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Category: Budget

This is parent category of budgets presented by Pakistan government. Here you will find year-wise federal and provincial budgets.

  • KCCI proposes sales tax exemption to e-commerce

    KCCI proposes sales tax exemption to e-commerce

    Karachi Chamber of Commerce and Industry (KCCI) has proposed sales tax exemption to e-commerce retailers to promote online business transactions in the country.

    The KCCI in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR) said that through Clause 3(1)(c) a new Clause (18A) under Section 2 whereby a definition of Online Market place has been inserted which brings the entire Online shopping and E-Commerce sector within the scope of 17 per cent Sales Tax and other levies.

    READ MORE: Withholding tax on raw material import should be adjustable

    The chamber said that a large number of educated youth and start-ups have found productive employment through E-Commerce and Online Sales in Pakistan.

    By imposing high rate of Sales Tax at 17 per cent plus other taxes by new provision will cap the potential of E-Commerce and result in failure of many new entrepreneurs.

    READ MORE: KCCI suggests VAT removal for commercial importers

    The KCCI proposed online retailers having turnover less than Rs50 million should be exempt from sales tax to support the MSMEs, startups and women entrepreneurs conducting retail sales other than established brand products who are already in normal sales tax regime.

    Giving rationale, the KCCI said that it will promote E-Commerce which has far more potential to increase the volume of online sales.

    E-Commerce and start-ups have the capacity to employ educated youth, women entrepreneurs and contribute to GDP growth.

    READ MORE: FPCCI demands CNIC condition withdrawal

    Earlier, the chamber proposed that the withholding income tax at import stage on raw materials should be adjustable against actual liability.

    The concept of minimum withholding tax on import of raw materials may be phased out.

    Further, distinction should be made between importers of finished goods and raw materials who mainly cater to the industry and are fully documented.

    Giving rationale to the proposals, the KCCI said commercial importers who are a major source of revenue will be able to resume their business and contribute to revenue as well as promotion of SMEs.

    READ MORE: FBR urged to wave further tax on providing CNIC number

  • Withholding tax on raw material import should be adjustable

    Withholding tax on raw material import should be adjustable

    KARACHI: The Federal Board of Revenue (FBR) has been suggested to allow adjustment of withholding income tax collected at import of raw material against the actual liability.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2022/2023 submitted to the FBR highlighted that by amendment to Section 148 of Income Tax Ordinance, 2001, through Finance Bill 2018-2019, withholding tax paid on import of raw materials by commercial importers has been converted to minimum tax and the importers have been taken out of Fixed Tax Regime (FTR).

    READ MORE: KCCI suggests VAT removal for commercial importers

    The chamber said that the collection of withholding tax at source is tantamount to putting the burden of tax-collection from undocumented entities on the compliant tax payers and compounds the burden by treating it as minimum tax.

    Concept of treating withholding tax as minimum tax is unique and unfair as it leaves the scope for further squeeze on documented and compliant tax-payers. “Any Tax paid as withholding tax should be adjustable in order to promote the culture of direct taxation and reduce dependence on tax at source,” the KCCI said and added that the rates of withholding tax are already very high and akin to turnover tax.

    READ MORE: FPCCI demands CNIC condition withdrawal

    Giving proposals to the issue, the KCCI said the withholding income tax at import stage on raw materials should be adjustable against actual liability.

    The concept of minimum withholding tax on import of raw materials may be phased out.

    Further, distinction should be made between importers of finished goods and raw materials who mainly cater to the industry and are fully documented.

    Giving rationale to the proposals, the KCCI said commercial importers who are a major source of revenue will be able to resume their business and contribute to revenue as well as promotion of SMEs.

    READ MORE: FBR urged to wave further tax on providing CNIC number

    The KCCI further highlighted that the Finance Bill 2021-2022, imported plant and machinery not manufactured locally, has been omitted from 8th Schedule of Sales Tax Act, 1990, resulting in Increase in the rate of sales tax from 10 per cent to 17 per cent.

    The chamber said this measure will discourage new investment in industry and upgradation of existing industries and BMR. Industrial machinery falls in the category of capital goods for the purpose of production. It should not be treated under the same criteria as consumer product or raw material, subject to 17 per cent sales tax.

    READ MORE: Tax exemption sought for plant, machinery import

    The KCCI proposed to restore plant and machinery not manufactured locally in 8th Schedule of Sales Tax Act, 1990, and exempt from 17 per cent sales tax, to encourage expansion and generate employment.

