ISLAMABAD: The Federal Board of Revenue (FBR) is primarily delegated with a duty to oppose the grant of tax, duty and any other kind of exemptions which may hurt the national revenue collection.
However, the FBR does not require any approval from the federal government for the issuance of any statutory regulatory order (SRO) for the granting any kind of exemption. The board enjoys full authority to issue SROs with the approval from the Minister In-charge.
FBR Member Inland Revenue-Policy Dr. Muhammad Iqbal and Member Customs Muhammad Zahid Khokhar made this observation here on Thursday while explaining FBR’s position before the Senate Standing Committee on Finance and Revenue on the issuance of SRO No. 47(1)2018 dated January 23, 2018. Under this SRO one particular company had been exempted from payment of sales tax and federal excise duty.
In this regard, some 12 senators including the Chairman Senate Standing Committee on Finance and Revenue Salim Mandviwala had submitted a calling attention notice in the House and matter was referred to the committee for further consideration.
Therefore, both the FBR members explained before the committee that said SRO was issued in pursuance of the decision of Economic Coordination Committee of the Cabinet which was later rectified by the federal cabinet.
ECC made this decision on a summary moved by Ministry of Communications which sought exemption from sales tax and federal excise duty in respect of imported construction materials and goods whether or not locally manufactures for China State Construction Engineering Corporation Limited for construction of Karachi Peshawar Motorway (Sukur-Multan section), on the four early harvest projects under China-Pakistan Economic Corridor (CPEC).
They observed that said exemption had been granted under clause (a) of sub-section (2) of section 13 of the Sales Tax Act 1990 and sub-section (2) of section 16 of the Federal Excise Act 2005. After amendments made in the relevant provisions of law exemption can be by the Board with approval of federal minister in charge pursuant of to approval of ECC of the cabinet.
Even then, Muhammad Zahid Khokhar said that FBR opposed the grant of exemption to Chinese company; however, perhaps it was necessary under bilateral agreement between Pakistan and China for the construction of said section of motorway. Moreover, he said that FBR usually issued SROs under special circumstances and situations because exemptions often hurt the national revenue collection.
Earlier, almost majority of movers of the said calling attention notice, strongly criticized the federal government, finance ministry and FBR for granting exemption to Chinese company tantamount to discrimination between Chinese and local companies.
