FBR removes tax on diplomats’ imports

The government has withdrawn the 17% sales tax imposed last month on imports by the United Nations agencies and foreign diplomatic missions.

According to media reports, the rollback came after a warning from the Foreign Office that other countries would drag Pakistan to the International Court of Justice due to the move.

Commentators say that the Federal Board of Revenue (FBR) made an illegal move by giving the tax exemption through simple “instructions” and did not get the Sales Tax Act 1990 amended by the National Assembly.

The government also withdrew the sales tax imposed on the imports made by the Prime Minister of Pakistan, President of Pakistan, and provincial governors.

The irony is that the FBR has rolled back the sales tax on the country’s top rulers but has maintained it on bread and edible goods sold at restaurants and bakeries.

Moreover, the instructions have been laid forth to all the customs offices in the country for implementation.

“On the request of the Ministry of Foreign Affairs, the issue of tax exemption on imports by diplomatic missions, diplomats, and other privileged persons has thoroughly been reviewed and sales tax shall not be collected on these imports,” the FBR instructed.

As part of the mini-budget, the government imposed 17% GST on goods imported by diplomats, various agencies of the United Nations, and diplomatic missions.

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In the same mini-budget, the government had imposed taxes on children’s milk, bread, raw materials of medicines, bakery items, and all types of imported machinery. The government had also increased taxes on cellular calls.

What is concerning is the fact that the tax can only be withdrawn through a Presidential Ordinance or by the parliament. The move to remove the levy is not attainable legally, as per independent tax experts. The FBR spokesperson has not commented on the matter.

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