FBR Unable to Exercise New Tax Laws in the Absence of Federal Govt

The Federal Board of Revenue (FBR) presently cannot issue any notification or statutory regulatory order (SRO) to revise tax rates, impose new taxes or reduce tax rates where approval of the Finance Minister/ECC/Cabinet is required.

The powers of the FBR to issue SROs have been limited under the present circumstances.

Sources told Propakistani that there are four types of SROs. The first category of SROs are those where the FBR is legally empowered to issue notifications under the Sales Tax Act, Income Tax Ordinance, Federal Excise Act and Customs Act.

The second category of notifications covered those where the approval of the Finance Minister is needed. The FBR can issue these SROs only after the approval of the FM.  The third category of SROs required approval of the Economic Coordination Committee (ECC) of the Cabinet. The fourth category of SROs required approval from the federal cabinet.

The FBR can only issue SROs of procedural nature or technical changes, but they cannot make changes in the tax rates. The FBR also cannot issue SROs where the competent authority is the “federal government” in the fiscal laws. Under the present political situation, the FBR can mostly issue procedural or technical SROs.

As there is no Finance Minister under current circumstances, the FBR also cannot issue SRO or move a file for approval where approval of the “Minister-in-Charge ” is needed.

There are situations where the fiscal laws allow the FBR to make changes in the existing SROs. For example, the Sales Tax Act 1990 says: “Where the Board deems it necessary it may, by notification in the Official Gazette, fix the value of any imported goods or taxable supplies or class of supplies and for that purpose fix different values for different classes or description of the same type of imported goods or supplies: Provided further that where the value at which import or supply is made is higher than the value fixed by the Board, the value of goods shall, unless otherwise directed by the Board, be the value at which the import or supply is made”, it added.