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Business

November 11, 2015

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Service providers asked to intimate authorities of facility use by 15th

KARACHI: The Federal Board of Revenue (FBR) has asked taxpayers from the services sector to intimate the tax authorities by the mid of November about their willingness to avail the revised turnover tax rate and failing so will keep them under the existing rate structure, sources said on Tuesday.
These taxpayers are required to intimate the tax authorities by November 15 if they are willing to avail the facility of two percent tax, the reduced rate of income tax, said the sources at the Regional Tax Office (RTO) Karachi.
The federal government, in the budget of the current 2015/16 fiscal year, made the tax liability as minimum tax and disallowed adjustments. The service providers resented and compelled the government to review its decision.
On October 31, a presidential order was promulgated following detailed discussions between the government and the industry’s stakeholders.
Under the ordinance, services sectors were offered an option of advance tax equal to two percent of their total turnover of the corresponding period of the immediately preceding tax year.
The sources said the taxpayers are required to submit their account to the concerned tax officials within a month for auditing of income tax affairs of the tax year 2016.
“If they couldn’t inform us till the deadline then they will be treated under the prevailing tax rates,” said an official.
The government has given the reduced tax rate facility to 12 services categories, including freight forwarding, air cargo, courier, manpower outsourcing, hotel, security guard, software development, tracking, advertising (not print or electronic media), share registrar, engineering and car rental.
The RTO sources said other services providers are approaching the tax department to benefit from the scheme.
Under the ordinance, the excess amount of paid tax is allowed for adjustment and in those cases where the excess tax is not wholly adjusted the adjusted amount will be

carried forward to the following tax year.
“The facility can be abolished only through an ordinance or parliament as it was defined in the ordinance,” said the official. Tax practitioners, however, have reservations about the scheme.
They said the taxpayers of particular categories, who have already filed for exemptions certificate and were rejected, are unable to file a fresh application as the online system shows that the filing application task is complete.

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