Anomaly Committee Calls for Review of New Exporters Tax Regime

Anomaly Committee Calls for Review of New Exporters Tax Regime

Karachi, Pakistan – June 21, 2024 – Pakistan’s business community is calling for a reevaluation of a key provision in the recently unveiled Finance Bill 2024. The proposed change, a shift from a fixed tax regime for exporters to a regular tax system, has raised concerns and prompted a high-level meeting at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

Atif Ikram Sheikh, FPCCI President and co-chair of the FBR’s Anomaly Committee 2024, alongside Dr. Gohar Ejaz, a former federal commerce minister, led the meeting. Representatives from various chambers, trade bodies, and associations participated in a sector-by-sector analysis of perceived discrepancies in the Finance Bill and the 2024-25 federal budget.

Compiling a Comprehensive List of Concerns

The FPCCI intends to present a comprehensive dossier highlighting these anomalies to the Finance Minister. This document will detail concerns from across the business, industry, and trade sectors with the hope of securing revisions from the government’s economic team and the Prime Minister.

Fixed Tax Regime Seen as Essential for Exporters

Atif Ikram Sheikh emphasized the importance of a business-friendly budget. He stressed that the withdrawal of the fixed tax regime for exporters, currently set at a one percent levy on export proceeds, is a primary concern. Exporters across various industries are requesting its reinstatement, arguing that it is vital for their protection and the health of the overall economy.

Focus on Growth, Not Regression

Dr. Gohar Ejaz underscored the urgency of amending the Finance Bill to remove measures that could hinder economic growth. He emphasized the need to control inflation, maintain a manageable current account deficit, and create an environment conducive to job creation and export expansion.

Addressing Regional Disadvantages and Brain Drain

Dr. Ejaz highlighted the challenges already faced by Pakistani businesses compared to regional competitors. He pointed to high electricity and gas tariffs, inflationary pressures, and inconsistent economic policies as key factors contributing to an uncompetitive business environment.

Saquib Fayyaz Magoon, Senior Vice President of FPCCI, expressed concerns about the proposed tax increases for salaried individuals. He argued that this would exacerbate the existing brain drain as Pakistan struggles with a shortage of skilled workers critical to industrial development. Instead, Magoon advocated for a revised Finance Bill that fosters industrialization, promotes import substitution, empowers youth through skill development, and encourages diversification of exports and technological advancements.

Conclusion

The business community’s concerns underscore the delicate task of balancing revenue generation with economic growth. The FPCCI’s call for a review highlights the potential negative impact of the proposed changes on exporters and the overall business climate. The coming days will be crucial as the government weighs these concerns and seeks solutions to address the needs of both the public and private sectors.