A meeting of the Senate Standing Committee on Finance Wednesday rejected the proposed issuance of provisional assessment and recovery as well as seizure of undisclosed offshore assets with a majority vote. A meeting of the Senate Standing Committee on Finance presided over by Senator Farooq H Naek commenced discussions on the Supplementary Finance (Second Amendment) Bill 2019 presented by the Finance Minister Asad Umar in the National Assembly on January 23, 2019. The committee also rejected the proposal that allows non-filers to procure up to 1300 CC vehicles and recommended that non-filers should be allowed to purchase vehicles of up to 800cc.
State Minister for Revenue Hammad Azhar told the committee that a pilot project for retail sector to register them in the tax net will be launched through simplification of tax return and reduction in tax rate. The minister said that small traders, especially shopkeepers, are not coming into tax net because of fear of harassment at the hands of tax authorities.
Additionally, retail sector's concerns are that process for filing of tax returns is very cumbersome and they cannot afford to hire the services of lawyers, and that tax rates are higher.
Azhar added the government has decided to charge a fixed tax rate on retail sector either on their turnover or some kind of categorisation would be undertaken. "We have also assured them if they come into tax net, the tax paid by them would be their final liability and they would be exempted from audit."
He also told the committee that most of the industries have shifted abroad, especially home appliances and shoe industries were relocated to China, and duty reduction in the supplementary finance bill was proposed keeping this aspect in view.
Earlier, when committee met in the morning session, its proceedings were postponed until afternoon in protest over absence of finance minister, secretary finance and chairman Federal Board of Revenue (FBR) to provide time and opportunity to the senior officials to turn up in the meeting.
Minister of State for Revenue Hammad Azhar, chairman FBR and special secretary finance rushed to the committee meeting after it was conveyed to them that the committee has decided not to start discussions on the Supplementary Finance (Second Amendment) Bill in their absence.
As the discussion started on the proposal on provisional assessment of offshore assets, FBR Member Inland Revenue Policy Dr Hamid Attiq Sarwar told the committee that the government received details of 152,000 accounts from 26 foreign jurisdictions and the amendment in the law was proposed to enable tax authorities for taking speedy action on the information before the money is shifted from those accounts.
He further stated that addition of section of provisional assessment does not mean that those accounts holders would have exemption from Federal Investigation Agency (FIA) and Anti-Money Laundering (AML) Laws.
Azhar informed the committee that under the new amendment of offshore assets, the tax authorities will submit a request for freezing of assets on detection of concealed assets aboard. The FBR will be in a position to attach their local banks accounts to recover the tax liability.
The committee also sought opinion of the Law Division on it and a Law Division official stated that "by making tax payment of a concealed asset, a person cannot be exonerated from criminal liabilities." However, most of the committee members were not in favour on new section on offshore account, and the committee through voting rejected the proposal with a majority vote.
The committee was informed that mobile phones worth Rs 190 billion are being smuggled into the country and registration of mobile phones and proposed taxation measure would provide Rs 50 billion revenue annually.
To a query, the committee was informed that the banks have agreed to provide information of those accountholders where the transaction of more than Rs 10 million per month took place.
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