Almost every business decision has tax implications, yet what makes this area even more complex is that tax rules are constantly changing. Companies face a daunting task to manage their tax costs and obligations effectively, especially when dealing across borders. ZA offers clients a broad range of fully integrated tax services. ZA approach combines insight and innovation from multiple disciplines with business and industry knowledge to help your company excel.

MAINSTREAM SERVICES

Individual Taxation

Residents are taxed on their world income, which includes domestic and foreign-source income, with a foreign credit for taxes paid abroad (subject to an applicable tax treaty or bilateral reciprocity).

World income is normally taxable whether received in cash or in-kind. Such income includes salaries, bonuses, housing allowances, home leave provided by employer, employer-maintained car, consulting fees and commissions, interest and dividends, rental income, capital gain and individual business income.

Individual taxation is as complex as business tax due to the layers of complexity added every year in the annual Finance Act, therefore, only up-to-date professional advice can guide you through it.

The Pakistan tax system is based on “self-assessment” and automatic penalties are imposed for missing time limits and making errors or paying tax late. Consequently, your affairs require planning and control by experienced professionals familiar with the rules and procedures.

Our Individual Taxation Services include;

  • Tax Compliance– preparing and filing your return, wealth statement, foreign income and asset statement, advising on tax payments due, and reviewing your tax affairs every year;
  • Income Tax and Capital Gains Tax Planning– minimizing or delaying tax on your income or assets by availing tax credits that could be used under the local taxation laws;
  • Investment and Tax Planning – tax efficient structuring of domestic and global investments, including business concerns, government securities and real estate;
  • Trust Taxation and Donations– helping you to understand the tax laws relating to trusts and tax credits available against charitable giving and private foundations;
  • Advance Tax Adjustment– calculation of advance tax adjustments available at the time of filing of income tax return which you have paid at multiple stages throughout the year and assistance in planning to adjust overpaid taxes in upcoming periods;
  • International Tax– advising you if you have overseas interests, live outside Pakistan or plan to move abroad, or if you’re a foreign national considering a move or invest in Pakistan;
  • Amnesty Scheme – helping you to manage your assets and avail the benefits of amnesty schemes on timely and effective manners;
  • Tax Compliance – helping you in dealing with tax authorities and dispute resolution;
  • Tax Audit – supporting anyone facing tax audit.

Corporate Taxation

Corporate Taxation is an organization’s adherence towards laws, regulations, guidelines, and specifications set by the government for its industry. Since regulations are always woven into the laws of the land, businesses must comply with them as failing to comply regulations can have huge impacts on the long-term success of the business from its financial health to its reputation within the industry and clients.

However, efficient corporate tax planning can result in potentially significant improvements in the cashflow of the business and it is ZA’s job to help corporations develop an efficient and compliant tax structure. As a part of this development, ZA helps its clients with the following;

Computation of Taxable Income / Filing of Annual Tax Declaration 

Services provided under this area shall include verification and vetting of taxable income computed by the Company and the corresponding tax liability thereon. The aforesaid activity shall include;

  • Build an understanding, by obtaining detailed understanding, of stream of revenues along with the accounting treatments for classification in minimum, final and normal tax regimes;
  • Analyzing the expenses in detail for apportionment in different streams of revenue;
  • Verification of the admissible / inadmissible expenditures and other adjustments made in the accounting profits to derive the taxable profits;
  • Verifying the application of correct / applicable tax rates in the calculation of tax liability;
  • Analyzing and recalculations of deductions including depreciation, initial allowance, first year allowance, accelerated depreciation to alternate energy project, pre-commencement expenditure, scientific research expenditure and bad debts;
  • Analyzing the allow-ability tax credits, exemptions and rebates, if any;
  • Adjustment of unabsorbed depreciation and brought forward losses;
  • Calculation of other liabilities (e.g. WWF, WPPF, Super Tax etc.)
  • Application and impact of special provisions on account of Thin Capitalization, Related Party Transactions and other general provisions of the Ordinance;
  • Verification of the advance taxes deducted / paid during the year and analyzing the admissibility of prior year refunds; and
  • Prompt completion, disclosure and filing of your tax returns.

