that it would allow FBR to move against someone without giving right of being heard.

Minister of State for Revenues Hammad Azhar said that this proposed clause would not grant indemnity from the proceedings under criminal charges under Anti Money Laundering (AML) laws or giving money trail to NAB or FIA. The FBR, he said, would go against those who possessed undeclared bank accounts with money of $10000 and above.

After rejection of proposal for provisional assessment, Senator Mohsin Aziz said why the committee rejected it and whether they wanted lenient attitude against those owning offshore assets.

On the issue of tax incentives for PSL franchises of sports, the FBR’s Member said that if this tax incentive was not provided then PSL matches would not become viable. He said the outstanding refunds of franchises stood at millions of rupees, so they required this kind of tax incentives from next fiscal year with effect from July 1, 2019. The committee rejected the proposal for franchises of sports.

The Senate panel approved abolishing 5 percent Customs Duty and granting tax exemption on newsprint but recommended for placing mechanism to avoid its selling into open market.

On issuance of promissory note for clearance of stuck up refunds, the FBR’s Member Inland Revenue Policy Hamid Ateeq Sarwar shared the FBR’s plan to clear the backlog of sales tax refunds to the tune of Rs120 billion including Rs40 billion through cash and Rs80 billion through promissory note for the period of three years with 10 percent interest rate. For using this promissory note as collateral, Senator Mohsin Aziz of PTI recommended for allowing KIBOR plus 2 percent rate for allowing businessmen to get credit line from banks against these promissory notes.

On issue of unified tax rate on import of mobile, Minister of State for Revenues Hammad Azhar said the smuggled phones in the range of Rs190 billion or $1.5 billion were coming into Pakistan so the government gave deadline for registration of IMEI number till January 15, 2019. After one month, all unregistered mobile phones would be deactivated.

“We are going to launch website on Thursday (today) for registration of mobile phones,” he added.

He said the government unified all taxes after which the tax rate on imported phone ranged from Rs400 on phone set of Rs10000 and Rs41000 on mobile phone price of over Rs150000.

The regional countries are considering replicating our system in their jurisdictions, he added.

When Senator Sherry Rehman inquired about less tax collection from services sectors, the minister of state said that there should be some fiscal responsibility as in the aftermath of 18th amendment the property, agriculture and services were in the domain of the provinces but the Center was responsible for debt repayments and other obligations.