October 14, 2006	Saturday	Ramazan 20, 1427

KARACHI, Oct 13: The Central Board of Revenue and the Sindh government have joined hands to check evasion of sales tax on locally-assembled motorcycles at the manufacturing stage.

On a request from the CBR, the Sindh ministry of excise and taxation has taken steps to ensure that no motorcycle, on which sales tax has not been paid at the manufacturing stage, gets registration.

Giving details of the arrangements, Shoaib Siddiqui of the ministry told Dawn that after October 15 no motorcycle would be given registration unless the buyer produced a proper sale invoice, which inter alia showed sales tax deduction by the assembler.

About 400 bikes are registered at the excise and taxation department daily. Mr Siddiqui said that the complaints of sales tax evasion were mainly related to 22 industries manufacturing bikes in the country under the Chinese franchise.

The CBR suspected that in many cases sales tax was not deducted by the manufacturers at the assembly stage, as the buyers were not producing a proper sales invoice at the time of registration. They only submitted a letter from the dealer showing a full-sale mount without mentioning any tax deductions.

Sales tax on imported vehicles and bikes is deducted at the customs stage, while local assemblers of cars and bikes are required under the law to deduct tax at the manufacturing stage and deposit the same in the treasury.

According to the CBR sources, assemblers of Japanese cars and bikes were regularly deducting sales tax at the supply stage. It was also possible for the tax authorities to check compliance because there were only a few assemblers. But with the advent of assembling of Chinese bikes by as many as 22 industries, it was noted that in many cases the assemblers were not deducting sales tax as required under the sales tax act.

This compelled the CBR to seek cooperation from excise and taxation ministries in various provinces to plug the revenue leakage. Consequently, the Sindh excise and taxation department made it mandatory for all bike owners to produce a sales invoice at the time of registration. No request for registration will be entertained after October 15, if the application is not accompanied with a proper sale invoice.

Mr Siddiqui pointed out that elaborate arrangements had been made to collect motor vehicle tax in Karachi and elsewhere in the province and a computerised collection system installed since 1992 has eliminated chances of leakage of revenue. At present 11 branches of National Bank of Pakistan are collecting motor vehicle tax in the city. Besides, there are 40 collection counters at the main excise and taxation office at the Civic Centre, which collect tax and take care of registration and transfer matters.