    It will help to promote industrialization, GDP growth and employment.

  • KCCI suggests VAT removal for commercial importers

    KCCI suggests VAT removal for commercial importers

    Karachi Chamber of Commerce and Industry (KCCI) has suggested the tax authorities to withdraw Value Added Tax (VAT) imposed on commercial importers in order to rectify anomaly in the law.

    The KCCI in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR) said that a three per cent value addition sales tax at import stage on commercial importers of raw materials was removed in the Finance Act 2019-20 after long deliberations with FBR and Ministry of Finance for several years.

    READ MORE: FPCCI demands CNIC condition withdrawal

    It was agreed by FBR that the tax is unjustified because commercial importers do not add any value to raw materials. It is sold to SMEs without any change in form or any process. No inputs such as gas, electricity, labor or machinery are used hence 3 per cent VAT was an obvious anomaly.

    Unfortunately, the very next year through Finance Act, 2020, amendment was made in the Twelfth Schedule to Sales Tax Act, 1990 –under the heading “Procedure and Conditions”, in condition (2), 3 per cent value addition sales tax has been imposed again on commercial import of industrial raw materials, thus restoring the anomaly.

    READ MORE: FBR urged to wave further tax on providing CNIC number

    Also, after re-imposition of this 3 per cent VAT, the exclusion from Section 8 B (1) 2, provided to commercial importers under SRO 647 (I) 2007 was not restored. This has led to double taxation as importers are forced to pay extra 10 per cent value addition over and above 3 per cent paid at custom stage.

    The outcome of these amendment resulted in dual anomaly in the Finance Bill, 2020-21.

    A 3 per cent VAT cannot be imposed on raw materials where no value is added.

    READ MORE: Tax exemption sought for plant, machinery import

    Restriction of 90 per cent adjustment of input is tantamount to double taxation as importers of raw material forced to pay extra 17 per cent (10 per cent of 17 per cent) value addition over and above three per cent paid at customs stage under Section 8B of Sales Tax Act, 1990 through SRO 1190 (I)/2019.

    The KCCI said that this obvious anomaly should be rectified and raw materials imported by commercial importers shall be excluded from the scope of condition (2) under “Procedures and Conditions”   Twelfth Schedule of Sales Tax Act. Thus removing 3 per cent Value Addition Sales Tax on commercial importers which was re-Imposed unjustly.

    READ MORE: Proposed list of higher withholding tax rates for non-filers

    Importers of Finished products paying 3 per cent VAT at custom stage and having no local purchase should be excluded from application of Sec 8 (B).

    The proposed amendment will remove an obvious anomaly and disparity in rates of sales tax on raw materials because all raw materials are ultimately consumed in the industry, and mainly by SMEs.

  • FPCCI demands CNIC condition withdrawal

    FPCCI demands CNIC condition withdrawal

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday demanded the authorities to withdraw CNIC condition on transactions.

    FPCCI president Irfan Iqbal Sheikh categorically demanded that CNIC Condition needs to be withdrawn in the upcoming Federal Budget 2022 – 23 and the Finance Act 2022 for being counterproductive as it has failed to generate more taxes.

    READ MORE: FBR urged to wave further tax on providing CNIC number

    The CNIC condition has given a rise to the use of flying invoices and fake documentation.

    Nowhere in the world a buyer is asked to submit their NIC while making a purchase and the conditionality defies every administrative, regulatory, operational, commercial and economic sense, he added.

    Irfan Iqbal Sheikh maintained that introduction of CNIC condition was merely a part of political sloganeering at the cost of economy and now the same vested interests are propagating for its continuation; whereas, they have no understanding of the ground realities of business, industry and trade.

    READ MORE: Tax exemption sought for plant, machinery import

    Irfan Iqbal Sheikh added that FPCCI has also briefed Miftah Ismail, Federal Minister for Finance & Revenue, on the issue and how it is hampering the economic and commercial activities in the country.

    FPCCI Chief explained that this condition negatively affects the production and market sales of the businesses in Pakistan. He recalled that Chairman FBR visiting FPCCI did concede that due to the condition of CNIC there has been a drop in sales tax collection, during his visit in the year 2021.

    READ MORE: Proposed list of higher withholding tax rates for non-filers

    President FPCCI has added that the only workable solution to generate more taxes is to present a business-friendly and pro-growth budget in consultation with the stakeholders, i.e. businessmen, traders and industrialists.

