The Federal Board of Revenue (FBR) and State Administration of Taxation (SAT) China have decided to establish a Joint Tax Working Group for resolving tax issues of nine Chinese enterprises operating in Pakistan and putting in place a mechanism for dispute resolution under the China-Pakistan Economic Corridor (CPEC).
Sources told Business Recorder here on Saturday that the FBR fully endorsed the proposal of SAT China for establishing a Joint Tax Working Group of both tax authorities for resolving tax-related disputes under the CPEC projects.
Giving background of the issue, sources said that the decision is being implemented in the light of a past meeting of the officers of FBR and the SAT China held here at FBR headquarters. This meeting was presided over by Chairman FBR/Secretary Revenue Division Tariq Pasha and attended by officers from both the tax authorities and representatives of Chinese enterprises in Pakistan.
The meeting was organized in order to address various tax issues of the Chinese enterprises arising in Pakistan against the backdrop of the CPEC, which has stepped onto a fast track since 2014. In this regard, the SAT China had earlier communicated a list of certain tax issues pertaining to nine Chinese enterprises operating in Pakistan.
The chairman FBR assured the participants that FBR will take all necessary steps to facilitate the enterprises and address their tax issues in accordance with the tax laws. Wang Gengsheng, Deputy Director General of international Taxes of SAT China, thanked the chairman FBR for the warm welcome extended to the Chinese delegation. For resolving the tax issues and putting in place a mechanism for dispute resolution, Wang proposed that a Joint Tax Working Group of both the tax authorities may be established. He stressed upon common understanding of the issues and better communication amongst the two tax authorities. Wang underscored that as both the countries proceed with the CEPEC projects, there will always be issues concerning taxation. In this backdrop he stressed that it is imperative to improve mutual understanding in order to address the issues more promptly.
The chairman FBR fully endorsed the proposal for establishment of a Joint Working Group between the two tax authorities and suggested that from Pakistan side, the proposed group will be headed by Dr Muhammad Iqbal, Member (IR-Policy), whereas Mohammad Iqbal, Chief (International Taxes), will also be member of the group. From Chinese side, Wang suggested that on his return to China, he will report to the Commissioner SAT and subsequently send the nominations for the Joint Working Group. As soon as nominations from both the sides are complete, the Joint Tax Working Group will be established. The chairman FBR emphasized the need for a frequent interaction and co-ordination in the Joint Working Group, preferably on monthly basis, to address the tax issues in an efficient and prompt manner.
In the past meeting, the existing cases for dispute resolution, as already communicated by the SAT China, were discussed threadbare in the meeting. However, since representatives from all the concerned Chinese enterprises were not present on the occasion, the Chinese side proposed to defer some of the cases for discussion. The chairman FBR apprised the participants of the issues. He stated that all-out efforts shall be made by the FBR to facilitate the Chinese enterprises and remove the bottleneck in this regard, if any. The chairman FBR informed that most of the cases of the Chinese enterprises are at different levels of appellate authorities and to facilitate the taxpayers, the FBR is helping them for early hearing of the cases. The FBR chairman further informed the participants that FBR is also considering co-locating the jurisdiction of all the Chinese enterprises working on the CEPC projects in one office for the facilitation of the Chinese enterprises. In this regard, he suggested that SAT China may provide the list of the Chinese enterprises working on the CEPC projects in Pakistan. Wang appreciated the level of understanding that the FBR expressed for the issues and the facilitation it offered for the purpose.