ZOLLGESETZ 1969 – Economic system & Finance

(a) Eliminate anomalies in the cascading tariff structure

(b) Promotion and protection of the domestic industry through targeted interventions

(d) Facilitating export-oriented production by reviewing the existing exemption and export regulations

INDUSTRIAL RELIEF MEASURES

Reduction / exemption of CD, ACD and RD on imports of goods falling under PCT 589 codes to incentivize the textile industry.
Reduction / exemption of CD, ACD & RD when importing flat rolled products made of HRC and stainless steel.
Reduction / exemption of CD and ACD for raw materials and intermediate products and vending machines that fall under 328 tariff lines as a result of tariff rationalization.
To create incentives for the pharmaceutical sector and to keep the prices on the market stable,

• Exemption from CD & ACD for 350+ APIs

• Plant, machinery and equipment are subject to a reduced rate of 5%

• CD & ACD exemption for raw syringes with automatic deactivation and tariff reduction for finished syringes with auto deactivation

Reduction / exemption of inputs / raw materials in the food industry.
Reduction of CD & ACD on uncoated paper and board for the printing and graphics industry.
Reduction / exemption from CD & ACD on vaccines for veterinary drugs and feed additives to incentivize the dairy sector.
CD & ACD discount / exemption for goods falling under more than 100 PCT codes related to the tourism industry.
Reduction of tariffs on raw materials / inputs of the shoe industry.
Reduction / exemption of CD & ACD for inputs for the poultry industry.
Reduction / exemption of CD & ACD on raw materials for manufacturers of aseptic plastic packaging.
Exemption from ACD when importing raw materials for cable / fiber optic manufacturers.
Reduction / exemption of CD & ACD for raw materials for the paint industry.
Reduction / exemption of CD & ACD on raw materials for the chemical and artificial leather industry.
Reduction / exemption from CD & ACD on inputs for the electronics manufacturing industry.
Reduction / exemption of CD & ACD for raw materials / inputs from furniture, coating, boiler making industry, coil and cop making industry, etc.

RELIEF FOR THE MAN TOGETHER

Reduction of the ACD for goods falling under 2436 tariff lines that affect a 20% inch plate from 7% to 6%.
Extension of the duty exemption for the import of COVID-19-related articles for a further six months.
Exemption from CD & ACD for Ready-to-Use Complementary Food (RUSF) and Ready-to-Use Therapeutic Food (RUTF) inputs.
Exemption from CD & ACD for 06 life saving drugs.
Increase the value of unsolicited gifts by mail or courier from 20,000 to 30,000 rupees.
Exemption from CD & ACD when importing hermetic bags and cocoons for grain storage.
Rationalization of the tariff structure in the automotive sector.

LEGAL REVIEW

(RD) REGULATION:

Rationalize RD in cellphone import to encourage import substitution
Increase RD rates when importing non-essential / luxury items to support local industry.
Reduction of RD when importing cocoa mass, butter and powder as industrial inputs.

EXPORTER RELIEF MEASURES:

In order to facilitate business transactions, a new uniform export facilitation scheme is proposed. The existing regulations are to expire in the next two years.
It is suggested that the transfer of goods via WeBOC is allowed without prior consent from the picker.
Reducing RD on exports of molasses, hides and hides in order to strengthen the positive image of the country with our important trading partners around the world.

MISCELLANEOUS

Establishing border supply markets to alleviate the problems of people living in border areas through fences and anti-smuggling measures.

LEGAL CHANGES:

1) Introduction of a concept of the common customs warehouse for the promotion of small and medium-sized enterprises.

2) Authorization of the customs collector to determine the customs value there by facilitating trade.

3) Enabling the General Director Valuation to make an appropriate decision and limiting the time limit for such a procedure. Facilitating trading by avoiding wasted litigation time.

4) Allowing the importers to change the manifest until the docking event without obtaining approval from the customs authorities, thus making the deal easier.

5) Enable the customs authorities to allow a bonafide change in the customs declaration and thus facilitate trade.

6) Allow the collector to extend the storage period by six months. Shortening the processing time of inquiries and promoting business transactions.

7) Shortening the decision-making time in cases in which the goods complained about are in seaports, airports or dry ports, and thus the costs of doing business.

8) Allow customs authorities to issue a Certificate of Correction / Correction in case of real / apparent error and facilitate trade.