Exemptions / Tax Concessions

ZA also facilitates its customers in thorough preparation, assistance and representation before any relevant regulatory authority for obtaining;

  • Exemptions available to new industrial undertakings under 65D of the Income Tax Ordinance;
  • Exemptions available to Greenfield Industry for all types of taxes and duties;
  • Key exemptions available under section 148 and 153 of the Income Tax Ordinance, 2001;
  • Certificate of non-withholding of income tax on payments to non-residents; and
  • Special exemptions available to funds, specific industries and class of persons under any taxation law.

Ensuring of Compliance with Advance Tax Provisions

  • Quarterly review of advance tax estimations / computations in accordance with the provisions of the Ordinance and informing the company of any inaccuracy therein and the probable exposure that may result from such inaccuracy;
  • Planning of advance tax with the Company and representation before tax authorities for its proper compliance;
  • Replying to advance tax notices by filing of estimates with the tax department and subsequent discussions to amicably settle the advance tax liability in the best interests of the company; and
  • Responding and representing the Company to any discrepancy observations raised by the tax authorities in advance tax calculations.

Tax Litigations and Representations

Facing a serious dispute, investigation or litigation from tax authorities can be one of the most challenging times for any organization. Virtually, no area of tax enforcement has escaped this phenomenon, which includes direct taxes and indirect taxes as well as specialist areas.

Tax litigations and representations requires a comprehensive approach involving professionals with sound understanding of law, tactful handling at Departmental as well as Appellate Fora and sound knowledge of business practices. ZA has a dedicated team of specialists to offer effective, practical solutions to clients focused on managing/ resolving all areas of enforcement and audit by;

  • Developing approach against a notice or compliance issued by customs, FBR, PRA, SRB, KPK, BRA;
  • Responding to various sales tax discrepancies raised by FBR, PRA, SRB, KPK, BRA including crests discrepancies and input tax allow-ability;
  • Filing of representations, against inappropriate basis of selection and issuance of notices basing our representation on constitutional validity of such notices and recent judicial precedents, with relevant Authorities;
  • Determination of documentation requirement for proceedings under the laws and assisting in preparation and best presentation of financial records to tax authorities;
  • Preparation and representation in respect of information obtained by tax authorities;
  • Filing tax appeals before various forums including FTO and ADRC;
  • Drafting replies and appeal arguments taking into account, precedents set by the higher forums giving due regard to client’s own history and nature of the Authority;
  • Representations before Revenue / Custom / Provincial Appellate Authorities or dispute resolution forums as Authorized Representatives;
  • Working closely in liaison with the Legal Counsels of clients, securing maximum reliefs from higher courts;
  • Providing amicable solutions to proceedings through effective and continuous follow ups and liaisoning with Authority.

Transaction Advisory and Retainership

Tax law changes make it extremely difficult for non-specialized firms and internal tax departments to successfully navigate and apply the relevant laws. ZA diligently pour through the details of transactions with tax consequence for as long and as far as it takes to discover a truly magnificent solution to mitigate the risks of misinterpretation of laws and potentially enhance the opportunities.

At ZA, we believe that through coordinated understanding of local and international taxation laws, transactions could be structured in a way to balance investor sensitivities and help improve prospective earnings or cash flows while maintaining compliance.

ZA encourages its clients to enter into advisory agreement for real time consultancy regarding their day to day tax issues faced by the taxpayers in routine nature transactions to mitigate the risks associated with misapplication of provisions of law. This benefits to reduce the chances of high exposures during audits/ compliance proceedings.

The scope of services to be provided are discussed under each broader area that includes;

FEDERAL & PROVINCIAL SALES TAX LAWS [‘LAWS’]

We will provide advisory services in the following areas of interest, on the areas discussed in depth below;

