SOHAIL SARFRAZ

ISLAMABAD: In a major move to increase revenue collection from importers, the government is expected to withdraw 3 percent minimum value addition sales tax on commercial importers in budget (2012-2013) and make it mandatory for them to pay 16 percent sales tax on actual value of supply from 2012-2013.

Sources told Business Recorder here on Monday that the budgetary measure of the Federal Board of Revenue (FBR) is likely to be announced through Finance Bill (2012-2013). According to the budget proposal, the importers would be liable to pay sales tax on the basis of the actual value of supply instead of minimum value addition tax. This would be instrumental in increasing revenue collection in the next fiscal year. Another major proposal is to withdrawn the existing immunity from sales tax audit of the importers as per Sales Tax Special Procedure Rules, 2007. There is no audit for the commercial importers as they pay sales tax on the basis of minimum value addition under the Sales Tax Special Procedure Rules. The FBR is planning to introduce a provision in the sales tax law to conduct audit of the importers for proper collection of sales tax. This would be only possible following withdrawal of the audit exemption available to the importers under the said procedure. Once the importers would be audited and they would start paying sales tax on the basis of value of supply, there would be increase in sales tax collection under this head from next financial year.

At present, the importers are operating under the Sales tax Special Procedure Rules, 2007. The sales tax on account of minimum value addition has been levied and collected at import stage at the prescribed rate of the value of goods in addition to the tax chargeable under section 3 of the Sales Tax Act or notification issued there under. The value addition tax paid at import stage shall form part of input tax, and the importer shall deduct the same from the output tax due for the tax period for determining his net liability. The excess of input tax over output tax shall be carried forwarded to the next tax period as provided in section 10 of the Sales Tax Act.

Under the rules, the importers paying value addition tax shall file monthly return as provided in Chapter II of the Sales Tax Rules, 2006.  The importers who do not claim any refund of excess input tax shall not be subjected to audit except with the permission of the Board.

Sources said that the said provision of the Sales Tax Special Procedure Rules would be amended to start audit of importers from 2012-2012 by withdrawing facility of sales tax payment on the basis of the minimum value addition.

It is important to mention that the registered person, if also dealing in goods other than imported goods, shall be entitled to file refund claim of excess carry forward input tax for a period.