    Irfan Iqbal Sheikh has reiterated, as President of the apex body, his resolve to play his mandated role of creating bridges and promoting cooperation between the business community and the government &its regulators from the platform of FPCCI.

    READ MORE: PSX demands slashing CGT rates on disposal of shares

  • FBR urged to wave further tax on providing CNIC number

    FBR urged to wave further tax on providing CNIC number

    KARACHI: The Federal Board of Revenue (FBR) has been urged to wave further tax where CNIC (Computerized National Identity Card) number is provided by unregistered supplier.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2022/2023 submitted to the FBR highlighted an issue stating an obvious anomaly is perpetuated by imposing 3 per cent penal tax (further tax) on registered persons on supplies made to unregistered persons.

    READ MORE: Tax exemption sought for plant, machinery import

    Despite providing CNIC number of unregistered buyers, as required under Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, 10th Schedule, the registered seller has still to pay 3 per cent further tax.

    Moreover, prior to Supplementary Finance Bill 2022, registered seller was not held responsible in case a fake CNIC was provided by buyer. However, after enactment of Supplementary Bill 2022, seller will be held accountable and face consequences in case fake CNIC number is provided by unregistered buyer.

    READ MORE: Proposed list of higher withholding tax rates for non-filers

    The outcome of the amendment is that it is unjust and irrational to impose 3 per cent further tax on supplies by registered person to unregistered persons, while also it is required to provide CNIC Number of unregistered buyer in Sales Tax Invoice.

    The KCCI proposed that CNIC number of unregistered buyers provided by registered seller/supplier be treated at par with STRN.

    The 3 per cent further tax on supplies to unregistered buyer should not be charged if CNIC number is provided by registered seller in Sales Tax Return.

    READ MORE: PSX demands slashing CGT rates on disposal of shares

    In case CNIC number of unregistered buyer of raw materials is not provided, VAT may be charged at 1.7 per cent on sales of raw material.

    Giving rationale to the suggestion, the KCCI said it will discourage cash economy and encourage documentation by placing the trust in registered persons.

    Placing the responsibility to broaden the tax base squarely on Regional Tax Offices (RTOs) and Large Tax Offices (LTOs) rather than on taxpayers.

    Further, it will discourage fake and flying invoices which are issued to avoid 3 per cent further tax.

    Besides, it will enhance business transactions through banking channels and promote growth.

    READ MORE: FBR suggested reduce corporate tax rate for listed companies

  • Tax exemption sought for plant, machinery import

    Tax exemption sought for plant, machinery import

    KARACHI: The business community has sought exemption from withholding tax on import of plant and machinery in order to reduce the cost of doing business.

    Pakistan Business Council (PBC) in its proposals for budget 2022/2023 submitted to Federal Board of Revenue (FBR), said that Section 148 (1) of Income Tax Ordinance, 2001 covers advance tax on Imports and Section 153 covers advance tax on sale of goods and services.

    READ MORE: Proposed list of higher withholding tax rates for non-filers

    Companies are required to pay advance quarterly income tax based on their projected incomes under Section 147 of the Ordinance.

    In addition, companies are also required to pay advance tax on imports at 1 per cent/ 2 per cent/ 5.5 per cent and on sale of their goods at 4 per cent and services at 8 per cent. This leads to the creation of refunds as companies are paying advance income tax based on projected income, advance income tax on imports and advance income tax on sales.

    READ MORE: PSX demands slashing CGT rates on disposal of shares

    There is a cumbersome procedure for seeking exemptions under Section 148 (advance tax on imports) which also does not take into account capacity expansions.

    “Import of plant and machinery by companies should be exempted from withholding at import stage,” the PBC suggested. Moreover, for raw materials, preferably corporate manufacturers should be excluded from the ambit of income tax withholding at import stage. In case, FBR wants to keep track of GD wise import of raw materials and complete exemption from tax collection is not feasible, then at least the rate of income tax collection should be reduced down to 0.5 per cent across the board for all raw materials from the existing 1 per cent / 2 per cent and 5.5 per cent for different items.

    READ MORE: FBR suggested reduce corporate tax rate for listed companies

    In addition to above, local supply by corporate manufacturers should be excluded from the ambit of income tax withholding under section 153 in line with the general exemption given to commercial importers despite the fact that income tax collection from commercial importers at import stage is minimum.

