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ISLAMABAD: The federal cabinet has decided to adhere to the past practice and authorised the prime minister to continue to be the final decision-making authority on changes to the prices and taxes on petroleum products.
Chaired by Prime Minister Nawaz Sharif, the cabinet also decided not to change the prices of petroleum products for the month of September 2016.
On Aug 18, the Supreme Court had ruled that the prime minister could not move any legislation, finance/fiscal bill or approve any budgetary or discretionary expenditure on his own, without taking the cabinet into confidence.
Dar says govt will ask apex court for a review; federal cabinet approves tax law amendment, OECD convention
However, announcing the decisions reached in the cabinet meeting, Finance Minister Ishaq Dar told reporters that though the government would continue to comply with the apex court’s order, it would be filing for a review of this decision.
He said the cabinet had not only confirmed the changes made to the rate of sales tax on petroleum products in the past, but also restored the “past practice” of making changes in oil prices.
As per practice, the Oil and Gas Regulatory Authority (Ogra) would move a summary seeking changes in the prices of petroleum products to petroleum ministry; the Federal Board of Revenue (FBR) will suggest changes to the rate of sales tax on petroleum products to the finance ministry, and both will finally be approved by the prime minister.
Flanked by Information Minister Pervaiz Rashid and acting Information Secretary Saba Mohsin Raza, the finance minister also announced that changes to oil prices can also be made fortnightly, following the cabinet’s approval.
He said that in compliance with the Supreme Court’s order, the cabinet had signed off on all decisions taken over the past three years, even when cabinet approval was not acquired.
Decisions
In addition to determining the rate of sales tax on petroleum products, the cabinet also approved the Tax Laws (Amendment) Ordinance 2016,on Wednesday.
The ordinance makes changes in the tax laws regarding the input tax adjustment issues with provinces, as well as changes in the procedure for property valuation tax.
It was decided that FBR would issue tax directories of parliamentarians and general taxpayers in the next two to three weeks, while the Banking Transactions tax of 0.4pc was extended again for the month of September.
Following the meeting, Finance Minister Ishaq Dar said that the cabinet had approved the Multilateral Convention on Mutual Administrative Assistance in Tax Matters with the Organisation of Economic Cooperation and Development (OECD), which he would sign on Sept 14.
“I will leave for Paris on Sept 13 to sign the agreement with OECD, which has the representation of 100 countries,” Mr Dar said, adding that the OECD secretariat had invited Pakistan to become a member because the country fulfilled all its requirements.
The agreement, which will be implemented by 2017-end and fully activated from FY2018-19, will enable Pakistan to access an automated global tax database. Mr Dar said the OECD model is much better than a simple bilateral arrangement seeking information about tax matters.
The cabinet also approved the initialled draft of the revised convention between Pakistan and the Swiss Confederation for the avoidance of double taxation with respect to taxes on Income.
Elaborating, the minister said this process was initiated in 2014 and a two-member Pakistani delegation had held successful negotiations with Swiss authorities in June, 2016.
The agreement will have to be approved by the Swiss parliament before it can be signed by the two countries, Mr Dar said, adding that it may take a year or so to complete the entire process.
The cabinet also approved the third protocol of the agreement between the governments of Pakistan and China for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income. After this approval, both Pakistan and China will now sign the initialled draft.
Also approved was the Saarc Agreement on Motor Vehicles and Railways for Intra-Regional Connectivity, changes to the Rs5 coin and the introduction of the Rs10 coin. A presentation was also made on the Sustainable Development Goals programme.
The cabinet accorded confirmation to decisions taken by the Cabinet Committee on Restructuring (CCoR) in meetings held in December 2013, July 2014, November and December 2014, August, September and October 2015 and also ratified the decisions of the Economic Coordination Committee (ECC) meeting held on August 29, 2016.
In response to a question, the minister admitted that the current foreign exchange regime was amended in 2001 to allow capital flight foreign currency accounts. Under the amendment, forex account holders can freely transfer any amount at any time. While the minister deplored what had already transpired, he said the government was working on amendments to curtail such practices.
Published in Dawn, September 1st, 2016
