ST cut on sugar imports: PAC grills tax authorities over FBR's decision
PAC member Riaz Fatyana raised the issue during a session chaired by Junaid Akbar Khan, pointing out that the drastic reduction was implemented through a Statutory Regulatory Order (SRO), which he said served vested interests.
'This decision reeks of favouritism,' Fatyana said. 'It appears to have been designed to give financial advantage to specific groups.'
Committee member Sanaullah Khan Masti Khel didnot minces words, calling it a 'broad daylight robbery' and accusing the authorities of colluding with sugar cartels.
MNA Moeen Aamir Pirzada added that the practice of exporting sugar first and then importing it back was an engineered cycle designed for profit manipulation.
The committee expressed strong reservations and summoned top officials from the FBR and the Ministry of Commerce to appear in the next session to explain the rationale and legality of the tax reduction.
'This is not just mismanagement; it's systemic exploitation,' said Masti Khel.
The PAC warned that it would not let the matter slide without a thorough investigation and accountability.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
10 hours ago
- Express Tribune
10,000 import declarations tampered due to WeBOC 'glitch'
Listen to article The Chief Executive Officer of Pakistan Single Window (PSW), a government-owned trade network integration entity, revealed on Wednesday that large-scale tampering of Goods Declaration (GD) forms was made possible due to a technical glitch in the WeBOC (Web-Based One Customs) system, dating back to 2015. In a briefing with journalists, PSW CEO Syed Aftab Haider said the flaw allowed changes in GD forms without backend validation, enabling importers to alter declared quantities and descriptions of goods. He said that he had recommended the Federal Board of Revenue (FBR) to register First Information Reports (FIRs) against those involved. "There was no backend validation of GD changes in WeBOC since 2015," said Haider. He added that this loophole was exploited by unscrupulous users to manipulate imports data. Haider said PSW took over WeBOC management in 2022 but cannot make system changes without Pakistan Customs' approval. In March, The Express Tribune reported that more than 10,000 GD forms were tampered with, helping evade billions in taxes. While the PSW CEO claimed that no revenue was lost, there is no rationale behind changing forms without importers at least gaining financial benefits given that they are exposing themselves to criminal cases. The scam raised serious concerns about the credibility of GD forms, which are supposed to be secure records detailing importers, agents, goods, and duties. "This alteration, effected through changes in the browser script, did not need any help from WeBOC, PSW, or Information Technology staff," stated the PSW earlier this year. Prime Minister Shehbaz Sharif had directed the PM's Inspection Commission (PMIC) to investigate the scam. Though the PMIC report has not been made public, Haider said the PMIC accepted the PSW's stance that the issue was a technical glitch. The Express Tribune had reported that to remain undetected, the corrupt network did not alter the Harmonised System (HS) code, a unique numerical identifier for traded goods, they manipulated the descriptions and quantities of goods. The CEO said WeBOC has not undergone a technical audit for years. PSW is now hiring external auditors to evaluate the system. "There's a clear demarcation between the PSW and Customs. PSW only manages the WeBOC system, but Customs controls the design," said Haider. Commenting on a separate scam involving smuggled vehicles cleared as duty-paid, Haider said this resulted from the misuse of user codes, and there was no evidence of system failure. FBR has suspended the officers whose codes were used to clear the smuggled vehicles. The CEO also announced the launch of a new pilot project, the Port Community System (PCS), which is to be inaugurated by PM Shehbaz Sharif in the first week of August in Karachi. The PCS is designed to streamline port operations and fulfil International Maritime Organisation (IMO) requirements. "It will serve as a one-stop platform for all port transactions, providing real-time updates on cargo, vessels, and berthing to ensure seamless coordination between port stakeholders," said Haider. He said the system was developed in-house and PSW resisted pressure to adopt foreign-developed systems. However, he clarified that the new PCS will not directly reduce container clearance times but will make the process paperless and more efficient. "Globally, container grounding time is not more than three hours, but in Pakistan it goes as high as 26 hours," said the CEO, urging reforms to reduce cargo examination delays to reduce the dwell time of containers. He also stressed the need to integrate scanners installed at various ports. Scanners at Karachi Port and the Torkham border are not electronically linked, which creates lots of problems. Haider added that the FBR is working on scanner integration and installing new equipment to improve imported goods monitoring.