  • Sales Tax Act, 1990 [‘Act’]
  • Federal Excise Act, 2005
  • Punjab Sales Tax on Services Act, 2012 and related rules made thereunder;
  • Sindh Sales Tax Act on Services Act, 2011 and related rules made thereunder;
  • Khyber Pakhtunkhwa Sales Tax on Services Act, 2013 and related rules made thereunder;
  • Balochistan Sales Tax on Services Act, 2015 and related rules made thereunder; and
  • The Islamabad Capital Territory (Tax on Services) Ordinance, 2001.
Scope of Sales Tax Applicability
  • Classification of particular goods or machinery to a Schedule, considering HS Codes of that article, i.e. whether zero rated, exempt or subject to reduced rate or standard rate of 17%;
  • Applicability of Further Tax with respect to the sales made to Unregistered Persons and exemption thereto;
Claim ability of Input Taxes
  • Admissibility and inadmissibility of input sales tax paid on acquisition of any plant, machinery, raw material etc. for the purpose of business running in vision of the following;
  1. Provision of Section 8B of the Act and relevant applicable Provincial Laws;
  2. R.O. 490(I)/2004 amended time by time through S.R.O.450;
  3. Precedents by various Appellate Forums; and
  4. Any other provisions of the Act, Rules, S.R.O.s and Notifications dealing with input taxation;
Withholding of Sales Tax
  • Applicability of the provisions of the withholding agent under the Act and Provincial Laws upon the Company;
  • Applicability of sales tax different withholding rates on specific transactions or classes of transactions;
  • Application of exemption principles and criterion pertaining to withholding of sales tax on specific transactions or classes of transactions;
  • Advisory on issues relating to payment of withheld amount in Government Treasury, at PSID stage or at the time of filling of monthly sales tax returns;
Documentation
  • Particulars for issuance of valid Sales Tax Invoice and circumstances in which a proper Debit or Credit Note can be issued and adjustments available in its correspondence against output tax;
  • Books and records, including electronic records, a registered person is required to be maintained under the Act & Provincial Laws and the retention period within which these records can be scrutinized by the authorized officer of the Board;
Miscellaneous
  • Advisory regarding practice of filing, sanctioning and processing of refund claims of input tax;
  • Impact on the Company with respect to sales tax paid to the vendors in case of blacklisting/ suspension of the vendors; 
  • Interpretation of amendments in the provisions of the Act & Provincial Laws along with clarifications of new S.R.O.s or notifications issued time to time by the Board and inference thereto on the operations of the Company;
  • Interpretation of terminologies stated under the Act & Provincial Laws;
  • Applicability of sales tax on the jurisdictions of Azad Jammu Kashmir, Gilgit Baltistan and tribal areas of FATA & PATA;
  • Penalties that are imposed under the Act & Provincial Laws in consequence of committing any offence;
  • Advisory on integration of various functions of a system with FBR along with operations of the system and benefits available in this retort to the integrated Company;
  • Implication of specific provisions of the Act & Provincial Laws for supply or purchase of merchants/plant & machinery by Five Export Sectors and any relief available thereto;
  • Advisory on privileges available to an exporter registered as “Export Oriented Unit”;
  • Advisory on benefits available with reference to Drawbacks in the event of re-exportation of goods.

Transfer Pricing/ Related Party Transactions – Taxation and Audit

Globalization and the continued growth of international trade have made transfer pricing a material and challenging issue for domestic as well as multinational corporations. Tax regulations in this respect may vary by jurisdiction and worldwide tax authorities are very keen on ensuring their fair share of tax revenue.

The compliance burden for related party transactions wherever incurred either domestic or cross-border with tax rates gaps becomes significant and relating exposures in in taxation laws, for non-compliance, are much costly. All jurisdictions throughout the world are concerned that multinational companies are eroding their tax base through transacting with its related parties.

ZA tailors its transfer pricing services in ways that best add value to the business operations of its clients and maximize the potential to increase profitability by;

Documentation
  • In case of Ultimate Parent Entity – providing assistance in assembling information for maintaining “Master File” and CbC Reporting to local tax authority;
  • In case of Subsidiary Entity – providing assistance in preparing documentation for submission to Ultimate Parent Entity;
  • Providing support in maintaining Local File, in every scenario, for submission before Local Tax Authority, under the law;
Transaction Advisory
  • Assisting in preparation and review of transfer pricing policy/ arm’s length pricing approach for managing tax exposure;
  • Specific advisory on transactions with Related Parties to minimize potential tax risks of non-compliance with Arm’s Length Principles;
Tax Audit 
  • Representing before taxation authorities for transfer pricing audit proceedings.

Agreed-upon Procedures

Tax Health Check

Just like people, business should also go under periodic health check to guarantee survival. Tax health check are important in Pakistan due to constantly evolving regulations through change in laws and regulations. To keep pace with the changing business landscape, businesses therefore, must thoroughly asses their tax structures, tax positions and tax compliances on an on-going basis, to ensure that the overall tax positions are backed by adequate support.

A tax health check-up is a review of the tax affairs of a business entity, which is intended to highlight potential weaknesses or risks arising from errors or omissions in the business records and accounting systems, as well as identifying potential tax liabilities.

