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PM approves withdrawal of 80 income tax exemptions

Shahzaz ud din

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PM approves withdrawal of 80 income tax exemptions
Govt set to introduce Income Tax Amendment Bill in NA next week to meet IMF conditions


Shahbaz Rana March 06, 2021

atl 2021 has replaced atl 2020 that carried names of 3 12 million individuals and companies a comparison of both lists showed that over 932 000 names were missing from the new list photo file

ATL 2021 has replaced ATL 2020 that carried names of 3.12 million individuals and companies. A comparison of both lists showed that over 932,000 names were missing from the new list.. PHOTO: FILE
ISLAMABAD:
Prime Minister Imran Khan on Friday approved the introduction of Money Bill in the National Assembly next week to withdraw around 80 income tax exemptions and reform the tax laws to meet a prior action for the revival of $6 billion International Monetary Fund (IMF) programme.
The IMF has asked Pakistan to withdraw income tax exemptions worth Rs140 billion through a new legislation but the exact quantum can only be determined once the government officially lays the bill in the National Assembly.
The Income Tax (Second Amendment) Bill 2021 would seek to streamline the tax regime for non-profit organisations, listing of firms in the stock market, exemptions for oil refineries, special economic zones (SEZs) being setup under the China-Pakistan Economic Corridor and the Independent Power Producers (IPPs), sources in the Prime Minister’s Office told The Express Tribune.
The National Assembly session would be convened next week to introduce the bill, said the sources. Prime Minister Imran Khan chaired a meeting to review these exemptions, which was followed by another meeting in the Federal Board of Revenue (FBR), the sources added.
On the input from Nadeem Baber, the special assistant to the prime minister on petroleum, it has been decided that some exemptions would continue, including depreciation allowance for the oil exploration and production companies and refining minerals, sources close to the SAPM revealed.
Pakistan and the IMF reached an staff-level agreement last month for the approval of second to fifth reviews and release of the next loan tranche of $500 million, subject to the fulfilment of certain conditions.
For the revival of the stalled bailout programme, the IMF had placed prior conditions of increasing electricity tariffs, introduction of new bills and withdrawing income tax exemptions.
The premier took the decision to introduce the bill a day before he would take vote of confidence. However, he shot down a proposal for slapping Rs4 per kg federal excise duty (FED) on imported LPG, directing for taking up this proposal in the main budget.
In the future, tax incentives will not be used as instrument for attracting investment, a member of the federal cabinet said.
The objective of tax reform is to make tax code simple, plug existing loopholes in the system, reduce discretionary powers of tax collectors and tax practitioners and introduce automation to ensure transparency of tax system, said Prime Minister Imran Khan.
The premier further stated that tax regime should be reformed and structured in such a way that it facilitates businesses and help the economy grow.
The FBR has estimated the total cost of tax exemptions at Rs1.15 trillion, including Rs378 billion income tax exemptions. The exemptions from total income amounted to Rs212 billion and the cost of tax credits is Rs104.5 billion.
Major exemptions
In a major decision, the government has decided that the income tax exemptions available to the IPPs would be withdrawn in the future. The existing IPPs would continue availing the exemptions due to sovereign guarantees that cost the national kitty Rs27 billion last year.
Similarly, tax credit for investment in balancing, modernisation and replacement of plant and machinery by the manufacturing sector that caused Rs65 billion revenue loss last year would not be extended beyond June 30.
The tax exemptions available to the Real Estate Investment Trusts would be withdrawn, said the sources. Last year it cost Rs5.3 billion revenue loss. In yet another important move, the sources said, the tax credit on listing of new companies in the stock market is proposed to be withdrawn.
The concessionary income tax regime, available to the prime minister’s low-cost housing scheme would be available till June 2024 and any project that will be setup after that would not be entitled to claim the concessionary rates, said the sources.
It was decided that the income tax exemptions available to oil refinery investments would continue by the end of this calendar year. The decision to continue these concessions for another nine months was taken to get time to finalise an oil refinery deal with Saudi Arabia, the sources said.
Some major changes will also be proposed to streamline tax regimes of the SEZs, export of information technology services, Sindh coal mining projects and start-up projects, said the sources.
The NPO regime will be reformed to stop tax avoidance by the NPO sector. Instead of claiming tax expenditures, these NPOs would be given tax credits, said the sources. It was also decided that the direct deduction of donations paid to the NPOs would be withdrawn. However, tax credit equal to omitted exemption will be offered.
Similarly, tax expenditure claimed on donation paid to Prime Minister’s Special Funds for Victims of Terrorism, Flood Relief Fund, to the Chief Minister’s (Punjab) Relief Fund for Internally Displaced Persons (IDPs), would be withdrawn. But the donors can claim tax credits.
The sources said that it was decided that the income tax exemption on income of Sukuk holders from Sukuk issued by the Second and the Third Pakistan International Sukuk Company Limited will be withdrawn.
The income tax exemption available to sports boards and reduced rate for Pakistan Cricket Board can be withdrawn. Likewise, exemption on income from modarba, other than manufacturing or trading modarba, could be withdrawn. The income tax regime of the film industry may also undergo changes, said the sources.
Pakistan will take additional revenue measures equal to 1.4% of the size of its economy or over Rs700 billion to achieve a tax collection target of around Rs6 trillion in the next fiscal year under the IMF deal.
The FBR will need to collect an additional Rs1.3 trillion in the next fiscal year, including over Rs700 billion through additional revenue measures. The remaining about Rs600 billion is expected to be collected through its existing revenue base.
The FBR’s powers to declare any sector or industry as industrial undertaking, and the first-year allowance equal to 90% of the cost of plant and machinery to mobile phone manufacturers may also be withdrawn, said the sources. The sources said that the government may withdraw income tax exemption available to Sheikh Sultan Trust, Karachi.