Express Tribune
10 hours ago
- Express Tribune
Retail sector pays extra Rs455b
Listen to article The Prime Minister's Office said on Wednesday that the retail sector paid an additional income tax of Rs455 billion in the last fiscal year, a startling claim made on the basis of a briefing given by tax authorities. In an official statement released by the PM Office, it was stated "in the retail sector, tax collection increased by Rs455 billion compared to the previous year, driven by the integration of point-of-sale systems and stricter enforcement". Officials of the Federal Board of Revenue (FBR) claimed that total income tax payments made by the retail sector in fiscal year 2024-25 were in fact Rs617 billion and the additional income tax was Rs455 billion. They said that the collection of Rs617 billion included Rs316 billion in quarterly advances given by three categories, wholesalers, retailers, traders and some companies. The surprising Rs316 billion in quarterly advance could be looked into with critical lenses due to the highly informal nature of the sector. Sources in the FBR told The Express Tribune that a loose definition of the retail sector was used, which included some corporate sector firms. The official statement added that Prime Minister Shehbaz Sharif chaired a review meeting on the ongoing reforms in the FBR, lauding the progress made so far while stressing the need for sustained and time-bound efforts to overhaul the tax system in line with modern requirements. Sources said that during the meeting discussions took place on the share of retail and manufacturing sectors and the record tax contribution of Rs555 billion made by the salaried class. Some of the participants were of the view that the manufacturing sector and salaried individuals were highly overburdened compared to their contribution to the economy. According to Pakistan Bureau of Statistics' (PBS) data, the share of the manufacturing sector in the economy was hardly 12% while the share of wholesale and retail sectors was 18% in FY25. FBR spokesman Dr Najeeb Memon did not respond to a question about the breakdown of additional income tax of Rs455 billion collected from the retail sector. However, an FBR official said that it was a definitional issue as various categories were included in the retail sector and as a result total income tax contribution reached Rs617 billion. With the additional Rs455 billion, the total income tax collection from the retail sector should have been Rs940 billion. In fiscal year 2023-24, the collection was Rs484 billion on the basis of the new loose definition, said the sources. Retailers and traders are functioning under a highly informal mechanism. According to the input the FBR has used for claiming the collection of Rs617 billion and an additional Rs455 billion, the wholesalers, traders and retailers are treated as part of the retail sector. These three categories paid income tax in the shape of advance income tax on a quarterly basis, admitted income tax with annual returns, withholding taxes on sales, purchases, imports and electricity bills, and other taxes. FBR officials claimed that the collection of Rs617 billion included Rs316 billion in advance income tax. In the advance tax, Rs30 billion was paid by wholesalers, Rs49 billion by traders and Rs316 billion by retailers. Likewise, the admitted income tax stood at Rs28 billion, including Rs14 billion from traders, Rs5.3 billion from retailers and Rs8.5 billion from wholesalers, the sources said, adding that these three categories also paid Rs216 billion in withholding taxes. Of this, the wholesalers paid Rs28 billion, traders Rs119 billion and retailers Rs69 billion. In the category of others, Rs57 billion in income tax was paid by these three categories. However, if one goes by the definition of the retail sector and its contribution, the sources said, in FY24, payments by the retail sector were Rs484 billion and in this case the net increase was Rs133 billion. The PM Office statement said that Shehbaz Sharif told the meeting that recent improvements in the tax machinery were "encouraging," but reforms must lead to the creation of a sustainable, digitised and facilitative tax system. The PM directed the FBR to accelerate digital transformation, restructure its digital wing with a clear roadmap and enhance enforcement to curb the informal economy. He also stressed the importance of stakeholder consultation in the reform process, particularly with businesses, traders and taxpayers. He reiterated that improvement in the tax system should contribute to boosting national revenue while reducing the tax burden on the common citizen. The meeting was briefed that as a result of reforms and enforcement measures, the tax-to-GDP ratio registered a historic rise of 1.5% in FY25 compared to FY24. However, the FBR missed the IMF condition to increase the ratio to 10.6% despite imposing record taxes. The PM Office said that the number of income tax return filers surged from 4.5 million in 2024 to over 7.2 million by June 30, 2025. FBR officials also reported significant progress under the faceless customs clearance system, which increased revenue and was expected to reduce clearance time from 52 hours to just 12 hours in the next three months.
Express Tribune
10 hours ago
- Express Tribune
Vanaspati manufacturers threaten closure over tax
Listen to article The Pakistan Vanaspati Manufacturers Association (PVMA) has warned of an indefinite nationwide shutdown of ghee and cooking oil production if the Federal Board of Revenue (FBR) does not withdraw controversial tax enforcement powers within 48 hours. At a press conference following the association's General Body meeting in Karachi, PVMA Chairman Sheikh Umer Rehan said the strike was unanimously approved by members. However, the strike is on hold for two days due to ongoing FPCCI-FBR talks facilitated by the Special Investment Facilitation Council (SIFC) in Islamabad. "We have delayed the strike by 48 hours, hoping that negotiations between FPCCI and FBR under SIFC supervision will bring results. If not, we will halt production across Pakistan," Rehan warned. According to a statement released on Wednesday, PVMA opposes new amendments in the Income Tax Ordinance in Budget 2025-26, particularly Sections 40B, 40C, 21S, and 8B. These allow FBR to monitor private businesses and grant power to arrest alleged defaulters without warrants under Section 37A. Rehan said these powers mirror the National Accountability Bureau (NAB), raising fears of arbitrary interference in commercial activities and would lead to harassment. "If NAB-like officers monitored the FBR chairman, could he work freely? Then how can we work under similar pressure?" he asked. PVMA highlighted its economic role, saying the sector is the second-largest taxpayer after petroleum. Rehan said the industry pays 35% tax on imports and 10% on sales but still faces raids and arbitrary rules. He also claimed that utility stores owe the industry over Rs6.5 billion, while billions in sales tax refunds remain unpaid. He added that the sector lacks capacity for immediate compliance with the newly introduced digital invoicing requirement. "Digitisation takes time and investment. We can't do it overnight," he said. The PVMA said it prefers dialogue but warned that if the government fails to act, it will proceed with a shutdown.
