ISLAMABAD:The government has quietly withdrawn the 17% sales tax that it had imposed last month through the mini-budget on imports by foreign diplomatic missions and the United Nations agencies after a warning from the Foreign Office (FO) that other countries may take Pakistan to the International Court of Justice over the move.
The Federal Board of Revenue (FBR) apparently made an illegal move by withdrawing the tax through simple “instructions” instead of getting the Sales Tax Act of 1990 amended by the National Assembly.
Through the February 4 instructions, the government also withdrew the 17% sales tax imposed last month on the imports made by the President of Pakistan, Prime Minister of Pakistan and provincial governors. Where the FBR has withdrawn the sales tax on the country’s top rulers, it has maintained it on bread and other edible goods sold in bakeries and at restaurants.
“On the request made by the Ministry of Foreign Affairs, the issue of tax exemption on imports by diplomats, diplomatic missions and other privileged persons has been reviewed and consequently sales tax shall not be collected on such imports covered under PCT headings 99.01, 99.02 and 99.06 of Chapter 99 of the First Schedule to the Customs Act, 1969,” according to the instructions that the FBR issued last week on Friday.
These instructions have been forwarded to all the customs offices in Pakistan for implementation.
The customs tariff heading 99.01 covers goods imported by various agencies of the United Nations under the United Nations Privileges and Immunities Act, 1948 and the heading 99.02 is about goods imported by diplomats, embassies, consulates under the Diplomatic and Consular Privileges Act, 1972.