    The PBC highlighted the withholding tax under section 148 of Income Tax Ordinance, 2001 (Imports), Section 161 Subsection 3:

    Withholding tax u/s 148 (Imports) -Income Tax Ordinance 2001: Certain raw material covered under category III of Twelfth Schedule are subject to WHT tax and fall under minimum tax regime.

    READ MORE: Tax cut suggested on dividend paid by exempt entities

    In order to claim the advance tax, the tax payers are required to file an application to Commissioner/ Board for claiming adjustment of withholding tax deducted as advance tax, which leads to administrative and operational inefficiencies, and puts the company at the risk of exposure till such application is entertained.

    Tax deduction on import of raw material for own use u/s 148 (Imports) should be explicitly expressed as withholding advance tax across the board in the Income Tax Ordinance, which will save the companies from exposure resulting from possible delays in acceptance of application by the Commissioner/ Board or non-acceptance at all. It will remove operational and administrative hassle also.

  • FBR urged to audit income of commercial importers

    FBR urged to audit income of commercial importers

    KARACHI: The Federal Board of Revenue (FBR) has been urged to audit sales and income of commercial importers in order to discourage under-invoicing and misdeclaration for tax evasion.

    The Pakistan Business Council (PBC) in its proposals for budget 2022/2023 submitted to the FBR, recommended measures to stop under-invoicing by commercial importers.

    The PBC suggested: “Monthly sales declared by commercial importers should be matched with sales declared in annual income tax return as well as the credit entries in all business bank accounts. In case of any discrepancy, a reconciliation with justifiable reasons should be submitted by the commercial importers.”

    READ MORE: Proposed list of higher withholding tax rates for non-filers

    The council said that transparency in collection of taxes will discourage mis-declaration, measures to discourage evasion of taxes and duties will help industry to fairly compete with unscrupulous imports and also Government stands to benefit from the increased indirect taxes revenues. It will also help in accountability of the customs staff and will reduce the incidence of Customs Duty and Sales Tax evasion and increase government revenues.

    The PBC said that values at which import shipments are cleared through PRAL or CARE need to be publicly available.

    “The Government of Pakistan must insist of Electronic Data Interchange (EDI), for both FTA and non-FTA imports from China. In future the requirement of EDI should be made compulsory for imports from FTA / PTA partner countries.”

    READ MORE: PSX demands slashing CGT rates on disposal of shares

    Depending on industry, the Import Trade Price (ITP) be fixed e.g. on the basis of country of origin, weight, volume etc. after discussion with stakeholders. ITP’s may be fixed for most items prone to mis-declaration such as consumer goods and margins of commercial importers be monitored to assess the value of subsequent supply of imported goods. “A certificate to this effect should be issued by auditors of commercial importers.”

    The PBC said for items, prone to under invoicing and mis-declaration, FBR should designate one or two ports (including the dry ports) for clearing of import consignments. “This will allow better monitoring of the import consignments where chances of mis-declaration are on a higher side.”

    Additionally, the old Customs General Order 25 needs to be revived with a provision that local manufacturers be given the option to buy at a 15 per cent premium, any consignment which appears undervalued.

    READ MORE: FBR suggested reduce corporate tax rate for listed companies

    Taxes and duties deposited by local manufacturers and commercial importers should be published.

    The rate of tax collected from commercial importers be increased by at least by 2 per cent. Presently, tax collected from commercial importers is treated as Final Tax. In order to avoid burdening of genuine commercial importers, we would recommend that the income tax collected at import stage be treated as an advance tax, it said.

    In order to allow commercial importers to claim adjustment of taxes deducted at import stage, commercial importers should be asked to present certificate from auditors that at least 70 per cent of imported items have been exported or sold to registered manufacturers.

    Online CREST system must be amended in a way to trace sales along with value addition thereon of person to whom supplies were made by Commercial importers.

    The proposed change will help in boosting the manufacturing base of Pakistan. This will also help increase the overall tax base.

    READ MORE: Tax cut suggested on dividend paid by exempt entities

  • Proposed list of higher withholding tax rates for non-filers

    Proposed list of higher withholding tax rates for non-filers

    KARACHI: A proposed list of higher rates of withholding tax for non-filers of income tax returns has been sent to Federal Board of Revenue (FBR) for broadening the tax base.

    The concept of separate withholding tax rates for filers and non-filers was introduced as a measure for increasing documentation of the economy, said Pakistan Business Council (PBC) in its proposals for budget 2022/2023.

