FATA, PATA residents get 5-year tax holiday
K-P financial authorities advise against withdrawing FED on imports
FATA map. PHOTO: FILE PHOTO
PESHAWAR:
Residents of the erstwhile Fata and Pata areas are likely to get a five-year exemption from paying any income tax, customs duty on cars, sales tax, and agriculture income tax along with Abyana.
This was recommended by the Khyber-Pakhtunkhwa (K-P) finance secretary along with the Income Tax Chief Commissioner and Peshawar Customs Collector on the directions of the federal government’s sub-committee on Federally Administered Tribal Areas (Fata) Reforms.
Rs8b set to lapse over slow utilisation of Fata funds
The provincial government is working on preparing an elaborate mechanism to provide tax exemptions to residents of the erstwhile Fata and the Provincially Administered Tribal Areas (PATA) in line with the government reforms for these areas which were merged into K-P.
The three financial officials of the K-P government had held a meeting on Tuesday after which they prepared their recommendations.
A document carrying the recommendations, a copy of which is available with The Express Tribune, shows that officials have advised the federal government that even as the areas are given a tax exemption, they must not be exempted from the federal excise duty — which is levied on imports.
The officials argued that any such exemption will benefit the few oil mills owners who are not even bonafide residents of the erstwhile PATA areas.
Exemption of customs duty on non-custom paid (NCP) vehicles (which account for a major trade in the area) has been recommended. However, the provincial financial regulators have advised that a cutoff date for the provision of registration data of such vehicles may be extended by three months.
Moreover, it directed that exemption on customs duty may only be granted to those vehicles which did not enter through the notified customs stations — closing the door on smuggled vehicles.
It adds that other than the NCP cars, since there is no demand for exemption on imports and exports, therefore no such exemption is recommended.
“The government may, however, grant exemptions separately to special economic zones or industrial estates as the case may be,” it states.
The officers recommend an exemption from sales tax on electricity for domestic consumers. It asked the subcommittee of the federal government to discuss the exemptions from the sales tax on electricity for commercial consumers other than industry consumers.
“The five ghee mills in Dargai and 11 steel re-rolling mills in the Malakand District may object to the imposition of sales tax on electricity. Granting exemption to these units, though, may result in protest from the rest of the industry in K-P, therefore, this demand may be resisted,” it states.
Similarly, sales tax on retailers has been recommended to be exempted. “There shall be no limit to the retailers of erstwhile FATA/PATA.”
Regarding the income tax exemption, the officials recommend exemption from income tax for individuals along with an association of people or companies. The cutoff date for registration with the Federal Board of Revenue (FBR), though, could be extended to June 30, 2019, from the current deadline of September 30, 2018.
Exemption from all withholding taxes may be extended to salaried individuals working in the erstwhile FATA/PATA, even if the taxpayer resides outside the mentioned region.
No exemption may, however, be given to the withholding tax at import and export stage. It adds that the income tax on salary, property, capital gains and income from other sources may be exempted if this income arises of or accrue in FATA / PATA.
Regarding the provincial taxes, it states that the urban immovable property tax will only be extended to erstwhile FATA/PATA once the urban areas are notified in the schedule of the relevant act.
With a number of urban areas in rest of the province lying outside the ambit of this tax, it stated that there is no need to take a decision right now. For the agriculture tax and Abyana, exemption for five years is recommended.
The K-P Revenue Authority has been recommended to act as the collecting agency in the province as per the existing mechanism.
Published in The Express Tribune, July 6th, 2018.
Residents of the erstwhile Fata and Pata areas are likely to get a five-year exemption from paying any income tax, customs duty on cars, sales tax, and agriculture income tax along with Abyana.
This was recommended by the Khyber-Pakhtunkhwa (K-P) finance secretary along with the Income Tax Chief Commissioner and Peshawar Customs Collector on the directions of the federal government’s sub-committee on Federally Administered Tribal Areas (Fata) Reforms.
Rs8b set to lapse over slow utilisation of Fata funds
The provincial government is working on preparing an elaborate mechanism to provide tax exemptions to residents of the erstwhile Fata and the Provincially Administered Tribal Areas (PATA) in line with the government reforms for these areas which were merged into K-P.
The three financial officials of the K-P government had held a meeting on Tuesday after which they prepared their recommendations.
A document carrying the recommendations, a copy of which is available with The Express Tribune, shows that officials have advised the federal government that even as the areas are given a tax exemption, they must not be exempted from the federal excise duty — which is levied on imports.
The officials argued that any such exemption will benefit the few oil mills owners who are not even bonafide residents of the erstwhile PATA areas.
Exemption of customs duty on non-custom paid (NCP) vehicles (which account for a major trade in the area) has been recommended. However, the provincial financial regulators have advised that a cutoff date for the provision of registration data of such vehicles may be extended by three months.
Moreover, it directed that exemption on customs duty may only be granted to those vehicles which did not enter through the notified customs stations — closing the door on smuggled vehicles.
It adds that other than the NCP cars, since there is no demand for exemption on imports and exports, therefore no such exemption is recommended.
“The government may, however, grant exemptions separately to special economic zones or industrial estates as the case may be,” it states.
The officers recommend an exemption from sales tax on electricity for domestic consumers. It asked the subcommittee of the federal government to discuss the exemptions from the sales tax on electricity for commercial consumers other than industry consumers.
“The five ghee mills in Dargai and 11 steel re-rolling mills in the Malakand District may object to the imposition of sales tax on electricity. Granting exemption to these units, though, may result in protest from the rest of the industry in K-P, therefore, this demand may be resisted,” it states.
Similarly, sales tax on retailers has been recommended to be exempted. “There shall be no limit to the retailers of erstwhile FATA/PATA.”
Regarding the income tax exemption, the officials recommend exemption from income tax for individuals along with an association of people or companies. The cutoff date for registration with the Federal Board of Revenue (FBR), though, could be extended to June 30, 2019, from the current deadline of September 30, 2018.
Exemption from all withholding taxes may be extended to salaried individuals working in the erstwhile FATA/PATA, even if the taxpayer resides outside the mentioned region.
No exemption may, however, be given to the withholding tax at import and export stage. It adds that the income tax on salary, property, capital gains and income from other sources may be exempted if this income arises of or accrue in FATA / PATA.
Draft bill to amend Constitution for merger of FATA with K-P
Regarding the provincial taxes, it states that the urban immovable property tax will only be extended to erstwhile FATA/PATA once the urban areas are notified in the schedule of the relevant act.
With a number of urban areas in rest of the province lying outside the ambit of this tax, it stated that there is no need to take a decision right now. For the agriculture tax and Abyana, exemption for five years is recommended.
The K-P Revenue Authority has been recommended to act as the collecting agency in the province as per the existing mechanism.
Published in The Express Tribune, July 6th, 2018.