MAQBOOL HAROON SHAHID SAFDAR & CO. CHARTERED ACCOUNTANTS. KPK FINANCE BILL

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1 MAQBOOL HAROON SHAHID SAFDAR & CO. KPK FINANCE BILL 217

2 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS- 217 KHYBER PAKHTUNKHWA FINANCE BILL 217 This memorandum has drafted to portray the significant changes which have been proposed to be incorporated in Khyber Pakhtunkhwa Finance Bill 217. These changes are mainly relating to Khyber Pakhtunkhwa Sales Tax on Services Act 212, We have prepared this commentary for benefit, information and guidance of our prestigious clients both local and foreign clients doing services business in Khyber Pakhtunkhwa, Pakistan and it is available at our website These changes proposed in Khyber Pakhtunkhwa Finance Bill 217 will be generally be applicable from 1st July, 217 until and unless specified. The notes specified in this document are based on Finance Bill 217. This finance bill shall be published as Finance Act 217 as and when enacted. The memorandum is aimed at providing general guidance with the objective of keeping our clients and staff abreast of the changes in the aforementioned laws. MHSS accepts no duty of care or liability for any loss occasioned to any person acting in this publication. The readers are therefore advised to seek professional advice before exercising any judgment, interpretation of any legal provision and acting there upon. 1

3 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS- 217 AMENDMENT OF WEST PAKISTAN ACT No. V OF In the West Pakistan Urban Immovable Property Tax Act, 1958 (W.P Act No. V of 1958) For existing Schedule-1, the Scheduel-1 specified in Appendix-1 to this Act shall be substituted; and S# Category 1 Up to 5 (other than selfoccupied) 2 Exceedin g 5 but not exceeding 1 3 Exceedin g 1 but not exceeding 15 4 Exceedin g 15 but not exceeding 18 5 Exceedin g 18 but not exceeding 2 Rate of tax for areas of Provincial headquarter as notified by Gov. (per annum) (Rs) A B C Rate of tax at Divisional headquarter (per annum) (Rs) Other than Rate of tax in suburban areas of Divisional headquarter (per annum) (Rs) Other than Rate of tax at District headquarter (per annum) (Rs) Other than Rate of tax at District other than District Headquarter (per annum) (Rs) Other than

4 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS Exceedin g 2 but not exceeding 3 7 Exceedin g 3 but not exceeding 4 8 Exceedin g PART B Building acquired for the use by Government, Semi-Government, Non-Government Organization, Development Financial Institutions, private commercial organization, guest houses, hostels or by Banks shall be assessed and taxed twenty percent of the actual annual rent. In case building other than exempted under section 4 of the Act, which are owned and occupied by such organization, tax shall be levied on the assessed annual rental value of such buildings on the rate prescribed herein before. PART C Tax on properties let out on rent, lease or other arrangement and not in use of their registered owners will be double of the above, except for the category-1 (up to 5 marlas) EXPLAINATION: Categorization of area in Provincial Headquarter into Category A, B or C shall be by way of notification by the Local Government & Rural Development Department, to be notified from time to time. In Divisional and District Headquarters. are approved and include those areas, which are declared so by Local Government & Rural Development Department from time to time. In Schedule-II,- At S.No.7 for the figure 15 and 75 the figure 22,5 and 11,25 shall respectively be substituted and At S.No.7A for the figure 15, the figure 2, shall be substituted. AMENDMENT OF KHYBER PAKHTUNKHWA ACT No. IV OF In the Khyber pakhtunkhwa Finance Act, 199 (Khyber pakhtunkhwa Act No. IV of 199), in section 7, for the existing Table, the Table specified in Appendix-II to this Act shall be substituted. 3

5 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS- 217 Sr.No. Description of Tax payers Proposed rates (Rs) 1 (i) All persons engaged in any profession, trade, calling or employment, other than those specifically mentioned hereinafter, in the Khyber Pakhtunkhwa Province, whose monthly income or earning (a) When exceeds Rs.3, but not exceeds Rs. 1, (b) When exceeds Rs.1, but not exceeds Rs. 2, (c) When exceeds Rs.2, but not exceeds Rs. 5, (d) When exceeds Rs.5, but not exceeds Rs. 1, (e) When exceeds Rs.1, but not exceeds Rs. 2, (f) When exceeds Rs.2, but not exceeds Rs. 5, Exempted , (ii) Employees of Federal and Provincial Government Drawing pay in Basic Scales (a) BS-1 to 4 (b) BS-5 to 12 (c) BS-13 to 16 Exempted 1 2 (d) (e) (f) (g) BS-17 BS-18 BS-19 BS-2 and above 3 5 1, 2, 2 All limited companies, Modarbas, Mutual Funds and any other body corporate with paid up capital and reserves in the preceding year, whichever is more (a) When not exceeding Rs.1 million (b) When exceeds Rs.1 million but not exceeds Rs. 25 million (c) When exceeds Rs.25 million but not exceeds Rs. 5 million (d) When exceeds Rs.5 million but not exceeds Rs. 1 million (e) When exceeds Rs.1 million but not exceeds Rs. 2 million (f) When exceeding Rs.2 million 27, 36, 5, 75, 95, 1, 4

