Bank transactions: government decides to reduce contentious WHT to 0.3 percent

The government has decided to reduce 0.6 percent withholding tax on bank transactions of non-filers to 0.3 percent for a period of three months up to September 30, 2015, fix turnover tax on sector to sector basis and provide an opportunity to non-filer traders to file their returns. Talking to media after reaching an agreement with traders at the FBR House here on Thursday, Finance Minister Ishaq Dar said that after September 30, 2015 non-filers would be required to pay full tax if they did not file their tax returns.
Finance Minster further stated that the President would issue an Ordinance in one to two days for a decrease in withholding tax rate to 0.3 per cent. Dar stated that subsequently, government would get the Ordinance endorsed from the Parliament within 120 days. Under the agreement between business community and FBR in a meeting held in FBR HQ on July 9, 2015, it has been decided that 0.3% WHT is adjustable for non-filers upto September 30, 2015. Secondly, the non-filers would file their returns on September 30, 2015 for period ending June 30, 2015. Thirdly, the extension of schedule-III of the Sales Tax Act 1990 to be undertaken/considered on sector to sector basis for sales tax. Fourthly, the turnover tax to be agreed, according to various trade and sectors, between FPCCI & FBR. Fifthly, the FBR and business community shall hold in depth and meaningful parleys to resolve the issues related to filing of returns.
According to sources, the Federal Board of Revenue (FBR) will determine the extension of Third Schedule of the Sales Tax Act 1990 on sector to sector basis for sales tax collection. The sales tax would be collected on printed retail prices from items to be included in the said Schedule. The FBR would decide about the ratio of turnover tax on a sector-to-sector basis. There was an apprehension the traders that if they declare all their accounts, their turnover would increase which would raise the ratio of turnover tax. It has been decided that the turnover tax would be fixed (according to various trades and sectors) with consultations between representatives of business community and FBR.
Sources said that full credit goes to Finance Minister for a breakthrough in discussion with traders as he rushed to Federal Board of Revenue (FBR) straight from Executive Committee of National Economic Council (ECNEC) meeting after hearing the reports of a deadlock between tax authorities and traders on the issue of 0.6 per cent withholding tax. On Wednesday, the Finance Minister constituted a 19- members committee after initial talks with traders on the first round of discussion of the committee took place in the FBR on Thursday.
The government announced 0.6 per cent withholding tax for banking transaction of no filers and traders had threatened to go on a countrywide protest against the tax. Finance Minister invited representatives of traders and business community for talks on the issue. Chief Minister Shahbaz Sharif had reportedly spoken to Prime Minister in Norway and Finance Minister Ishaq Dar in Islamabad on the issue and informed them about the business community''s reservations on tax in banking transactions even before the first meeting of the committee and requested them to take steps towards easing their concerns.
A Press Release issued by the Ministry of Finance said: Members of the Business community and the Federal Board of Revenue here on Thursday agreed for adjusting 0.3 percent Withholding Tax (WHT) for non-filers up to September 30, 2015. The agreement between the two sides calls upon non-filers to file their returns on or before 30th September, 2015 for period ending 30th June 2015.
SAPM on Revenue, Haroon Akhtar, Chairman FBR, Tariq Bajwa, Mr Naeem Meer, President Anjuman Tajiran, President FPCCI, Mian Idress, President Karachi Chamber of Commerce & Industries, Mr Iftikahr A Vohra, President RWP Chamber of Commerce & Industries Syed Asad Mashadi, President KP Chamber of Commerce Fuad Ishaq, President Islamaqbd Chamber of Commerce, Muzammil Hussain Sabri, MNAs and prominent business leaders, Mian Abdul Mannan, Pervez Malik, and other representatives of the business community were present on the occasion.
Federal Minister for Finance, Senator Muhammad Ishaq Dar shared details of the meeting with media after chairing meeting of the 19- member committee comprising representatives of traders, bsuinessmen and Chambers of Commerce and Industries at FBR on Friday. Finance Minister said that decision about 0.6% withholding tax was part of the Finance Bill and had a legal and constitutional binding. For any relaxation in it, the matter had to be taken to the parliament. He said an ordinance would first be issued regarding withholding tax and then it would be taken up by the parliament.
The Minister also stated that extension of schedule-III would be considered on a sector-to-sector basis for sales tax between business representatives and FBR. It was also decided that turnover tax would be decided (according to various trades and sectors) with consultations between representatives of business community and FBR. The Minister further said that the 19-member committee will work on these issues and hopefully finalise its recommendations by the end of August.
The Minister further told mediapersons that FBR and business community would hold in-depth talks to resolve the issues related to filing of returns. Minister Dar lauded the hard work of all the members of the committee (formed on Wednesday) to arrive at this agreement. He appreciated the resolve of the business community to contribute to the national exchequer. The Minister said he had always voiced for a charter of economy and still advocates this idea for economic good of the country. All the representatives of business community present on the occasion thanked the Finance Minister for his interest and support to resolve the issue regarding withholding tax on banking transactions and other FBR-related matters.