Franchise services: FBR tells RTOs and LTUs to ensure FED collection as per law

The Federal Board of Revenue (FBR) has directed all Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) to certify that Federal Excise Duty (FED) on franchise services is being charged properly, as specified under the law. It is learnt on Monday that the FBR has issued instructions to the LTUs and RTOs to ensure proper collection of the FED on franchise services across the country.
The FBR said a complaint pointing out departmental omission to charge and recover FED against payment of royalty, fees for technical services, franchises, etc, from (5) companies assessed in Large Taxpayers Unit, Islamabad was filed by a consultant company. The five companies referred to by the complainant included three oil and gas exploration companies, a telecom company and a tobacco company.
While disposing of the aforesaid complaint, the Federal Tax Ombudsman directed Chief Commissioner's, LTUs, "to have third party audit by engaging services of the reputed chartered Accounts for ascertainment of the difference in figures and evasion of tax, if any, and provide comprehensive report on the action proposed to be taken," the FTO added.
In the review order of the Federal Tax Ombudsman, the recommendations to the FBR were amended vide Order Rev-76/2010 in C-79/KH1/FE (01)/424/2010/IMP dated 12.09.2014, which is as follows:
"The FBR is directed to ensure that the Federal Excise Duty is properly charged/collected on franchise services as per law by all LTUs and RTOs, as applicable; figures of franchised services receipts are declared in income tax returns by the taxpayers as per law and compliance is reported within 30 days," the FTO directions to the FBR said.
Accordingly, the amended decision of FTO was circulated vide Board's letter dated 13.11.2014 and a certificate has been sought on top priority that Federal Excise Duty is properly charged/collected on franchise services as per law by all LTUs and RTOs as applicable, the FBR said. Since compliance is required to be made within 30 days which have already expired and the FTO has issued a notice for fresh hearing, it is requested that the requisite certificate stating that Federal Excise Duty is properly charged/collected on franchise services as per law may be furnished immediately, the FBR added.