OICCI Taxation Proposals 2021-22 Recommends Unified Sales Tax Rate - Android

The Overseas Investors Chamber of Commerce and Industry (OICCI) submitted comprehensive Taxation Proposals for the Federal Budget 2021-22, which highlighted… Read More

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The Overseas Investors Chamber of Commerce and Industry (OICCI) submitted comprehensive Taxation Proposals for the Federal Budget 2021-22, which highlighted various measures required to streamline the complex tax regime, incentivize the legitimate taxpayer through Ease of Doing Business measures and ensure filing of tax returns by all income earners.

Commenting on the Taxation proposals, Irfan Siddiqui, OICCI President, acknowledged that “GoP has taken various bold measures in the face of many economic challenges, including those emanating from the COVID-19 impact on the local and international trade and business”.

Siddiqui added, “OICCI members are fully conscious that the continuing spread of COVID-19 poses exceptional challenges to the government and have, therefore, decided not to seek a number of tax relief measures which, under normal circumstances, would have been justified to boost FDI and align Pakistan to compete with other regional countries.”

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OICCI has strongly recommended that the Minimum Tax regime should be rationalized with a lower level general tax rate and immediately reduced to 0.2 percent for certain industries, like oil refining and oil marketing companies, with high turnover and low/government-regulated margins.

Moreover, the Withholding tax regime (WHT) with over 45 rates is cumbersome and needs to be immediately rationalized to 5 rates for filers. The final Tax regime should be abolished, and all withholding taxes should be made adjustable.

FBR should ensure that all those persons who have been subjected to withholding taxes should file regular tax returns.

OICCI Secretary General, Abdul Aleem, giving further details of the key Taxation proposals from the chamber, highlighted the need to introduce one unified Sales Tax rate of 13 percent, as applicable in Sindh, and one common Tax Return Form throughout the country, filing of a single tax return with FBR instead of separate ST returns to the authorities in every province.

He also stated Income Tax rebate of 2 percent for Shariah Compliance investment has not been effective and the intent of the regulators will not be realized until these are aligned with SECP Shariah regulations.

Abdul Aleem also stated that OICCI recommended a substantial increase in FED on unmanufactured tobacco to arrest massive tax evasion in the tobacco industry.

This, together with the introduction of the Track and Trace Monitoring system, will boost FBR revenue significantly. OICCI also proposed introducing stringent controls and penalties for illicit trade across the whole value chain.

Pending review and revision of the Afghan Transit Trade Agreement (ATTA), there is a need to harmonize duty and tax rates to remove the incentive for duty evasion.

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Highlighting the need for Ease of Doing Business and promoting tax culture in the country, OICCI has recommended that the tax regime should be simplified with a massive reduction in the number of tax payments and filing of various forms/returns.

Pending tax refunds should be settled within 45 days, and inter-adjustment of income/sales tax refunds should be allowed in the law.

In line with the latest focus in the country on digitization of the economy, FBR and associated tax authorities need to substantially upgrade their use of digital technology, data analytics, including Artificial Intelligence tools to effectively use a strong database already available in the country from NADRA and other documented sources to ensure that all income earners regularly comply with the tax requirements.

In conclusion, Abdul Aleem observed that OICCI members believe in the potential of Pakistan, despite challenges, which can be harnessed with the positive and regular engagement of relevant authorities and the private sector.

There is a need to continuously improve and align policies and practices in Pakistan with the best in the region to be able to attract sizeable FDI in the manufacturing, IT and services export, and other job-creating sectors.

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