9) Involving other law enforcement agencies for reward and motivational purposes.

10) Granting the opportunity to registered users of WeBOC to be heard in accordance with the canons of natural justice.

11) Extension of the period of validity of preliminary rulings from currently one year to three years in accordance with international benchmarks and facilitating trade in them.

12) Provision for the classification committee to avoid unnecessary litigation due to classification disputes and consequently reduce the cost of doing business.

13) Cancellation of the fine in the event of late submission of the goods declaration and thereby facilitating the transaction.

ENFORCEMENT CHARACTERISTICS:

1) Inclusion of the master bill of lading and certificate of origin in the existing definition of documents in order to prevent originating fraud.

2) Inclusion of retail in the definition of smuggling to discourage retailers from selling smuggled goods.

3) Hold shipping companies responsible for re-exporting prohibited items that were imported in commercial quantities.

4) Increase in the amount of the fine in the event that the invoice and packing list are not placed in the container in order to enforce compliance.

5) Discouragement of smuggling by refusing to release vehicles that are repeatedly used for smuggling, subject to a penalty for taking them back.

SALES TAX ACT 1990

The proposed budget measures in relation to sales tax for fiscal year 2021-22 are:

REVENUE MEASURES

It is proposed to include the sales of goods via the online marketplace in the VAT net by considering the online marketplace as a provider in relation to sales by third parties through its platform.
For certain goods, it is proposed to require manufacturers of such goods to acquire a trademark license for each individual brand or SKU.
Section 56C provides a pricing regime to promote tax culture. In order to ensure that the mentioned incentive is not abused, it is proposed to insert a new subsection that enables random "mystery shopping".
It is proposed to increase the sales tax rate for Potassium Chlorate from Rs. 80 per kg to Rs. 90 per kg in addition to the 17% standard rate.
It is proposed to withdraw the zero rating of petroleum crude oil, parts / components of equipment and machinery with zero rating, the import of equipment and machinery by the petroleum and gas sector, and the supply, repair and maintenance of ships.
It is proposed to streamline the sixth annex and remove exceptions other than those relating to staple foods, health and education.
It is proposed to streamline the eighth annex and include reduced rates in the standard regime except for basic food, health and education.
Waste lead and used lead-acid batteries are a disorganized sector. Therefore, it is proposed that the full amount of sales tax in relation to the sale of such goods, as set out in Appendix 11, be withheld at source.
In order to ensure the collection of the taxes due, it is proposed that the sales tax on sugar be levied on the retail price by adding the named product to the third list.

RELIEF MEASURES

It is proposed that the minimum annual sales threshold for all supplies for the home industry be increased by Rs. 3 million to Rs. 10 million.
It is proposed to increase the threshold of retail space for furniture stores / showrooms from 1000 square feet to 2000 square feet for inclusion in Tier 1 retailers.
It is proposed to exclude public companies from the scope of Section 8B.
A separate section has been introduced to allow the deadline for the return to be made available to be extended.
It is proposed that art and printing paper be exempted for the publication and printing of the Holy Quran.
The import exemption of CKD kits for electric vehicles by manufacturers, which is granted by the Tax Act Amendment Ordinance 2021, is to be included in the Sixth Annex.
In order to facilitate international athletes, it is proposed to include in the Sixth Annex the exemption granted by the Tax Law Amendment Regulation 2021 for goods temporarily imported by athletes / athletes.
It is proposed that the tax exemption for the automatic deactivation of syringes under the Regulation on Tax Laws (Second Amendment) 2021 be included in the Sixth Annex.
In order to promote the country's IT industry, it is proposed that the import of equipment, machines and raw materials be exempt from sales tax through the Special Technology Zone.
In order to make farmers easier and to promote the storage of grain, it is proposed to grant a tax exemption for locally produced silos until 06/30/2026.
It is proposed that a reduced sales tax rate of 1% on the local delivery of electric vehicles in accordance with the Tax Law Amendment Ordinance 2021 be included in the Sixth Appendix.
In order to resolve legal disputes, it is proposed to remove the fixed tax on SIM cards with effect from July 1, 2020.
The VAT exemption on the import of electric vehicles, CKD kits for small cars, 2-3 wheelers, HCVs and all these vehicles under CBU terms has been granted under the Regulation on Tax Laws (Amendment), proposed to be included in the twelfth annex in 2021 .
To simplify matters, it is suggested to introduce the concept of constructive payment in section 73.
To relieve the registered persons, it is proposed to extend the claim to compensation for late reimbursement to those persons in whose case the order according to § 66 is issued.
In order to facilitate business transactions, it is proposed to introduce the concept of the Common Identifier Number.
For the establishment of border supply markets, it is proposed to grant an exemption from sales tax for food and other consumer goods.
In order to introduce an overarching export facilitation program for the customs wing, an import exemption and a zero tariff for local deliveries with regard to raw materials, components, parts as well as systems and machines are proposed for approved exporters.
Rising prices for locally made small cars are a big problem for low-income families. Accordingly, it is proposed that small cars with a displacement of up to 850 ccm can be exempt from VAT, in addition to lowering the VAT rate from 17% to 12.5%.

