PBC opposes taxation measures including fixed Super Tax on businesses

ISLAMABAD-The Pakistan Business Council (PBC) has opposed the government taxation measures including fixed Super Tax on businesses which would create more problems and double taxation, claiming that the tax burden is not evenly distributed across Pakistan and that many problems exist.
While briefing the Senate Standing Committee on Finance and Revenue, PBC Chairman Ehsan Malik said the default risk is too high at the moment, and increasing business taxes would imply that the government wants to keep businesses from earning more money. He suggested a standard 3 percent tax on the services sector which would help offset losses of entities operating in the field. PBC chairman said Pakistan lags behind Sri Lanka, India, and Bangladesh in tax revenue in the region and faces many problems due to restrictions and reduction of imports, lack of productivity, unemployment, and stalled exports. In response to rumors of additional taxes on financial assets, he stated that businesses already pay taxes on the capital they hold. Regarding reports of imposing a fixed tax on exporters, he argued that such a move would be unwarranted at this time because exports were already at a low level.
The Senate Committee deliberated on the various Pre-budget proposals put forward by different stakeholders. Ehsan Malik, CEO Pakistan Business Council, apprised that 100 of the most prominent business of the country are generating 40pc export, in addition to its 20pc share in GDP and approximately 56 pc tax have been collected from it. He suggested that an equitable tax regime should be initiated, besides providing ease of doing business and reducing the manufacturing cost. Representatives of Chamber of Commerce and Industries unanimously underscored the need of broadening the tax base of the country and demanded that super tax ranging from 1 to 10 pc on different affluent individuals and companies should be withdrawn. They also highlighted the need of revisiting the Pak-Afghan transit.
Moreover, Dr. Khurram Tariq, President Faisalabad Chamber of Commerce and Industries, maintained that the small business having turnover of around 150 million rupees should be exempted from computerized balloting audit for sales tax, and an audit of said businesses should be completed within six months instead of preceding for five years. He apprised that the measures will help the small business to flourish and eventually it will enhance their productive contributions.
However, Ahsan Zafar Bakhtawari, President Islamabad Chamber of Commerce and Industries, mentioned that the industries located in the erstwhile FATA are currently exempt from sales tax and the concession is putting steel industries, located in settled areas, at great disadvantage. He suggested that an equitable environment should be created by withdrawing the said exemption so that the industries of both sides could flourish at the same pace.
Discussing the pre-budget proposals, representatives of Karachi Chamber stated that 3pc value added tax which is being charged on raw materials at import stage is unjustifiable and it should be revisited. They also apprised that a major bulk of buyers in the country are unregistered and provision of CNIC on supplies to unregistered persons has become a major hurdle in business transactions. Above all, 3 pc further tax is being imposed on the registered supplier on the provision of buyer CNIC, they added. They suggested that 3pc further tax on the registered sellers is not based on rationale and it should be revoked.
Furthermore, representatives of Coca Cola Beverages apprised that Pakistan is the second country after Saudi Arabia where beverages are highly charged and the recent increase in Federal Excise Duty (FED) has reduced the sale by around 25pc. They suggested that FED on beverages should be reduced by 4pc which currently stands at 20 pc. Afaq Ahmad Qureshi, Member FBR, apprised that the recommendations of all stakeholders have been received and FBR has initiated deliberations on the said proposals and will inform the standing committee accordingly. The meeting was attended by Senator Saadia Abbasi, Senator Dilawar Khan, Federal Minister for Climate Change Senator Sherry Rehman, Senator Mohsin Aziz (via phone call), State Minister for Finance and Revenue Dr. Aisha Ghaus Pasha, Chairman FBR Asim Ahmad, Special Secretary Finance Division Hamed Yaqoob Shiekh, CEO PBC Ehsan Malik and presidents of various chamber of commerce and industries were also in attendance.

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