ISLAMABAD – The government is contemplating eliminating tax exemption to the foreign private educational institutes in the upcoming budget 2014-15.
As per details, the Federal Board of Revenue (FBR) has put forward a proposal seeking elimination of tax exemption on the foreign education institutes in Pakistan to the Finance Ministry for approval. The FBR has recommended that all educational institutions which are not non-profitable organisations should be taxed.
Similarly, the government had already considered another proposal regarding levying a 15 percent withholding tax on Pakistani educational institutions having branches abroad. Meanwhile, reports suggest that the government would not provide much taxation relief in next year, as usually government gave tax relief against heavy taxation measures. However, the government would largely depend on heavy taxation measures to make ambitious revenue collection target of Rs2,810 billion achievable.
Meanwhile, the government is also contemplating introducing uniform general sales tax for five exports oriented sectors, textile, surgical, leather, sports and carpet goods. There are different rates on these five sectors. However, the FBR has proposed to amend the statutory regulatory order (SRO) dealing with lower rates of sales tax (2 to 5 percent) on five leading export-oriented sectors – textile, leather, carpets, surgical and sports goods. The FBR proposed to Finance Ministry to maintain uniform rate.
SRO.1125 is the only major export related SRO specifically dealing with export oriented sectors and applies multiple rates of sales tax on exports. there are different rates according to law i.e. 2 percent sales tax, 3 percent, 5 percent and 17 percent sales tax is applicable at different stages. The FBR is proposing amendments in the law to rationalise tax structure in the upcoming budget.
The import of textile machinery is currently covered under the regime of zero rated Custom duty and sales tax through SRO 809, however by the end of June this facility is going to expire and the government may impose 17 percent sales tax on the import of machinery. The government had issued Technology Up-gradation Support order 2010 to provide incentives to textile machinery and technology to attract investment in textile sector; this is also going to expire on June 30, 2014, sources added. Sales tax at the rate of 2 percent is applicable on yarn, 3 percent on fabric and 5 percent on garments which is expected to be revised in budget (2014-15).