STRENGTHENING THE MEASURES

There are various provisions in the Sales Tax Act 1990 that require some corrections or streamlining, while some changes are proposed for the purpose of making business easier for registered persons. In some places, some spelling mistakes have to be corrected. All of these measures are listed below:

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See no. Section Proposed amendments with justification

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1 2 (4AA) A new definition was added to define

Commissioner (complaints).

2 2 (37) (iii) The word "from" is inserted for correction

Design flaw

3 2 (43A) (g) The definition of Tier 1 retailer is

streamlined by

Insertion of a new clause, where a

Dealer who has

accept purchased point of sale

payment by

Debit or credit cards from banking

Companies or other

other digital payment service

Provider authorized by

State Bank of Pakistan is also

included in the definition of the Tier 1 dealer

4 3 (1B) (a) The word “on” is replaced by “correct”

Design flaw.

5 11 (5) According to Section 11, Paragraph 5, this is an indication

may be

issued for the recovery of unpaid amounts

or paid short

within five years of the relevant date. Since

Sales tax is payable monthly

Timeline also applies on a monthly basis.

However, audits are carried out on

Full 6th annual basis. In addition, audits are for

Income tax and sales tax for the same thing

Financial or tax year

at the same time the demand

Sales tax can be statute-barred

up to two years earlier than demand

for income tax. in the

to tighten the said provision,

the words relevant date, is suggested to be

modified with the words "end of the

Fiscal year in which the relevant

Date falls "

6 25AA (2) A new subsection is added to

Enabling the provision in the law for

Prescribing rules for

Determination of the transfer prices of taxpayers

To reflect deliveries between employees

fair market value at customary market conditions

Transactions.

7 22 Paragraph 1 Section 22 Paragraph 1 has been changed

to strengthen and tighten the

There is an obligation to record.

8 47 (7) For the word "collector" the word

Commissioner is replaced to correct

Design flaw.

9 48 (2) Authorization provision inserted

taking into account

Application of a foreign jurisdiction under

a double taxation agreement, a multilateral agreement and

intergovernmental agreement or similar

Agreement or mechanism.

10 50 (2) Procedure for collection, arrangement and

Publication of the rules published under Sales

The tax law of 1990 has been tightened.

11 56A Provisions for the transfer of data to data

Abroad were mutual

introduced by tax laws

(Amending) Ordinance, 2021, which is

now included in the sales tax law,

1990. It also established a support mechanism

in collecting taxes at the request of foreigners

Mutual countries is also

proposed by inserting subsection (3).

12 76 (2) Authorization provision inserted for

Approval and regulation of the way for

Use of fees and

Service fees charged in accordance with Section 76

-1

13 P. No. 18 of P. No. 18 of Table-II of the sixth appendix

for sale

Table II of the Tax Act 1990 granting an exemption

Sixth plan for marble and granite makers with

Annual sales are under Rs. 5 million, is

suggested to be omitted. The said exception

is already available under the heading

2 (5AB) of the Sales Tax Act, 1990.

14 P. No. 19 Exemption for bricks and crushed stone

and 20 already has

of Table-II expired on June 30, 2018.

These series are accordingly

The sixth number should be left out

There is no need for a schedule.

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FEDERAL CONSUMPTION ACT 2005

The proposed budget measures in relation to the Federal Excise Tax (FED) for FY 2021-22 are:

REVENUE MEASURES

In order to generate adequate income from this sector, the federal excise tax on cell phone calls of more than three minutes @ Re 1 per call, SMS message @ Re. 0.1 per SMS and internet data usage @ Rs. 5 per GB is suggested. This will result in mild taxation on a wide range of the population.
It is also proposed to include electronically heated tobacco products in the tax network by inserting the new page No. 8c of Table 1 of the first appendix to the Federal Consumption Tax Act 2005.

