Ongoing rift : Depts lock horns over collection of entertainment duty
During last financial year 2019-20, an amount of Rs482 billion had been collected as customs duty in first nine months. PHO-TO: FILE
Three things are certain in life; death, taxes, and ambiguity between two departments in Pakistan. The Excise Department and Punjab Revenue Authority (PRA) are currently at loggerheads over an entertainment duty.
The ambivalence between the two departments started with a proposed Finance Bill tabled in the provincial legislature on June 14, empowering the PRA to levy entertainment duty. This came as a surprise to the excise department as collection from cinemas, theaters, fashion shows, and other commercial or semi-commercial events has been their responsibility for decades along with issuing NOCs for conducting programs.
The handover of entertainment duty collection was also a bolt from the blue for the Excise and Taxation Department as the matter was still under consideration and the excise department had not formally agreed. In the Resource Mobilization Committee meeting minutes, available with the Express, there is no mention of consent or approval of the proposal.
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The PRA had argued that entertainment duty was in fact in the services sector. Therefore, it should be collected by the revenue authority instead of the excise department. Officials familiar with the development revealed that the excise department is planning to request the provincial administration to reconsider the matter.
The ambiguity between the PRA and excise department has struck fear in cinema owners as they believe PRA might impose higher taxes on them. For the past 15 years cinemas received waivers for entertainment duty.
Their demands to pay taxes under self-assessment scheme have not been heard and as things stands the waiver will end next year. In the recent past, cinema owners have been accused of employing delaying tactics and influence over government officials to avoid tax.
Chairperson Film Exhibitors Association, Zoriaz Lashari, previously told The Express Tribune that taxes on cinema should be imposed keeping in mind the seating capacity of cinemas and an average of the total tickets sold.
He also called for a reduced tax ratio from 20% to 5% and that the Excise Department staff should not be deputized in cinemas.
He expressed his dismay at the current situation. “The cinema industry has already been ravaged by the pandemic. In all of this, to give another department the ability to levy tax after this year’s waiver expires is not right. Only tax collection [by relevant authorities] should not be the aim, the survival of the cinema industry should also be kept in mind,” Lashari told The Express Tribune.
Published in The Express Tribune, June 21st, 2021.