ISLAMABAD, Oct 23: The Central Board of Revenue has exempted advertising agencies from the payment of additional tax and penalty accrued due to non-payment of tax in case they got registered themselves with the sales tax department latest by November 15, 2004.
This amnesty was announced through a sales tax notification issued on Saturday. The CBR also notified special procedures for the collection and payment of sales tax by the advertising agencies and were inserted as Chapter XV in the Sales Tax Special Procedures Rules, 2004.
The CBR also exempted the past liabilities in excess of the tax payable on commission received by an advertising agency during the last three years.
By virtue of special procedure, an advertising agency, which was getting the printing job done through a registered vendor, should pay sales tax at the rate of 15 per cent of the commission charges received from the clients.
However, in case the printing job was done by a non-registered vendor, then the advertising agency should pay sales tax at the rate of 15 per cent of the total value of printed and promotional material inclusive of its commission.
The advertising agencies have also been allowed to offset the amount of input tax paid by them on account of taxable purchases, imports made and utilities consumed for furtherance of taxable activities. A special dispensation of the past liabilities has also been granted in the newly-notified special procedure.
The advertising business involving printing and supply of advertising material was peculiar in content and nature. The advertising agencies primarily provide technical assistance to their clients and act as a serving bridge between printers and clients on commission basis.
Hence, they have been arguing that they should pay sales tax on commission charges only. However, since there was no procedure to regulate the collection and payment of sales tax on commission charges, the advertising agencies were practically paying no sales tax against supply of advertising materials to their clients.