SUNDAY OCTOBER 30: ST withholding rules create serious problems for importers

ISLAMABAD: The applicability of Sales Tax Special Procedure (Withholding) Rules, 2007 on the commercial importers has created serious problems for these importers, who are already paying standard rate of sales tax along with value-addition tax.
Tax experts told Business Recorder here on Saturday that the commercial importers are not only paying 16 percent standard rate of sales tax, but also paying tax on value-addition. However, additional withholding of tax under the Sales Tax Special Procedure (Withholding) Rules, 2007 has over-burdened the commercial importers.
This would result in extra taxation on the commercial importers already paying sales tax at different stages as per agreed rules and laws of the Federal Board of Revenue (FBR). Sources stated that the supplies made to persons registered with Large Taxpayers Unit (LTU) are chargeable to one percent withholding tax under notification 660(I)/2007 and commercial importers are not excluded from it.
Since significant increase on account of advance value-addition tax has been made this year and given percentage by and large would be treated as full and final tax, the supplies of commercial importer should not attract sales tax withholding provisions.
In order to remove this disparity with commercial importers and to avoid accrual of refunds on this account, importers should be included in rule 5 of the notification 660(I)/2007 pertaining to the exclusion provisions of tax withholding. The rule 5 of the Sales Tax Special Procedure (Withholding) Rules, 2007 deals with the sectors on which provisions of these rules shall not apply covering supplies and services made or rendered by the specified sectors and companies, experts added.