All imports to be taxed regardless of destination

KARACHI: The Federal Board of Revenue (FBR) on Wednesday said all the goods imported into the country were strictly subject to sales tax and federal excise duty even if their final destination was in the non-tariff territories of the country. 

“Confusion prevails whether, at the stage of import, sales tax and federal excise duty are applicable on goods meant to be consumed in the areas where laws of aforementioned levies have not been extended,” the revenue board said in a circular issued to all chief commissioners of Inland Revenue and chief collectors of customs. 

“To remove this confusion, amendments were made in the laws in the recent budget and they now clearly explain that all the items imported into the country are subject to sales tax and federal excise duty.” 

The FBR, however, made it clear that exception was available, but for only those goods, which are exempted or zero-rated under the law of the land. “The Inland Revenue offices are directed to apply changes of laws related to big retailers to broaden the base of sales tax and collect due tax from them,” the revenue body said. 

The big retailers fall under Tier-1 category, which include: a unit of a national or international chain of stores; operating in an air-conditioned shopping mall, plaza or centre, excluding kiosks; a retailer whose cumulative electricity bill during the immediately preceding twelve consecutive months exceeds rupees six hundred thousand; and a wholesaler-cum-retailer, engaged in bulk import and supply of consumer goods on wholesale basis to the retailers as well as on retail basis to the general body of the consumers. 

In the recent budget the Tier-1 retailers are required to pay sales tax at the normal rate of 17 percent; however, such retailers also have been allowed to pay sales tax at two percent of the total turnover. 

The FBR said that taxpayers had been granted automatic stay in case of recovery, where 25 percent of sales tax/federal excise duty had been paid. 

“The latest changes in the tax laws have provided automatic stay against recovery till the decision of commissioner Inland Revenue (Appeals), subject to the condition that 25 percent of the amount of above mentioned levies determined as payable under the order had been paid by the taxpayer,” the revenue body said.