6 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS Persons, other than companies, owing factories, commercial establishment, private education, institution and private hospitals having the following commercial establishment (a) Any commercial establishment/factories having 1 or more employees which have not been otherwise explicitly given in this table. (b) Private clinics & hospitals having up to 1 employees. (c) Private clinics, hospitals having employees more than 1 but not more than 5 (d) Private clinics & hospitals having more than 5 employees (e) Private medical colleges (f) Private engineering institutes having degree programs 1, 1, 5, 1, 1, 1, (g) Private business education institutes Having up to 1 students Exceeding 1 students (h) Private law colleges (i) Private education institution including professional and technical institution other than specified at e, f,g & h charging monthly fee not exceeding 1 per student (j) Private education institution including professional and technical institution other than specified at e, f,g & h charging monthly fee exceeding Rs. 1 but not exceeding Rs. 2 per student (k) Private education institution including professional and technical institution other than specified at e, f,g & h charging monthly fee exceeding Rs. 2 but not exceeding Rs. 5 per student (l) Private education institution including professional and technical institution other than specified at e, f,g & h charging monthly fee exceeding Rs. 5 per student 7, 1, 1, 5, 7, 2, 1, 4 Holding of import or export license assessed to income tax in the preceding year with annual turnover- (a) When not exceeding Rs. 5 4, (b) When exceeding Rs. 5 5, 5 Clearing agent licensed or approved as custom house agents. 1, 5

7 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS Travel agents (a) IATA travel agents approved (b) Non-IATA approved (c) Hajj and tour operator 15, 8, 15, 7 Restaurants/Guests houses liable to Sales Tax 15, 8 Professional caterers 15, 9 Wedding halls/lawns (irrespective of their nomenclature) 3, 1 Advertisement agencies 1, 11 Doctors (a) Specialists (b) Non Specialists including medical practitioners, Hakeem`s, Homeopaths etc. (c) Dentists 2, 1, 15, 12 Diagnostic and Therapeutic Centers including pathological and chemical laboratories (a) Located at Divisional Head Quarter (b) Located at other places 2, 7, 13 Contractors, Suppliers and Consultants who, preceding financial year supplied to the Federal or any Provincial Government or any local authority in the District, Goods, Commodities or rendered services of the value (a) When exceeding Rs. 1 but not exceeds Rs..5 million (b) When exceeding Rs..5 million but not exceeding Rs. 1 million (c) When exceeding Rs. 1.5 million but not exceeding Rs. 2.5 million (d) When exceeding Rs. 2.5 million but not exceeding Rs. 1 million (e) When exceeding Rs. 1 million but not exceeding Rs. 25 million (f) When exceeding Rs. 25 million but not exceeding Rs. 5 million (g) When exceeding Rs. 5 million 4, 5, 7, 18, 25, 3, 1, 14 Petrol/Diesel/CNG filling station 12, 6

8 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS All establishment including video shops, real estate shops/ agencies, card dealers, and net cafes assessed or not assessed to income tax in the preceding financial year. 5, 16 Chartered Accountants with and independent audit practice and 15, excluding those who are employed in companies not owned by them. 17 Vehicle Service Station 8, 18 Transporters/Transport companies (a) Within Provincial Headquarters limits (b) Others 3, 2, 19 Member of Stock Exchange 5, 2 Money Changer (a) Within Provincial Headquarters limits (b) Others 1, 5, 21 Health Fitness Centers/Gymnasium (a) Within Provincial Headquarters limits (b) Others 2, 1, 22 Jewelers 1, 23 Departmental Stores 1, 24 Electronics Goods Stores 1, 25 Cable Operators 1, 26 Printing Presses 1, 27 Pesticides Dealers 1, 28 Tobacco Whole sellers 2, 29 Whole Sale Dealer/agency holder 1, 3 Chemist/Druggist/Medical Store 1, 31 Tailor Shops (a) Shalwar Qameez+wastecoat 5, (b) Shalwar Qameez+wastecoat+pent shirt 1, AMENDMENTS IN THE KHYBER PAKHTUNKHWA ACT No. XXI OF 213 In the Khyber Pakhtunkhwa Finance Act, 213 (Khyber Pakhtunkhwa Act No. XXI of 213), in First Schedule, after existing entry 983.3, the following new entry shall be added, namely: Ride hailing services 7

KHYBER PAKHTUNKHWA BILL HIGHLIGHTS- 217 PARTNERS MUHAMMAD MAQBOOL, FCA Fellow member of Institute of Chartered Accountants England & Wales, Canada and Pakistan.

, and Sadat Hyder Qamar & Company (Chartered Accountants) He is Senior Partner of MHSSCo.