A tax health check-up report will serve as a business tool to identify major errors or non-compliance with tax regulations which could result in significant tax penalties or unnecessary tax liabilities in future. In this respect, ZA offer following services to mitigate the future risks to the business;

Health Check – Annual Income Tax Return

  • Review the company’s annual audited accounts to determine its taxable income or loss for the period as per applicable income tax legislation;

Health Check – Sales Tax (Federal and Provincial)

  • Review the company’s VAT returns for the period and reconcile them to company’s audited accounts to ensure that sales/income was recognized uniformly as required by the law and advise appropriately;
  • Review of chargeability of appropriate rate of federal and provincial sales tax, test of claim-ability of input taxes and documentation challenges leading to recommendations based on best practices; and
  • Establish whether the VAT returns and payments were done within the allowed time limit as well as identifying the reverse charge VAT applicable on imported services had been accounted for in accordance with VAT law in place at the time and recommendations to fill the identified gaps.

Health Check – Withholding Taxes (Direct and Indirect Laws)

  • Review the company’s accounts and payment records for the period and confirm whether withholding tax was deducted and remitted to the tax authorities in accordance with the provisions of the applicable tax laws.

Payroll Management Services

Managing payroll can be one of the most time-consuming tasks for all businesses — calculating pay, withholding the various pay deductions, and finally making sure that everything gets paid and filed on time. This is a big task for business owners. ZA can help you process payroll and let you focus on things that matter most, like running your business. Services which are offered in this regard are as following;

  • Obtain monthly payroll information in a prescribed form from management regarding;
    • Attendance;
    • Deductions;
    • Changes in salaries; and
    • Other relevant information.
  • Prepare monthly payroll for the staff on the basis of information provided by the management giving details of salaries and deductions;
  • Send payroll for management approval and for transfer of amount for salary payments and withholding tax payments;
  • Prepare monthly payroll pay slips;
  • Maintain records of monthly deduction and remittance of withholding tax;
  • Send copy of a monthly payroll for the Company’s records;
  • Review the benefits in kind provided by the company to its executives and employees and establish whether they are treated in accordance with tax law requirements;
  • Adjustment of advance taxes, reported to us by the relevant employees, in compliance with applicable provisions of law;
  • Issuance of annual certificate of withholding of income tax on salary; and
  • Ensure the incorporation and payment of other statutory deductions (Social security and EOBI) to the relevant authority as required.

Tax accounting

Due to the increased complexity in International Financial Reporting Standards and the demand for greater transparency, it is difficult to prepare complete tax accounting calculations internally. To help you tackle these difficulties, ZA provides assistance in these areas;

  • Tax provisioning and reporting. Supporting tax provision calculations, validating tax balance sheet accounts and implementing new accounting standards under IFRS.
  • Tax accounting consulting.Technical tax accounting knowledge applied to transactions and other business issues.
  • Tax accounting technology. Improving operating strategy and organization design, tax process and controls, and data and systems effectiveness
  • Tax risk. Identifying and prioritizing key risks and assisting with controls monitoring and remediation

Development of SOPs for recording of information in ERP, issuance of invoices and reporting & disclosure

In every business, the tax department has a clear goal to deliver efficient, credible tax planning, reporting and compliance. Achieving this goal requires that your data, technology, people and processes be properly aligned through formation of proper standardized operating procedures. In this respect ZA provides following services;

  • Build a detailed understanding of the present practice of the Company in respect of recording the information in the ERP.
  • Review the documentation prepared as per the present process followed by the Company.
  • Prepare a detailed report of the weaknesses in the system and As-Is.
  • Prepare flowcharts of the business processes along with suggestion to build a controlled environment for recording of information in ERP system.
  • Provide suggestion regarding the new documentations to be prepared to improve the reporting structure.
  • Prepare formats of invoices to be issued to the customers and vendors which fulfills the requirement of the applicable laws.
  • Provide guidance of three months regarding the implementations of the controls and performs control testing to check the effectiveness of the controls.

SPECIALITY SERVICES

Strategic Planning & business modeling

Market globalization and the rising expectations of customers have drawn organizations into fierce competition. Some innovative organizations are meeting this challenge by creating new values from combinations of products and services.

