President Arif Alvi has issued new tax regulations that allow officials to disconnect mobile phones/SIM cards, electricity, and gas lines of those who are obligated to file tax returns but do not show on the Active Taxpayer List (ATL).
The president signed the Tax Laws (Third Amendment) Ordinance 2021, which authorizes the Federal Board of Revenue (FBR) to exchange data with the National Database and Registration Authority (NADRA) in order to widen the tax net.
According to the ordinance, NADRA must share its records and any information accessible or maintained by it with the Board.
The ordinance imposes severe fines on anyone who fails to file tax returns. The Ordinance includes a penalty of Rs 1,000/- each day of noncompliance.
The government has also increased the penalty for tier-1 merchants who are not integrated with the FBR and levied an extra advance tax on professionals using home power connections ranging from 5% to 35%.
The Ordinance defines professions such as accountants, attorneys, physicians, dentists, health experts, engineers, architects, information technology professionals, tutors, trainers, and others who provide services.
Sales tax rules in the Ordinance
The government has given fat-filled milk, including those sold in retail packaging under a brand name or trademark, a sales tax exemption.
The Ordinance provides for a reduced rate of 16 percent sales tax on supplies made by POS integrated outlets where payment is made digitally; a discounted amount of 14 percent on meltable scrap imported by steel melters; a reduced rate of 5 percent on the import of electric vehicles in Completely Built-Up (CBU) condition; and a reduced rate of 16.9 percent sales tax on business supplies.
Furthermore, the government has exempted the steel and edible oil industries from further taxation.
FBR gives legal cover to foreign remittances, right of appeal to importers
The FBR has given statutory protection to foreign remittances received through foreign currency accounts of Overseas Money Service Bureaus (MSB), Exchange Companies (ECs), and Money Transfer Operators (MTOs) through the new Ordinance for granting income tax exemption under Section 111(4) of the Income Tax Ordinance, 2001.
The Tax Laws (Third) Amendment Ordinance 2021 granted importers the opportunity to appeal valuation rulings with the FBR Member Customs Policy.