According to the FBR officials, so-called foreign companies that have entered into joint ventures with Pakistani companies have been evading tax for the last seven years inflicting loss of Rs300 billion to the national exchequer.
The official sources in FBR said Pakistan can become self-sufficient in generating revenue if the so-called foreign firms could be brought under tax umbrella, there is no need to seek assistance from IMF as tax evasion of non-resident companies (AOPs) are in thousands in number due to increasing impact of CPEC projects, these firms evade taxes that mount to trillion of rupees, the money that can be collected from these firms could produce federal budget alone.
The sources said FBR currently contributes 70% of the total Federal budget, however, FBR is still unable to collect billions of rupees in taxes and duties due to influential politicians and bureaucrats.
Foreign companies or entrepreneurs also known as non-residents, according to tax law are exempted from tax. However, when these companies enter into a joint venture with local Pakistani companies or individuals they require a license for Pakistan Engineering Council (PEC), and they become resident-persons after entering into a joint venture as per Income Tax Ordinance (ITO) section 84, then they are bound to pay tax under section 153 (I) (c) of the ITO 2001.
The FBR union has written a letter to PM Imran Khan, Finance Minister Asad Umar and newly appointed FBR chairman Jahanzeb Khan in which they have recommended to take strict action against the culprits for embezzlement of Rs300 billion by non-resident companies.
The FBR union has pointed out some 1200 such companies are not paying tax, the previous FBR chairman dismissed 19 unionists for unveiling the details about tax invaders, the FBR eyes on the new government to strengthen the organization and take necessary measures which could stop the revenue leakage and bring all these companies under the tax net.
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