KPRA in starting its operations from today according to reports. The ceremony is expected to take place in Peshawar today. KPRA was already collecting sales tax on services from July 01, 2103 from all registered tax payers who were providing services in KPK and are required to deposit tax as per KPK Finance Act, 2013.
All the tax payers who are currently registered with Federal Board of Revenue for sales tax purposes are required to e-enroll with KPRA for filing and payment of taxes.
KPRA gained legal powers to collect sales tax on services from July 1, 2013. The services include hotels, marriage halls, lawns/clubs, beauty parlours, 59 types of telecommunication services, customs agents, ship chandlers, stevedores, advertisements on TV and radio, courier services, insurance services and services provided by stock brokers, banking companies or non-banking financial institutions.
Provisional collection of sales tax for the month of July, 2013 reached up to the mark of Rs. 130 billion as compared to Rs. 109 billion for the month of July, 2012 showing an increase of 21 billion which of course reflects a positive trend towards revenue collection.
Business Circle of Pakistan rejected the proposal made by Federal Board of Revenue to use Sales Tax invoices as Gate passes that are given upon clearance of manufactured goods from factory. They were of the view that a manufacturer could have multiple sites and therefore normally issues several gate passes to same client. However in case of invoice single invoice is raised for single delivery although from multiple sites.
Adding to this sales tax invoices are issued at the time of payment or at the time of delivery of goods whichever is earlier, however gate passes are issued on other occasions as well just for example on even delivery of goods as sample.
They also objected on the requirement of FBR to maintain record of inward, outward gate passes as well as record of transport receipts for six years, because it was argued that for some companies such record would cover huge volume of space and is really hard to manage.
As part of the Tax Broadening measures FBR issued notices to about 10,000 unregistered persons for the period up to 30th of July, 2013.
In second phase notices to another 10,000 persons will be issued during the month of August, 2013.
The measure of broadening tax base has so far worked well for FBR and plenty of such persons has started the compliance after getting the notices.
FBR is expected to take measures to stop issuing of permanent establishment certificates to foreigners in Pakistan without proper scrutiny.
It was brought into the notice of ITNA news wing that in order to facilitate foreigners operating from Pakistan no certificate from the concerned commissioner as required under section 2(41) should be required.
A clarification was also issued in this regard by Federal Board of Revenue by FBR vide C.No 1(31)WHT/2012/edox-147873-R dated 16.11.2012 whereby it was clearly mentioned that foreigners operating in Pakistan are not required to obtain certificate of Permanent Establishment for commissioner.
However some of the field officers are clearly violating this circular by issuing notices which is to be taken up by Federal Board of revenue shortly.
FBR has identified reasons behind low collection of Income taxes some of the major reasons are energy crisis, leakages in tax system, transfer of sales tax collection to provinces etc.
Interestingly the export sector is doing well for the month of July, 2013 and a reliable exporter told ITNA news that slight decrease in exports is due to the Holy Month of Ramzan otherwise things are so fare quite positive for this sector.
Power shortage is also identified as one of the major cause in decrease of sales tax collection as industries are receiving only 3 days a week and 14 hours power.