In the current age, volatility in business conditions are mainly due to the technology disruption which makes the existing business models inappropriate. With digital disruption, every company is facing an impending threat of getting extinct, as its business operations as well as its business portfolios are no longer aligned to the market fashions. Organizations are compelled to review their business models and operations to ensure they continue to be profitable, reallocate resources and investments to businesses which are profitable and operate in high growth markets.

Apart from technological changes, strategic planning is also important to cater rapidly changing economic environment, social and life style changes, regular updating in laws and regulations and tax cost of business.

A bungled business restructuring can turn a good idea into disaster, therefore, ZA is here to support you in strategic planning and restructuring of your business by;

  • Establishing the utmost tax effective structure for your business in the context of different streams of revenues being dealt into;
  • Advisory of adoption of suitable business model e.g. sole proprietorship, partnership, LLP, Company or any other suitable structure;
  • Enlightening you of the opportunities and available tax reliefs like group taxation, group relief, schemes of mergers, adjustment of losses between the group entities, exemptions etc.;
  • Identification of areas of improvements that may ultimately lead to reduction in tax cost;
  • Making use of industry specific tax opportunities;
  • Guidance on taxation incentives available for Greenfield Investments, Special Economic Zones etc.

Sales Tax Function Outsourcing

Sales Tax encompasses every area of a company’s business and have impact on material and product costs, cash flow, profitability and, ultimately, on shareholder value, hence, is an important element to stay ahead in competition.

It is necessary for business entities to discharge their sales tax liabilities in accordance with regulatory requirements of Federal and Provincial Governments for being tax efficient. ZA will help you to ensure timely and smooth compliances with all the sales tax obligations and requirements by;

Federal Sales Tax cum FED & Provincial Sales Tax Returns
  • Preparation and submission of Annexure C regarding output tax of sales tax return;
  • Appropriation and claiming of Input Tax between Federal and Provincial Boards;
  • Checking validity of claim of input tax under the law while giving regard to provisions of “bar on claim of input taxes”;
  • Uploading import and export data from portal and making global reconciliation of the same with general ledgers;
  • Checking the status of suppliers before claiming the input against them. (active or inactive, suspended or black listed supplier);
  • Making appropriate disclosures of Debit/ Credit Notes in sales tax returns;
  • Assisting taxpayers with recovery/ uploading of input taxes by vendors to avoid critical loss of input tax, if required;
  • Computation of sales tax liability and sharing of PSIDs for payment in Government Treasury;
  • Proper filling of the Sales Tax Returns as per the legal requirements;
  • Filling of special annexures (Annexure F, Annexure H etc.)
  • Preparation and filing of Annual Sales Tax Returns.
Preparation & Filing of Sales Tax Withholding Statements
  • Preparation of sales tax withholding PSIDs for payment to Government. 
Global Reconciliations of Sales Tax Returns/Withholdings with General Ledger 
  • Preparation of the global reconciliation of output tax & input tax as per sales tax return and sales tax withholding as per withholding statements with general ledger to avoid any discrepancy between tax records and financial records.

TAX REFORMS AND CLARIFICATION

With the repaid change in the economy through introduction of new technologies and innovative business ideas, the government authorities are required to introduce new reforms to cope with the scope of revolving and dynamic environment. In addition, the authorities have also welcomed businesses to submit budget proposal for suggestions for change in tax laws.

In this regard, ZA also believes that in providing support in all possible means so that the economy and businesses could flourish.

ZA has a team of tested professionals having relevant expertise, links and skills to offer;

  • Obtaining clarifications from revenue authorities regarding ambiguities embedded in existing and newly introduced tax reforms and provisions of law;
  • Obtaining appropriate amendments needed in any rules and regulations issued by the revenue authorities basing amendments on our insights and research;
  • Engagement with authorities for obtaining Advance Rulings on commercial transactions;
  • Filing of budget proposals on behalf of our clients, leading to innovative and proactive changes in tax law; and
  • Engagement in lobbying with our established links with regulators and ministries to support in achieving above objectives.

DUTY EXEMPTIONS, DRAWBACKS, REBATES, APPROVALS, LICENSING, AUDITS AND LITIGATIONS

The Government of Pakistan has provided various facilities under which exemptions and rebates on duties and taxes on import of raw material and commercial goods by manufacturer-cum-exporters or commercial importers-cum-exporters in order to stimulate economic growth, to promote exports and to cover the trade deficits.