 

El Sidd

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It's like a rollercoaster ride.

One day. Tax free.
Next day. Jailed for tax evasion.

The country is being run like a cricket match of egoes and petty locker room horseplay.
 

Hakikat ve Hikmet

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A damn good decision!!! Screws around the corrupts need to be tightened even further!! Not a drop of water or a piece of cloth should be spared.....

The entire taxation process needs to be 100% automated for you can’t trust even an angel being a tax officer!!! The ultimate thieves and dacoits reside inside the bureaucracy....

It’s not the problem with the government, the government itself is the problem - President Ronald Reagan
 
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Oracle

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People living abroad don't understand.

This idiot is just increasing tax on people who area already paying tax.

Pmln was more focused on increasing the number of people under tax paying umbrella.
 

El Sidd

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8-) Good work Tax Exemption is for people who paid taxes in first place not free loaders
what chance is there you commented on the original decision with

good work. this exemption will help establish businesses which can be taxed later whenever need be.

how much does your constituency go for?
 

Hareeb

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Pmln was more focused on increasing the number of people under tax paying umbrella.
Yeah too much focus by increasing the lowest tax slab from 400k PKR to 1.2M PKR per year - removing 800,000 tax payers from tax net. You definitely have not studied reports about what they did to economy.
 

Enigma SIG

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i pray to god that this fool khan and his IMF circus is wrapped up as soon as possible
From the article:

In a major decision, the government has decided that the income tax exemptions available to the IPPs would be withdrawn in the future. The existing IPPs would continue availing the exemptions due to sovereign guarantees that cost the national kitty Rs27 billion last year.


Toi shareef who awarded IPP lucrative contracts was the bloody founder of Keynesian economics himself.
 

aasimanwaar

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People living abroad don't understand.

This idiot is just increasing tax on people who area already paying tax.

Pmln was more focused on increasing the number of people under tax paying umbrella.
Joke of century. Pmln was the one who believed in corruption and guiding how to run away from taxes. They were the ones who, when failed to add people in tax net putting indirect taxes to destroy all businesses. Your falling exports in there era is proof, also tax imposed on transactions within banks introduced by PmlN was there failure.
 

TheSnakeEatingMarkhur

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i pray to god that this fool khan and his IMF circus is wrapped up as soon as possible
BC hum yaha kude karkat tak ka Tax dete hain Council ko or udr 80 tax examptions hain 🤦‍♂️
Omly thing we get tax exemption is medicine that too if you qualify..
It's like a rollercoaster ride.

One day. Tax free.
Next day. Jailed for tax evasion.

The country is being run like a cricket match of egoes and petty locker room horseplay.
This is legal tax evasion set through constitution amendments for corrupt looters..
People living abroad don't understand.

This idiot is just increasing tax on people who area already paying tax.

Pmln was more focused on increasing the number of people under tax paying umbrella.
People loving abroad are not dumb 🙄 legal tax evasion should be stopped and those people are already paying Taxes of they are getting 80 legal ways to evade taxes ? 🤔

PMLN was more focused on increasing number of people yet SKA said only 3% people pay taxes in Pakistan 😂[/QUOTE]
 

Bouncer

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People living abroad don't understand.

This idiot is just increasing tax on people who area already paying tax.

Pmln was more focused on increasing the number of people under tax paying umbrella.
Ok then please explain it to people living abroad; how were any of these exemptions helpful for the common man? I am genuinely curious. From what I have read, these were massive exemptions given to some already filthy rich and corrupt segments of the economy.

"The Income Tax (Second Amendment) Bill 2021 would seek to streamline the tax regime for non-profit organisations, listing of firms in the stock market, exemptions for oil refineries, special economic zones (SEZs) being setup under the China-Pakistan Economic Corridor and the Independent Power Producers (IPPs), sources in the Prime Minister’s Office told The Express Tribune."
 

Turingsage

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IMF was not prepared to any longer to continue with these tax exemptions for the corrupt. IK had withdrawn from the IMF programme to facilitate the corrupt.
IK felt he could side step the IMF and continue with these practises including allowing corrupt money into real estate to turn it white.
IK was forced by the dire economic situation into re-entering the IMF programme and its conditionality's and the IMF insists these practises of molly codling the corrupt must end.
IK still will not tax the vast landowners or the massive profits made by the very rich as they are his backbone
 

peagle

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IMF was not prepared to any longer to continue with these tax exemptions for the corrupt. IK had withdrawn from the IMF programme to facilitate the corrupt.
IK felt he could side step the IMF and continue with these practises including allowing corrupt money into real estate to turn it white.
IK was forced by the dire economic situation into re-entering the IMF programme and its conditionality's and the IMF insists these practises of molly codling the corrupt must end.
IK still will not tax the vast landowners or the massive profits made by the very rich as they are his backbone
Do you always live in your fantasies,
What the blah de blah de blah was that, you made no sense, except showing your Indian hatred for Pakistan.

Wait, so you are one of those ex-Indians who went begging to live in the UK, your former masters you love to hate, but forgot to declare your hateful mindset when applying for the British passport.

You live in a plural democratic society, but all you do is spread hateful lies, that's pitiful.
 

Turingsage

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These are not lies but the bitter truth.

As I said the IMF will not allow IK to continue with many of his pet idiocies.
As confirmation I can tell you that CAD , the only measure IK brags about ( all other economic indicators having crashed through the floor ) and the only measure that has shown improvement will now fall.
That is because IK had through various "schemes" was subsidising exports using loan money. IMF will not stand for this and you WILL see a decline in CAD from current levels.
 

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