Some taxation measures: No final decision taken on reversal: FBR

ISLAMABAD: Federal Board of Revenue (FBR) Chairman Amjed Zubair Tiwana said Thursday that so far government the has not taken any final decision on the reversal of some taxation measures including increased taxation on salaried class through the Finance Bill 2024.

During an informal chat with the media here at the Parliament House on Thursday, the FBR chairman was responding to queries about whether the government would partially withdraw the enhanced taxation on the salaried class.

He did not confirm about the revision of the proposed slabs under the Finance Bill 2024.

To a question that there are reports of some relaxation to the salaried class, the FBR chairman said, “Till now, no decision has been taken in this regard.”

Meanwhile, the Senate Standing Committee on Finance has directed the FBR to sit together with the telecom sector and review the proposed measures of 75 per cent advance tax collection on mobile services to non-filers and penalising the enablers (telecom sector) of the Income Tax General Orders.

The telecom operators informed the committee that if the sector is burdened with unnecessary additional tax collection measures, frivolous legal disputes will arise which unfortunately may lead to the final exit of all foreign direct investment in the telecom sector in Pakistan.

Presently, non-filers are subjected to higher tax rates to make their cost of doing business higher as well as to compel them to file their returns. The authorities have proposed 75 per cent withholding (W.H.T) tax for late tax filers.

The telecom operators do not have any system provisioning to cater for this new development as currently at large W.H.T is charged 15 per cent across all individuals irrespective of filer or non-filer. In light of recent Income Tax General Order 1 of 2024 where the government has directed to block SIMS, the first line of defence will be to charge 75 per cent W.H.T and then proceed towards blocking of sims and disconnection of their utility connections. Furthermore, it is proposed to ban travel of individuals which will be communicated by the relevant authorities.

The telecom infrastructure is not equipped to handle multiple tax rates, leading to operational inefficiencies and increased consumer costs.

In case of the Income Tax General Order, where implementing agencies do not block SIMS or mobile phones or fail to disconnect utility connections or comply with the newly introduced bar on foreign travel, a penalty of Rs100 million will be imposed upon the implementing agency for first default andRs.200 million for each subsequent default.

Penalties and prosecutions are proposed for entities failing to fully disclose relevant particulars or submitting incomplete information in their tax returns or the failure to file return on discontinuation of their business. They cannot and must not be imposed to penalise compliant taxpayers who are mere instruments in enabling the Authorities to achieve its compliance targets.

Such punitive measures will only breed more litigation in the courts and ultimately compromise any objective of increasing the tax-to-GDP ratio. We recommend collaborative efforts to raise tax compliance awareness and a gradual implementation of new policies, the telecom industry added.

Copyright Business Recorder, 2024