ZA’s efforts of obtaining these facilities for its clients has immensely benefitted them not only on the financial but also on the operational front by:

  • Enabling them to explore potential areas where savings in the taxes and duties can be invested
  • Providing them opportunities of financial restructuring
  • Enabling them to bring operational effectiveness to add more value to their products
  • Motivating them to add more value to the country’s economy by contributing to enhance exports

The scope of various services provided by ZA in respect of obtaining these benefits has been summarized below:

Duties and Taxes Remission for Exports [DTRE]

DTRE is a facility provided by the Government of Pakistan under which no duties and taxes are payable at import stage of raw material and commercial goods, a move to enhance the country’s exports and helping the businesses to avoid hassles and costs of claiming refunds.

Scope of services – Obtaining DTRE approvals
  • Preparation and filing of application for availing DTRE facility as per the customs rules which includes the following tasks:
  • Filing of the Appendix–I containing the quantity and value of goods to be imported and exported
  • Calculating the addition in the value of imported goods by calculating the cost of local material, labor and overheads to be allocated to items of exports
  • Disclosing the percentage of wastages on material involved in the manufacturing process
  • Preparation and submission of documents to be attached with the application and resolving the issues (if any) as raised by the customs authorities.
  • Obtaining approval by custom’s appraiser regarding the value of imported goods and related duties and taxes as declared by the client.
  • Liaison with the Input Output Coefficient Organization [“IOCO”] or Engineering Development Board [“EDB”], as the case may be, for obtaining approval of wastages ratio of input material as claimed in the DTRE application.
  • Facilitating the clients during the official visits of customs officers for surveys and investigations necessary for the approval process.
  • Frequent meetings with the customs authorities and obtaining the approval of DTRE to avoid any bottlenecks and delays in the process of clients’ imports and exports.
Scope of our services – Post DTRE
  • Getting amendment in quota as approved under original approval and obtaining the extension in utilization period of quota under DTRE [if required]
  • Preparation of a quantitative reconciliation of goods imported and exported under DTRE within 60 days of expiry of quota utilization period
  • Submission of detailed reconciliation along with documentary evidence of imports and exports and resolving the differences as highlighted by the authorities through supporting documents.
  • Obtaining refund of sales tax, paid at import stage, or getting drawback of duties paid on goods not cleared under DTRE due to any discrepancies
  • Facilitating the client by preparation and submission of requisite documents and explanations during the post-exportation audit conducted by the customs authorities
  • Filling of appeal before the Collector (Appeals) or the Customs Appellate Tribunal against the unfavorable order passed by the adjudicating officer consequent to the audit. 

Scope of Other Services

  • Facilitating the clients in order to get duties and taxes drawbacks, on goods imported into Pakistan for the purpose of export.
  • Facilitating the “Export Oriented Units” for obtaining special exemptions on imported items including Plant & Machinery available under SRO 326/ 327 of 2008 dated March 29, 2008
  • Facilitating the clients in keeping and maintaining the documents and records in the manner prescribed by the rules and regulations
  • Advising regarding the prohibitions and restrictions on various goods to be imported and exported as well as on the levy, collection, exemption and repayment of customs and other duties
  • Resolving problems related to online web portals to ensure smooth management of activities related to imports and exports
  • Advising on the PCT headings for goods and services to be imported by the client so that the duties and taxes may be discharged in light of applicable laws

Tax Due Diligence for Potential Merger, Acquisition, Other Investments & Disposal

Businesses constantly evolve to survive and thrive by expanding into new territories, streamlining the operations or downsizing to a more manageable level of investment. At the time of transformation of your business, ZA can help you in making the best decision for your stakeholders by performing Tax Due Diligence.

Through Tax Due Diligence areas of opportunities, key risks and pitfalls shall be identified by having a fair insight of tax position of target entity and associated mitigation strategies can be incorporated for effective price negotiation and achieving synergies.

ZA has benefited its clients both financially and qualitatively by;

  • Examining comprehensively potential target’s historic tax profile, budgeted/ prospective financial information and business nature for assessing potential tax related risks and opportunities;
  • Evaluating significant tax attributes, credits and incentives;
  • Exploring possible transaction/ acquisition structures for potential tax benefits;
  • Suggesting appropriate financial restructuring alternatives for probable investment by analyzing tax benefits;
  • Assisting with complex group restructuring prior to disposal via IPO, carve out or full disposal;
  • Identifying post closing responsibilities to be addressed like reporting mechanism before relevant revenue authorities.

