Apr 17, 2018

Gilgit Baltistan: Pakistani Government to Re-Impose Taxation Months After Abolition

Several months after abolishing taxes in the region of Gilgit Baltistan, the government of Pakistan is set to make a U-turn on its decision by once again imposing taxation. At the same time, authorities announced the abolishment of the Gilgit Baltistan Council, along with the Kashmir Council in the next couple of weeks. The people of Gilgit Baltistan are protesting this decision, considering that there should not be any form of taxation without constitutional rights and recognition of the region as part of a province of the country.

This article has been originally published by Pakistan Today:

Though the imposed taxes in Gilgit Baltistan (GB) was withdrawn by the federal government after a prolonged protest and long marches across GB a few months ago, the centre is yet again imposing taxes in the region but this time to be collected through Federal Board of Revenue (FBR).

GB council had moved a summary early this month for convening the session of council to discuss the issue of taxation in GB suggesting to invite the finance secretary and FBR chairman to finalise imposition of taxes in the area.

According to the summary, a copy of which is available with Pakistan Today, GB council has suggested the chairman of the council, Prime Minister Shahid Khaqan Abbasi, to convene the 12th session of the Gilgit Baltistan Council to discuss the one-point agenda of the Gilgit Baltistan Council Income Tax Amendment Act, 2018. The FBR chairman and finance secretary may be requested to attend the above meeting as special invitees.

Interestingly, the government has decided to abolish GB council along with the Kashmir Council, the 12th session will be the final meeting of the council in which it will delegate powers to the finance ministry and FBR to collect the taxes in GB, insiders told Pakistan Today.

“The GB Chief Minister Hafeezur Rehman and the regional government has specially requested the prime minister to finalise the decision regarding the tax at GB Council’s forum before shelving it as the ruling party will be in a difficult position in case the same is imposed by it on the direction of the centre,” they claimed. Though the council has six elected representatives from GB but with the majority of selected members from the centre, the upper house represents the federal government.

Through the summary the prime minister has been informed that the people of GB had been protesting against the Gilgit Baltistan Council Income Tax (Adaptation) Act, 2012 since its inception, however, several failed efforts had been made previously to console them and bring about improvements in the said legislation.

The protests in GB became intense in December 2017 and people from all the ten districts gathered at Gilgit and started a sit-in along with a complete shutter down strike. Meanwhile, the GB government engaged and negotiated with the protestors by a Parliamentary Committee of GB Legislative Assembly. Their recommendations were forwarded by the GB chief minister on 28-12-2017 to Ministry of Kashmir Affairs and Gilgit Baltistan (KA&GB) with a request to constitute a working group from the council to examine the said recommendations. After the minister’s approval, the ministry constituted a working group under the chairmanship of MNA and GB Council Member Malik Ibrar Ahmad.

The summary says in a meeting held on January 3, 2018 under the chairmanship of the Prime Minister and GB Council Chairman Shahid Khaqan Abbasi, it was decided that instead of bringing a new taxation act, the existing Gilgit Baltistan Council Income Tax (Adaptation) Act, 2012 shall be amended by incorporating the desired changes in consultation with all the stakeholders. It was further decided that the amendments in the income tax adaptation act, will be submitted to the council subsequently. A summary was moved to PM’s office along with the endorsement of the GB council (through circulation) to restrain the Department of Inland Revenue Gilgit Baltistan and all withholding agents of GB from collection of taxes under the Adaptation Act, 2012.

However, after a series of lengthy meetings between the parliamentary committee and working group of the GB Council, 50 per cent rebates were agreed upon for contractors, associations of persons and companies as on the analogy of salaried person subject to the condition that its members and directors shall be Gilgit Baltistan domiciled holders. However, the officials of GB Council opposed the complete deletion of the withholding tax sections (both cash and non-cash). The submission of GB Council is that either the limit of cash withdrawal be enhanced from Rs50,000 to Rs100,000 or rate of withholding on cash and non-cash he reduced to the minimum.

According to the summary, the matter of withholding tax (both cash and non-cash) is under consideration with FBR and the finance division as these withholding sections were introduced through Finance Act, 2015 by the Government of Pakistan, to document the economy of the Country and to avoid money laundering activities. “Therefore, it is proposed that we may convene a 12th session of the GB Council to discuss the one-point agenda of the Income Tax,” it said.

According to sources, the PM’s secretariat is likely to convene the session of the council in next couple of weeks.

It may recall here that the taxes are widely being opposed and rejected by the people of GB until they are granted the constitutional rights at par with all of the other provinces of the country.

Photo courtesy of Pakistan Today.