FBR proposes withdrawal of tax incentive on remittances

KARACHI: The tax authorities planned tougher steps to curb cleansing of undeclared asserts or black money through overseas remittances and has decided to withdraw tax incentives on transfer of funds from abroad, sources said on Thursday.
The Prevention Committee on the Federal Board on Revenue (FBR), formed under the supervision of the National Accountability Bureau (NAB), has agreed “the provisions of relaxation under tax laws” on foreign remittances should be eliminated, they added.
“The committee has agreed to withdraw Section 111(4) of the Income Tax Ordinance, 2001 where massive level of money is being whitened without any benefit to the national exchequer,” said the meeting documents of the committee, held on March 16, 2015.
Section 111 of the ordinance treats with unexplained or concealed income; however, its sub-section 4 does not fall under the ambit, which is: “to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect.”
The meeting reviewed the progress on implementation status of enterprise resource plan in the FBR, which was presented by Member IT FBR.
The prevention committee is making efforts to ensure that ERP software goes online by July 1, 2015.
The committee has been formed by the NAB on the basis of report by Transparency International Pakistan in which the annual leakage of over Rs2,000 billion was identified in 2013 and the recommendations were given to the Supreme Court.
The ambit of the committee is to identify the lapses in the rules, regulations and procedures of the FBR and also to recommend measures to plug heavy leakages caused by corrupt practices.
The committee comprises all stakeholders as members with different backgrounds.
The meeting decided the use of automation with reliable and efficient system to reduce discretion and achieve transparency, besides separation of regulatory and implementation functions from the revenue authority.
It is also decided that bearer certificates and prize bonds should be registered and should be made as track-able. It is agreed to ensure that collectorate rate of property should be at par with the open market and the sale of property should be taxed on market value under reduced rates.
It was suggested that rational general sales tax rate should be introduced at all stages with elimination of refunds, besides elimination of all exemptions allowed through various SROs.
The committee recommended introduction of foolproof system to collect tax from professionals, traders and retailers.
The meeting also discussed the Afghan transit trade and it was agreed to review the duties under this regime. Furthermore, Customs controls should be improved for transparency and fairness.