RELIEF MEASURES

In order to make the people in tribal areas easier and to promote investment and economic growth in these areas, industrial units in FATA and PATA are exempt from the FED levy.
The provision in the Sales Tax Act of 1990 to revise the declaration without the prior approval of the Commissioner-IR is now proposed to be available in the Federal Excise Act, 2005.
Exemption from federal excise tax for all-wheel drive vehicles granted Vide grants Vide tax laws (amendment) Ordinance, proposed to be included in the federal excise tax law in 2021.
The federal consumption tax rate on telecommunications is to be reduced from 17% to 16%.
It is proposed that Merchant Discount Rate (MDR) payments be excluded from the FED's purview.
For the establishment of border food markets, it is proposed to grant an exemption from federal excise tax for food and other consumer goods.
Rising prices for locally made small cars are a big problem for low-income families. Accordingly, it is proposed that small cars with a displacement of up to 850 ccm can be exempt from federal excise duty.
In order to introduce the new export facilitation program in 2021, an exemption from imports and zero taxation for local deliveries of raw materials, components, parts as well as systems and machines to registered persons is proposed.
The federal excise tax on fruit juices was introduced in the Finance Act 2019 and as a result the prices of juices were increased. In addition, this sector is facing an unfavorable situation due to the pandemic. In order to relieve this sector, it is proposed to abolish the federal excise tax on juices.

STRENGTHENING THE MEASURES

There are various provisions in the Federal Excise Tax Act 2005 that require some corrections or streamlining, while some amendments are proposed for the purpose of making business easier for registered persons. In some places, some spelling mistakes have to be corrected. All of these measures are listed below:

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See no. Section Proposed amendments with justification

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1. 14 (4) authorization provision inserted

if requested by a foreigner

Responsibility under a double taxation agreement, a

multilateral convention, and

intergovernmental agreement or similar

Agreement or mechanism.

2. 47A Data Disclosure Regulations

with foreign countries on a reciprocal basis

were introduced by tax laws

(Amending) Ordinance 2021, the

is now included in the federal excise tax

Law, 2005. In addition, there is a mechanism for

Assistance in collecting taxes on request

from abroad on a reciprocal basis

The basis is also suggested by inserting

Subsection (3).

3. 49 (2) authorization provision inserted

for approval and regulation of the way

for the use of the fees and service charges

collected in accordance with Section 49 (1)

4. P. No. 56 of Correction of Spelling Errors, PCT heading

Table 1 of the filter rod has been replaced.

First schedule

to the federal

Consumption Tax Act,

2005

5. Heading of To correct spelling mistakes, the word

Column (2) was replaced for the services

from table-2 word "goods"

of

First schedule

to the federal

Consumption Tax Act,

2005

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CAPITAL OF ISLAMABAD

TERRITORY (SERVICE TAX)

REGULATION, 2001

RELIEF MEASURES

To promote and promote the IT sector, it is proposed to make the export of services tax-free.

INCOME TAX

REVENUE MEASURES

• Special regime for the export of services in the same amount as the export of goods, which is taxed at 1% according to the final tax regime.

• Abolition of block taxation of property income and transition to the normal tax system.

• Reduction of block taxation on capital gains on the sale of real estate if the profit exceeds Rs. 20 million.

• Reduction of block taxation on interest income if it exceeds Rs. 5 million.

• Taxation of “on” money for vehicles if the vehicle is disposed of without registration.

• Expansion of the scope of withholding tax collection from the supply chain below manufacturers and importers in certain sectors (§§ 236G and 236H).

• Lowering the monthly electricity bill threshold for withholding tax on electricity consumption from 75,000 to 25,000 for household customers who are not on the active taxpayer list.

• Removal of the requirement for a separate notification in cases of concealment.

• Tax retention on rental income of the subtenant.

• Expansion of the group of withholding taxes for the purpose of levying withholding tax on commission income (§ 233).

• Streamlining withholding tax on purchases and sales of immovable property (Sections 236C and 236K).

• Streamlining the withholding tax system for exporters.

• Taxation of the gain on the leverage component of the GP Fund and other such funds.

• Withdrawal from income tax exemptions.

