The Federal Board of Revenue is expected to announce a new mechanism for levying minimum tax on exporters, bringing them out of the Presumptive Tax Regime (PTR) in the coming budget (2011-12). Sources told Business Recorder here on Wednesday the FBR would devise a procedure for the exporters to pay one percent as minimum tax.
Under the proposed procedure, the effective rate of tax on total income or actual income should be zero percent during the first year. The FBR is expected to grant 80 percent rebate in total tax being calculated in the subsequent fiscal and it would be further reduced gradually on annual basis.
For example, 80 percent rebate could be systematically reduced to 60 and 40 percent in coming years. Once all kinds of exporters would be brought into the minimum tax regime, they would be liable to file the income tax returns and maintain their regular books of accounts for income tax purposes.
According to the proposal of the Revenue Advisory Council (RAC) the exporters should not be taxed under the Presumptive Tax Regime (PTR). However, one percent withholding at the time of realisation of export proceeds would be treated as minimum tax. It has been further recommended that the effective rate of tax on total income or actual income should be zero percent.