Addressing a press conference here at the FBR House on Wednesday, Zaidi said the massive gap exists between industrial/manufacturers consumers of electricity/gas and actual units registered with the sales tax department.
He said that the fresh tax amnesty scheme 2019 provided opportunity to clear liabilities of sales tax by paying 2 percent tax. They are intended to introduce legislation to stop misuse of existing system in the upcoming budget in case of those who will not prefer to come into tax system after July 1, 2019.
The FBR chairman said that there are 341,000 industrial consumers of electricity within the category of manufacturers and 7,000 industrial consumers of gas. Total number of sales tax registered manufactures stand at 38,000. There is a huge gap between the industrial consumers of electricity/gas and actual number of registered sales taxpayers.
He said that it is high time for those having industrial electricity connections to get themselves registered with FBR and take benefit of the Asset Declaration Scheme.
Zaidi said that new Assets Declaration Scheme 2019 is different from past schemes because the new scheme has introduced a new provision to clear sales tax liabilities on payment of 2 percent tax. The people can legalise their undeclared sales on payment of 2 percent.
The industrial manufacturers have been provided an opportunity to legalise their sales tax liabilities on payment of 2 percent tax under the Assets Declaration Ordinance 2019. If they will not come into the tax net, the FBR will do necessary legislation in budget (2019-20) to document them from July 1, 2019.
"I request the industrial consumers of electricity to legalise their sales tax affairs under the Assets Declaration Ordinance 2019. However, we would ensure their voluntary compliance by improving the current environment," Zaidi said.
A proposal is under consideration to revise the definition/threshold of the cottage industry in budget to check the misuse of sales tax registration of manufacturers, said the FBR chairman.
A senior FBR official confirmed to Business Recorder that the Sales Tax Rules would be amended in budget (2019-20) to change the procedure for registration of manufacturers, facility of temporary registration and definition of cottage industry.
Presently, "cottage industry" means a manufacturer whose annual turnover from taxable supplies made in any tax period during the last 12 months ending any tax period does not exceed Rs 10 million or whose annual utility bills during the last 12 months ending any tax period do not exceed Rs 800,000.
The Assets Declaration Scheme 2019 has provided an opportunity to the manufactures having industrial electricity connections to legalise their sales and get register with the sale tax department. Otherwise, legislation would be done to document them from July 1, 2019.
In this connection, the FBR is also coordinating with the power distributing companies (DISCOs) for the registration of the potential manufacturers having industrial connection of electricity, but not registered with the sales tax department.
He said that the business associations are demanding to increase the sales tax registration threshold. Business community has also approached the FBR for revision in the definition of cottage industry. To a query, Shabbar Zaidi said that the FBR is not considering any scheme for legalisation of non-duty paid smuggled vehicles. Sharing measures to broaden the tax-base, the FBR chairman said that the FBR has written a letter to the chairman Securities and Exchange Commission of Pakistan (SECP) about the registration/reconciliation of data of registered companies. The SECP has around 80,000 to 100,000 registered companies and below 50,000 are actually filing their returns with the FBR. Whether the company has income or not, whether company is in operation or not, it is mandatory for the company to file their returns, he said.
The FBR and SECP will have to take decision for the registration of these companies with the FBR. Either the SECP should exclude these companies from its data or FBR should register these companies having registration with the SECP.
About powers on freezing bank accounts of taxpayers, Shabbar Zaidi said that the tax officials are still empowered to attach bank accounts of the taxpayers as per law. However, the procedure has been streamlined with the objective to intimate prior information of 24 hours before attachment of bank accounts.
