Misuse of tax incentives in tribal areas; FBR directed to devise monitoring system

The Senate Standing Committee on Finance has directed Federal Board of Revenue (FBR) to devise a monitoring system to observe and control the misuse of tax incentives granted to businesses in the erstwhile tribal areas and Malakand Division.
During the last meeting of the committee at the Parliament House, the committee was of the view that the incentives extended to the FATA, PATA and Malakand Division could be misused and inquired about the implications in case of movement of tax persons as well as companies from all over the country to the said areas.
The FBR Member IR Policy responded that misuse of the said incentives could not be possible as the operations of the services rendered must be in said areas instead of only head offices. The committee directed the FBR to devise a monitoring system in that regard to observe and control the misuse of the incentives in FATA, PATA and Malakand Division.
Regarding modalities for implementation of the Tax Relief Regime announced by the government, as promised at the time of passage of the 25th Constitutional Amendment, the chairman FBR informed the committee that a summary was placed before the cabinet for restoration of pre-merger status in FATA, PATA and Malakand Division and accordingly the cabinet decided to restore the pre-merger status. He said that a blanket exemption had been extended with respect to the sales tax as per pre-merger status, however, custom duty was on the status of already extended laws and no change was required in that regard. The Member (Customs) apprised the committee that date of June 30, 2018 was fixed for the registration of non-customs paid vehicles which was later extended up to September 30, 2018, however, a total of 122,000 vehicles were reported from FATA, PATA whereas 8,083 were reported from Malakand Division. He also gave district-wise details of the non-customs paid vehicles registered so far.
Replying to a query raised by the committee, the chairman FBR responded that no complaint was received so far regarding difficulties in registration of non-customs paid vehicles in those areas, however, the matter would be looked into and resolved in case of any complaint in the matter. The committee directed the FBR to take necessary action against the officials who are creating hitches and obstacles in the registration of non-customs paid vehicles in those areas, in case of any particular complaint, as per decision of the cabinet. The committee deferred the matter for a future meeting of the committee and decided to invite representative of the M/o SAFRON for a proper briefing on FATA situation regarding the 25th constitutional amendment.
The chairman FBR gave a comprehensive briefing on the sudden changes in customs tariffs, especially that of copper, cotton and some other items, after immediate passage of Federal Budget 2018-19 along with reasons. He said that the revised regulatory duty on imports from Afghanistan was imposed in light of the bilateral trade, however duty on import of cotton was changed on the basis of seasonal dynamics of the cotton crop as it was impossible to foresee prior to the budget exercise.
Regarding duties on copper scrap, the Member (Customs) informed that 25% regulatory duty was imposed prior to the budget on the request of All Pakistan Brass Water Manufacturers Association on the basis of availability of scrap. Later as a result of the reaction from other concerned associations, the duty was again fixed at 15%. At that juncture, the chairman FBR apprised the committee that the said changes were made in pursuance of the decision of the cabinet. The committee showed its satisfaction on the briefing given by the chairman FBR and disposed of the matter.