FBR detects mega scam, of availing tax exemption for another five years by industrial units with changing their name in AJK, GB


ISLAMABAD:     Federal Board of Revenue (FBR) while unearthing a mega scam in Azad Kashmir has extended its scope therein.

The industries which were set up under 5-year tax exemption scheme have started reaping benefit of tax exemption for further five years by changing their names on conclusion of their first five years tax exemption period.
FBR has slapped general sales tax order 107/2019 in Azad Kashmir following emergence of this scandal.
FBR after having detected this high profile fraud has decided to set up special customs posts on the routes wherefrom these goods are being transported to Pakistan.

FBR has amended the tax rules and has sought permission from parliament for enactment of rules about the items which are manufactured in 3 special areas in Azad Kashmir and later are sent to Pakistan. Amendment in section 40D of sales tax act has been proposed.

It has been laid down in the draft of amendment that sales tax can not be levied in Pakistan on the goods which are manufactured in industrial units set up in AJK under 5-year tax exemption program because tax is recovered from them in the respective areas of AJK.

It will be incumbent on those who bring these goods to Pakistan for sale after paying sales tax in AJK and Gilgit-Baltistan to pay sales tax in Pakistan on the basis of value addition in terms of sales tax recovered on the sale price of these goods.

Sources said it has come into the notice of FBR that on expiry of their first five years tax exemption these industrial units have changed their name and ownership and started harvesting benefit of tax exemption for another five years which is illegal.
An approval for this rule from parliament will entitle FBR to make it binding on those supplying these goods from AJK and Gilgit-Baltistan to Pakistan to bring with them necessary documents. Following their entry into Pakistan not only 17 percent general sales tax along with other taxes will be recovered from them who fail to bring tax documents of tax authority of the AJK and Gilgit-Baltistan areas but also heavy fine will be imposed on them.