Sindh to collect Rs50mln in taxes from event managers

KARACHI: The Sindh government eyes Rs50 million in taxes on services by first-time bringing event management companies into the tax net during the current fiscal year, officials said on Saturday.

The officials said the Sindh Revenue Board (SRB) has already issued notices to seven companies, organising fairs and exhibitions in a bid to collect 14 percent sales tax on their services.

“In the initial phase, the tax target (for this fiscal year) was set at Rs50 million,” an official said.   

In July-February, the Sindh government collected Rs37 billion through the sales tax on services, which are collected from all the terminal operators, banks and financial institutions, insurance firms and telecom operators. 

“The SRB is working to find more tax avenues and it is planning to raise Rs100 billion as sales tax on services in 2017/18,” the official said. “We have already set a mechanism to collect taxes from the said companies.”

The board has also planned to bring public relation agencies and media service providers involved in local and international assignments into the tax net.

Even management companies sell thousands of square meters spaces for exhibitions and while they earn millions of rupees they don’t pay taxes on the services.

Likewise, public relations firms rake in good revenue through media consultancy and lobbying, but they also don’t pay taxes on services. 

Official sources said these firms have already started lobbying to avoid taxes on their services.

But, the SRB is determined to take strict action against all the tax defaulters, the sources added.

“We are facing constant resistance to our tax collection drive from various segments. Several people have moved the court for the tax relief,” an official said.

“Despite all the challenges, the tax revenue is increasing and a significant growth in the tax collection has been witnessed in all the sectors.”

The officials attributed the increase in tax collection to reduction in tax rates.

The provincial government reduced the sales tax on telecommunication services to 18 percent from 19.5 percent, while the tax rates on other services were brought down to 14 percent from 15 percent earlier.

“The rate cut always has a dynamic effect on increasing tax yield as it augments tax compliance and cost of evasion, boosts taxpayers' confidence and induces correct declaration of turnover,” an official said. “(Besides), the proximity of taxpayers with the tax administration encourages prompt responses and increases interaction and better understanding with least cost on travel and time.”