KARACHI: The Federal Board of Revenue (FBR) is mulling over the Large Taxpayers Unit (LTU) Karachi’s suggestion to withdraw an incentive allowed to banks on advances through their foreign branches.
The banks have been allowed losses of one percent against total advances given during a year. However, the banks are misusing the facility by claiming huge advances to their foreign clients through branches outside Pakistan.
The sources said the unit had informed the FBR that the domestic banks were claiming losses and making large provisions in respect of their foreign branches. The unit also demanded the FBR that the assessing officers should be given authority to examine such issues and act accordingly.
“The banks are not providing break up of advances and provisions under separate heads of domestic and foreign loans. Therefore, tax department has no other option but to accept the given figures as reliable,” the unit informed the FBR.
The sources said that as per an estimate, loans that banks are giving abroad are around 20 percent of their total advances. “The withdrawal of the incentive will help the FBR to generate substantial revenue from banking companies,” said an official at the LTU Karachi.