CUSTOM TARIFF CLASIFICATION (HS CODING) AND PRODUCT TAXATION

Products are classified on the basis of HS Codes developed by World Customs Organization [WCO]. HS Codes are important for Government Officials to identify the goods/products in order to collect taxes and duties at the stage of export, import and local sales.

Scope of Product Classification

Goods/products are taxed on the basis of HS Codes therefore, our expert team uses the HS Codes volumes developed by WCO to identify the HS Code of the relevant product. After that the HS code is searched the Sales Tax Act, 1990 to assign the appropriate sales tax rate. As there are more than on sales tax rates are applicable on different products and after the introduction of POS integration this area is more risky and important for the businesses to minimize their tax exposures. The main benefit for this product classification is to help businesses for better declarations and reduced tax litigations exposures.

SECTOR TAXATION

CONSTRUCTION / REAL ESTATE SECTOR

Construction / Real estate sector has grown significantly over the last few years and this Sector contributes over 2 percent to the GDP. Now, after the conferment of formal industry status, the investment in this sector would grow manifold.

We, at ZA believe in provision of end to end solutions encompassing all aspects of the financial, operational and legislative needs of the sector.

ZA has the right mix of expertise and resources in provision of value adding services to its prestigious clients. Some of the sector specific services, provided by ZA are being referred as follows;

Business Models

  • Designing of cost efficient and compliant business models for development of housing societies and construction projects; and
  • Analyzing the accounting and tax implications in the light of applicable standards and rules / regulations.
Taxation – Compliance Implications under Income Tax Ordinance, 2001 [‘Ordinance’] and Provincial revenue authorities
  • Analyzing the basis for preparation of tax accounts as per the specific features of the Project and advising our clients on the most efficient mode; and
  • Handling of total audits and withholding tax compliance with FBR, tax year wise and projects as whole.

Taxation – Advisory on the Best Possible Interpretation  

We have carried out extensive research work and have analyzed and opined on the following areas / provisions of the Ordinance / provincial laws

  • Implications of section 7C [Tax on builders] and section 7D [Tax on developers];
  • Implications of Section 113 [Imposition of Minimum Tax on Builders and Developers]
  • Implication of section 236K [Advance tax on purchase or transfer of immovable property]
  • Implication of section 227C [Restriction on Purchase of Certain Assets]
  • Implications of Section 4B [Super Tax] on Capital Gain arising on sale of Immovable Property;
  • Analysis and implications of the applicable provisions of Punjab Sales Tax on Services Act, 2012 on Builders and Land Developers; and
  • Other day to day transaction advisory on various aspects.

Retail Industry

Retail is the process of selling consumer goods or services to customers through multiple channels to earn a profit. Retail industry operates on a business model having high volumes/turnovers with low margins to provide best possible prices to its customers.

In order to attract Foreign Direct Investments [FDI] Pakistani Government give tax incentives to this industry as per the Clause 57 of Part IV of the Second Schedule of the ITO, 2001. The main incentive given to this industry is exemption from minimum tax u/s 113 of the ITO, 2001 for the first ten years from the commencement of business. Later via Finance Act, 2016 reduced rate is applicable @0.5% till Tax Year 2021 and @1% thereafter.

The other exemption given is from withholding u/s 153 of the ITO, 2001 as a “recipient” and as a “payer”. However, via Finance Act, 2015 the exemption as a “payer” has been withdrawn.

Further, the other issue is the application of provision of section 8B read with SRO 1190 dated October 02, 2019. According to the application of this provision retailer(Tier-I) shall adjust the input tax up to maximum of 95% of the output tax which causes cash flow problems in long run due to low value additions.

Through Finance Act, 2019, FBR amend the law and keep it mandatory for the Tier – I retailers to integrate their POS with FBR’s software for real time reporting of sales for documenting the economy. Failure to do so 15% disallowance of total input tax per tax period along with the penalties.

STARTUPS

Startups are indispensable for the success of the country; the government of Pakistan is very keen to develop business friendly environment for startups. The steps taken in this direction are introduction of special economic zones, startup legislation and financing policies.

