Karachi Stock Exchange (KSE) has proposed the Federal Board of Revenue (FBR) that the tax credit under Income Tax Ordinance 2001 equal to 15 percent of tax payable to the companies for opting for enlistment in any registered stock exchange in Pakistan be allowed up-to five year from the 'tax year' in which company is listed.
Sources told Business Recorder here on Thursday that under Finance Act 2011, a tax credit equal to 15 percent of the tax payable was allowed for the tax year in which a company opts for enlistment in any registered stock exchange in Pakistan, KSE consider this tax credit very insignificant. Therefore, KSE has proposed that the tax credit under section 65-C of the Ordinance equal to 15 percent of the tax payable to the companies for opting for enlistment in any registered stock exchange in Pakistan be allowed up-to five year from the tax year in which company is listed.
KSE proposed that as per section 86(7) of the Companies Ordinance, 1984, if whole or any part of the shares offered under sub-section (1) is declined or is not subscribed, the directors may allot and issue such shares in such manner as they may deem fit. It means the directors may allot/sell the shares offered to the existing shareholders in any manner they deem fit, if declined or not subscribed by shareholders, at cost they deem fit.
Section 13 of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008 states that the price shall be determined according to the manner given below: Minimum offer price of the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008: "(1) If the shares are frequently traded the public announcement of offer to acquire shares under section 5 or section 6 of the Ordinance shall be at the price which is not lower than, -
(a) the negotiated weighted average price under a share purchase agreement for the acquisition of voting shares of the target company; (b) the highest price paid by the acquirer or persons acting in concert with the acquirer for acquiring the voting shares of target company during six months prior to the date of public announcement of offer;
(c) the average share price of target company as quoted on the stock exchange during the last six months: (d) the average share price of target company as quoted on the stock exchange during four weeks preceding the date of public announcement of intention; or
(e) the price per share calculated on the basis of net assets valued by a valuer whose name appears on the list of SBP approved list of valuers. (2) If the shares are not frequently traded, the public announcement of offer to acquire shares under section 5 or section 6 of the Ordinance shall be at the price which is not lower than, -
(a) the negotiated weighted average price under a share purchase agreement for the acquisition of voting shares of the target company; (b) the highest price paid by the acquirer or persons acting in concert with the acquirer for acquiring the voting shares of target company during six months prior to the date of public announcement of offer; or
( c) the price per share calculated on the basis of net assets valued, not earlier than six months before the date of such valuation, by a valuer whose name appears on the list of SBP approved list of valuers.
Explanation:- For the purpose of this Regulation, shares shall be deemed to be frequently traded if they have been traded for at least 80 percent of the trading days during six months prior to the date of public announcement of offer and their average daily trading volume in the ready market is not less than 0.5 percent of its free float or 100,000 shares whichever is higher.
It is proposed that the provision of section 13 of the listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2008 shall also apply to directors/sponsors in exercising powers under section 86(7) of Companies Ordinance, 1984 for acquisition of unsubscribed right shares, KSE proposed. KSE has further proposed that under section 122 of the Ordinance: the Commissioner is empowered to amend an assessment order as well as any amended assessment order on the basis of definite information acquired from an audit or otherwise during the period of 5 years after the end of the Financial Year in which the original assessment is issued.
Accordingly, the tax authorities may amend assessment order frequently thereby delaying the finalisation of assessment orders of particular tax year. At the times of amendment of tax orders, there may be add backs which may be disputed by the taxpayer and causing a wide gap between the taxpayer and the tax authorities leading to greater fear of the taxman and unnecessary litigation.
Further, the re-amending of tax orders by the tax authority creates disturbance with the system and the natural cohesiveness that one should have with tax authorities is severely jolted. It is therefore proposed that an assessment order once amended should not be reamended except under section 122(5) of the Ordinance and period for amending assessment should be reduced to 3 tax years, KSE added.
To provide the taxpayer an easy and efficient dispute resolution mechanism and to liquidate arrears of tax an alternative dispute resolution forum comprising of an officer of inland Revenue and two persons from a panel comprising of chartered or cost accountants, advocates, income tax practitioner or reputable tax payers has been introduced in the Income Tax Ordinance 2001.
The ADRC is an independent body because of the nature of its composition and thus has a very strong element of credibility being trustworthy and totally unbiased. Since it comprises of officer of Inland Revenue and other experts from public/private sector, they have a thorough understanding of the tax laws and its practicality and therefore the recommendations of the ADRC will have strength and will have to be considered seriously by the Board. Therefore, in order to increase the effectiveness of the ADRC, its recommendatory nature may have to be changed to an authoritative nature providing absolute decisions. It is proposed that ADRC decisions be made binding and accepted by the FBR, KSE proposed.