Cable TV operators: FBR works out actual income formula
ISLAMABD: The Federal Board of Revenue has worked out method of calculating actual income of the cable TV operators on the basis of the parameters laid down by the Directorate General of Intelligence and Investigation Inland Revenue (IR). The FBR has issued instructions to all the Regional Tax Offices on Monday to determine the actual tax liability of the cable TV operators across the country.
This is for the first time that the FBR has issued a detailed mechanism for calculation of actual income of the cable TV operators. According to the FBR instructions, in the light of regulatory provisions and categories of CTV operators, the income of CTV operators can be worked out in a legally defendable manner. There are different categories of licensees as defined by the Pakistan Electronic Media Regulatory Authority (Pemra) based on the category of license.
The FBR has informed the RTOs that the category of license reflects the basic threshold ie minimum number of subscribers. From the annual renewal application, the actual number of subscribers can be ascertained, as Rs 1 per subscriber per month plus the fixed renewal fee paid at the time of annual renewal.
To determine the actual tax liability of the Cable TV Operators, from 5% of advertisement receipts, (paid to Pemra) annual receipts under this head can be worked back. By adopting minimum connection charges, receipts under this specific head can also be worked out by the tax department.
The tax officials can also ascertain the monthly subscription charges by applying minimum subscription. The charges to the number of subscribers as reflected from the respective category of CTV operator assigned by Pemra. Moreover, the advertisement rates/charges can be ascertained through discreet local inquiry or even by making a telephone call.
As per policy of the Pemra they have devised the territorial jurisdiction for the issuance of a license of different categories ie out of certain limit an operator has to get a new license, as per study conducted by the Directorate General a cable operator has got seven licenses for different cities, while making assessments of all such cases the receipts and expenses have to be clubbed to arrive at the actual income earned by the concern during a tax year.
In order to identify verifiable expenses in the hands of the CTV Operators, the FBR said that the payments to Pemra clearly reflect the actual volume of the business. Secondly, all payments to the regulatory authorities are verifiable and expense under this cannot be inflated. Third, payments for the in-house channels, for (which the operators select material on their own like CDs, on the requests of the viewers etc). Category wise payments have been defined by the Pemra. This being a verifiable expense can be a helpful tool to amend a case.
The FBR has also communicated an operational strategy to tackle the existing as well as non-existing taxpayers to the RTOs here on Monday. Under the operational strategy, the FBR said that the cases of CTV operators falling under your respective jurisdiction need to be taken up properly. Advisably all such cases need to be clubbed in one jurisdiction so as to ensure a unified and equal treatment. Following steps would help in professional handling of the said cases.
Cases of existing taxpayers/CTV operators: In addition to the ways out already discussed, following steps would facilitate the processing of cases of CTV operators already existing on tax roll. Firstly, the declared version needs to be cross-checked with the Pemra’s category of license. Declared Annual subscription fee need to be looked into, in the light of minimum number of subscribers of the respective category.
Secondly, payments made to the Pemra at the time of annual renewal would reveal the actual number of subscribers. Thirdly, new subscribers enrolled during the year in question can be identified by comparing annual renewal payments to Pemra with the immediately preceding year.
Fourthly, declared advertisement receipts can be verified from Pemra. Any discrepancy therein, may be dealt with, in the light of relevant provisions of law, FBR added. To tackle the issue of non-filers/non-existing taxpayers/CTV operators, the FBR has informed the RTOs that all cases of non-existing taxpayers may be booked on tax roll forthwith.
Secondly, the cases of non-filers may be taken up in the light of their actual tax potential, evident from the respective category assigned by the Pemra. Thirdly, the details of loop holders may be obtained from major CTV operators and all cases of non-filers/non-existing taxpayers may be processed accordingly.
To highlight the significance of the above guidelines and to facilitate the processing of other cases on similar lines, this Directorate General Intelligence IR has carried out a case study in the case of a taxpayer engaged in the business of cable TV services. The results produced by working out receipts of the above taxpayer in accordance with the criterion outlined above show a gross understatement.
These are analysis in just one case which discloses huge discrepancies in the declaration of the taxpayer and actual facts. A properly planned and effectively executed exercise on the points mentioned above is sure to produce more fruitful results in other cases, FBR stated. The Directorate ensures full co-operation in the matter for which it will feel more than happy to assist in case the same was needed on any matter related to the issue, the FBR instructions to the RTO added.
Source: Business Recorder