• In the current financial year, the Tax Act (Second Amendment) 2021 was passed to implement corporate tax reforms in order to offer all companies a level playing field. Certain tax credits, perks and exemptions have been withdrawn. The provisions of the ordinance are part of the Finance Act.

RELIEF MEASURES

• Deletion of 12 withholding taxes

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Deployment description

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153B Collection of taxes on the payment of royalties to residents.

231A Collection of Taxes on Cash Withdrawals.

231AA Collection of Taxes on Banking Instruments.

236P Collection of Taxes on Banking Other

than through cash.

236Y Tax collection from persons who transfer amounts abroad

by credit, debit or prepaid cards.

236B Collection of Taxes on Domestic Flights.

236L Collection of Taxes on International Air Travel.

236V Collection of the tax on the extraction of minerals.

233A Collection of taxes from members by an exchange

registered in Pakistan.

233AA Collection of marginal finance tax by NCCPL.

234A Collection of taxes from CNG filling stations.

236HA Collection of Taxes on Certain Petroleum Products.

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• Merging of 3 withholding taxes with other existing provisions

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Deployment description Merged with

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150A tax deduction in the income tax merger planned in

about investing in sukuks. Section 151 for residents and residents

Section 152 for non-residents

dealing with such payments.

152A Tax deduction on to be merged with Section 152

Payments for foreign countries, the payments to

produced commercials. Non-residents.

236S Collection of dividend tax To be merged with Section 150

in species. dealing with the dividend.

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• Lowering the general rate based on the minimum sales tax and raising the threshold for natural persons and AOPs for collecting the minimum tax.

• Expansion of the IT scope of services through the inclusion of cloud computing and data storage services.

• Exemption of companies in the Special Economic Zone from paying the minimum tax.

• Ten year tax exemption for Special Technology Zone Authority, Zone Developers and Zone Enterprises.

• Tax exemption on imports of capital goods and dividend income from private funds from investments in companies in the special technology zone.

• Introduction of a special tax regime for SMEs in the manufacturing sector.

• Income tax exemption for deeply converted new refineries and BMR projects of existing refineries for 10 years.

• Reduced withholding tax rate of 3% on oilfield services, storage services, logistics services, collateral management services and telecommunications services.

• Inclusion of telecommunications services in the definition of industrial enterprise.

• Exemption from electronic warehouse receipts traded on the Pakistan Mercantile Exchange.

• The provincial WWF and WPPF allowances as deductible allowances when calculating income.

• Offsetting operating losses against property income.

• Unconditional tax exemption granted to certain organizations.

• Removal of the commissioner's power to reject tax forecasts submitted by the taxpayer.

• Failure to record gains / losses on the sale of assets to non-residents due to gift from relatives, inheritance and agreement to live apart.

• Reduction of the tax rate on capital gains tax on the sale of securities from 15% to 12.5%.

• Revocation of the tax authorities' authority to conduct investigations under Section 122 (5A).

• Inclusion of live animals, raw hides and unpackaged meat in the definition of agricultural products.

• Reduction of tax liability by 25% for women entrepreneurs.

• Exemption from import tax for books and agricultural implements.

• Tax exemption for bagasse-fired power plants and reduced tax rate on dividend income from such projects.

• Extension of the deadlines for the use of tax breaks according to § 100D and Appendix eleven of the Income Tax Amendment Ordinance 2021 of February 21, 2021 became part of the draft law.

• Tax exemptions and discounts for Roshan digital accounts and implementation of electric vehicles and mobile phone directives were implemented in the Ordinance on Tax Laws (Amendment) 2021 of 02/11/2021 as part of the draft law.

STREAMLING MEASURES

• Strengthening the mechanism of alternative dispute resolution.

• Elimination of the need to submit a request for automated reimbursement.

• Introduction of a time limit for the elimination of advertisement announcements.

• Record of e-hearing as admissible evidence.

• Automated issuing of exemption certificates if the application is not processed by the commissioner within 15 days.

• Removal of the need to update the tax profile.

• Clarity on the taxation of the income of co-operatives from sales and services to their own members.

• Transfer of powers by the federal government to the executive board with the consent of the responsible federal minister.

• Extension of the deadline for issuing the return notice for foreign income or foreign assets.

• Time limit for the completion of the assessment by order of the commissioner.

• Tightening measure to monitor withholding taxes, which requires taxpayers to submit an online return with the reconciliation.