9 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS- 217 PARTNERS MUHAMMAD MAQBOOL, FCA Fellow member of Institute of Chartered Accountants England & Wales, Canada and Pakistan. He also graduated as Master of Commerce from University of Punjab in He has been senior partner in Qamar-ul-Islam & Co., and Sadat Hyder Qamar & Company (Chartered Accountants) He is Senior Partner of MHSSCo. Professional Experience and Achievements: He has 22 years accountancy experience in the field of Financial Consultancy, System Consultancy, Audit, Corporate and Taxation matters. He has rich experience of handling a large number of national and international consultancy assignments. Presently, he is council member of ICAP. He was Vice Present of ICAP. He was Past President of Association of Pakistan Institute of Public and Finance Accountants (1995), Chairman Education and Training Committee of ICAP ( ) and represented ICAP on International forums. MALIK HAROON AHMAD, FCA Fellow Member of Institute of Chartered Accountants of Pakistan. He also graduated as Bachelor of Commerce from University of Punjab in He worked in the capacity of Senior Manager Tax Ford Rhodes Sidat Hyder & Company (Chartered Accountants), a member firm of Ernst & Young International, one of the big accountancy firms in the world. Professional Experience and Achievements: He has 16 years experience in the field of consultancy especially Taxation matters, Audit and Corporate. During his service, he gained diversified experience of corporate tax planning, counseling and benefit optimization, handling matters relating to Capital Value tax, Provincial Professional Tax, Corporate Asset Tax. He supervising a large team of employees (around 15) working in the fields of Corporate Compliance Services, Internal Control development and Re engineering Services, Audit & Assurance, Accountancy assignments. He is also Life time member of Lahore Tax Bar Association. He is a writer of three books published by the Professional Business Publications [PBP], Emile Wolf International United kingdom. He is writer of Articles on different issues in the Newspapers and Magazines. He is also interviewed as tax expert in TV shows on different taxation issues. 8

KHYBER PAKHTUNKHWA BILL HIGHLIGHTS- 217 SHAHID MEHMOOD SHAKER, FCA Fellow Member of Institute of Chartered Accountants of Pakistan. He qualified as Chartered Accountant in June 23.

He worked as a partner in Qadeer and Company, Chartered Accountants (from February 25 September 29) and also worked as CFO in Ayesha Textile Mills Limited (from September 22- February 25).

10 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS- 217 SHAHID MEHMOOD SHAKER, FCA Fellow Member of Institute of Chartered Accountants of Pakistan. He qualified as Chartered Accountant in June 23. He also qualified his MBA in finance in the year He worked as a partner in Qadeer and Company, Chartered Accountants (from February 25 September 29) and also worked as CFO in Ayesha Textile Mills Limited (from September 22- February 25). Professional Experience and Achievements: He has 5 years experience in the field of consultancy especially Audit, System development and System Evaluation assignments. He has very rich experience of conducting various assignments in External audit as well as Internal Audit section specially assignments relating to Financial Institutions, Textile sector, Construction companies, Steel Sector, Leather Sector, Rice Sector, Sugar, Power Sector etc. He is presently assigned the task to prepare opinions on different aspects of corporate laws and foreign currency exchange control regulations. MUHAMMAD SAFDAR, FCA Fellow Member of Institute of Chartered Accountants of Pakistan (ICAP). He did his Bachelors from University of Punjab in He started his career in 25 as proprietor of Muhammad Safdar & Co. Chartered Accountant. Professional Experience and Achievements: He is experience and expert in the areas of Financial Advisory, Feasibility studies, Corporate restructuring, Tax planning, Compliance Services, Audit and Assurance Services. He is also working as advisor to the Board of a number of industrial undertakings. He was also a visiting faculty member of University of Punjab. 9

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13 KHYBER PAKHTUNKHWA BILL HIGHLIGHTS- 217 MHSS Clients INDUSTRIES Large Number of Chinese Clients Infrastructure Chemicals Energy, Utilities & Mining Hospitality & Leisure Entertainment & Media Engineering Companies Forest, Paper & Packaging Government & Public Services Transformers Manufacturers Food & Agriculture Industrial Manufacturing Contracting Companies Metals Pharmaceuticals & Life Sciences Dairy Farms & Processing Retail & Consumer Hospitals Information Technology Pesticides Transportation & Logistics Mobile Phone Manufacturers Automotive Non-profit Organizations SERVICES Corporate Compliance Audit and Assurance Services Human Resource Services Registrations Internal Control Development & Reengineering Legal Services Accounting & Book Keeping Tax Compliances & Advisory Services Business & Financial Consulting CONTACT US Lahore Islamabad Clients Contact person Karachi Clients Contact Person Address: 71- C3 Gulberg III, Lahore. Tel: Fax:

EY Ford Rhodes Chartered Accountants

EY Ford Rhodes Chartered Accountants Chartered Accountants KHYBER PAKHTUNKHWA BUDGET BRIEFING 2017 This Memorandum is correct to the best of our knowledge and belief at the time of publication. It is intended to provide only a general outline