However, there is sad reality that the brilliant mind involved in the formation and success of the startup faces litigations and compliance issues, as they are not aware of the tax laws prevailing in Pakistan. This result in difficulties with foreign investors and penalties and surcharge resulting in loss of revenue and Investment.

In this regard ZA also believes that the startups should be supported in all possible means so that the economy of the country flourished and more investment is driven into Pakistan. Therefore, ZA has formed a whole separate wing that provide one window solutions to the startups so that they could focus on their growth rather than tax compliance matters with the authorities. The services which are offered are;

  • Income Tax Registration (issuance of FBR NTN)
  • Sales Tax Registration (issuance of STRN / GST on services)
  • Provincial Revenue Board Registration
  • Income Tax Consultation
  • Sales Tax Consultation
  • Compliance of Corporate Income Tax Return
  • Comprehensive facilitation in Corporate Sales Tax Return
  • Compliance of E-Filing Withholding Tax Statement
  • Assistance in Issuance of Tax Reduce Rate Certificate
  • Handling Monitoring of Withholding Tax Obligations
  • Handling Statutory Notices from Tax Authorities
  • Availing Tax Exemptions and Concessions provided in different tax laws
  • Formation of Standardized operation procedures (SOPs)
  • Training of the staff relating to the tax matters.

TEXTILE SECTOR

The textile industry is traditionally associated with high levels of innovation and diverse industrial applications. To be a successful player in this competitive market, one must be flexible and adaptive to the rapid changes that characterize the industry including digitalization. ZA, with more than 10 years of experience in the textile industry across the globe, is equipped to provide end-to-end solutions spanning the complete business dynamics in the textile sector.

As an experienced management consultant in the domain of textiles and apparel, ZA services span the entire breadth of the taxation, strategy formulation & implementation, investment strategies and research & development. Our team has the expertise to provide timely, knowledgeable and insightful advice for projects and operations of the textile sector concerning taxation. The ZA team has worked on strategy and taxation assignments in the leading manufacturing concerns in this sector.

Our philosophy is two minds are better than one. ZA will work on a level playing field with every employee, working as peers to identify any inefficiencies and issues that may surface and reduce taxation costs inherent in this sector.

Some of the sector specific services, provided by ZA, in the field of taxation, are being referred as follows;

Facilities for Exporters
  • Availing Tax Exemptions on duties and taxes under DTRE, EOU regimes and other similar provisions of law, in order to reduce cost of business and save critical cash flows;
  • Representation on behalf of clients in audits and litigations arising as a result of above exemptions;
  • Availing Duty Drawbacks at the time of export of products;
  • Obtaining zero rated / reduced rate certificates available to exporters under the provisions of sales tax and income tax laws;
  • Advisory on Customs Tariff Classification of products and its taxation and related litigation;
  • Advisory on cross border transactions involving complex treatments of double taxation treaties;

 

Refunds Challenges
  • Providing extensive supports by hand on staff for performing refund calculations and preparation of documentary evidences;
  • Representation on behalf of clients before authorities for settlement of Refund cases on factual and legal basis;
  • Engaging in lobbying with our established links with regulators and ministries to support in achieving above objectives;
  • Representation on behalf of clients in post refund audits.
Retail Segment
  • Point of sale integration with FBR’s software for real-time reporting of sales to avail reduced rate of Sales Tax;
  • Advisory relating to tax risk involving to toll manufacturing;
  • Advisory relating to availing benefits as a directs importer of retails goods; and
  • Advisory relating to business restructuring of undertakings involved in both manufacturing and retailing process to avail inputs for cost efficiency.
General Advisory / Services
  • Advisory on issues of claim-ability of sales tax in the Sales Tax Returns covering vast range of rules and regulations made under the Sales Tax Act, 1990;
  • Analysis and implications of the applicable provisions of Punjab Sales Tax on Services Act, 2012
  • Handling of Withholding Tax Obligations & Statutory Notices from Tax Authorities
  • Advisory on issues of claim-ability of sales tax in the Sales Tax Returns covering vast range of rules and regulations made under the Sales Tax Act, 1990;
  • Analysis and implications of the applicable provisions of Punjab Sales Tax on Services Act, 2012;

HS Coding for products

  • POS integration
  • Industrial and technological support for initial set-up
  • Improving and restructuring of operations
  • Strategy and marketing services for new market entry
  • New product development
  • Supply chain management
  • Branding
  • Retailing
  • Partner search
  • Future strategies build-up