    READ MORE: PSX demands slashing CGT rates on disposal of shares

    Though large amounts are being collected from non-filers, no effort has been made to increase the tax base.

    The non-filers for the most part have built the cost of this government levy into pricing and passed it on to their customers.

    The PBC said in order to broaden the tax base and to achieve increase in overall tax collection without burdening existing tax payers, the policy to increase tax on non-filers / unregistered persons should be implemented specifically in the following cases:

    READ MORE: FBR suggested reduce corporate tax rate for listed companies

    a) unregistered industrial / commercial entities (not having STRN) having bill amount in excess of Rs. 20,000 per month, extra sales tax should be increased from 17 per cent to 30 per cent

    b) After collection of extra tax as referred above for a continuous period of 6 months, all these connections should be provisionally converted into NTN and STRNs and return filings from these connections should be enforced.

    c) In case of provisional registration as above, utility companies be directed to issue show cause notices where annual billing amount exceeds Rs.2.4 million and directing provisionally registered persons to obtain permanent registration. In case of non-compliance, utility companies be directed to disconnect utility connections.

    d) Moreover, in order to bring all commercial / industrial users in the tax net and to verify filer status, Electric distribution companies should provide one year to all such consumers to get their NTN registered with electricity distribution companies. In case of failure to provide NTN, electricity connection should be disconnected.

    READ MORE: Tax cut suggested on dividend paid by exempt entities

    Considering the fact that all industrial / commercial connections will be linked with NTN, the tax department will then be in a better position to assess the electricity consumed by commercial / industrial users and corroborate the same with amount of sales / production etc. reported in sales tax / income tax return

    e) in order to bring all commercial / industrial users in the tax net and to verify filer status, Electric distribution companies should provide one year to all such consumers to get their NTN registered with them. Thereafter, such commercial/industrial consumers without NTN should be charged advance income tax @ 20 per cent (from existing 5 per cent/12 per cent for industrial and commercial connections respectively) on their utility bills.

    f) Advance tax @7.5 per cent is collected from domestic connections in the name of Non-Filers is collected where monthly bill is Rs.25,000 or more. Rate of advance tax be increased to 30 per cent where monthly bill is in excess of Rs.75,000

    g) All exemptions (like exemption on agricultural income) under the Income Tax Law should only be made available to filers so that exempt income is also reported and wealth is reconciled.

    READ MORE: PBC suggests reducing further tax to stop flying invoices

    h) Withholding tax of Rs. 50,000 for non-filers be levied on International business class tickets

    i) Withholding income tax on interest income u/s 151 is 15 per cent for filer and 30 per cent for non-filer. Rate should be increased to 50 per cent for non-filers in case interest income is more than Rs.2,000,000/-

    j) Annual advance income tax @ 20,000 is applicable [under section 234] for non-filers owners of vehicles of 2000cc and above. Amount of tax should be increased to 100,000 for non-filers.

    k) Advance income tax of Rs. 800,000 on purchase of vehicles in excess of 2000cc by non-Filers [under section 231B] should be increased for non-Filers to Rs. 2,400,000 [3 times]

    l) Advance income tax on transfer of vehicles [applicable on 2nd hand buyer] under section 231B(2) should be increased for non-Filers as follows:

    a) Existing rate of Rs75,000 for 2001cc to 2500cc be increased to Rs225,000 [3 times]

    b) Existing rate of Rs100,000 for 2501cc to 3000cc be increased to Rs300,000

    c) Existing rate of Rs125,000 for 3000cc and more be increased to Rs375,000

    READ MORE: Commercial importers misusing tax registration

    m) Advance income tax of Rs. 400,000 on sale of vehicle [2001cc and above] by non-filers before registration [own money] should be increased to Rs1,200,000

    e) Advance income tax is collected on sales of immovable property under section 236C, which is 1 per cent for both filers and non-filers, should be increased for non-filers to 10 per cent for properties of 900 square yards or more

    f) In order to generate tax revenues and to divert funds from unproductive resource to productive area [for import substitution / export promotion industry], holding of land by non-filers should be made more expensive by asking those authorities collecting property tax (cantonment boards / societies / registrar) to collect adjustable advance income tax, from non-Filers, on behalf of the Federal Government as follows:

    g) Rs. 500,000 per year for 800 yards or more but less than 1800 yards

    h) Rs. 1 million per year for 1800 yards and above.

    READ MORE: FBR urged to massively reduce tax rates for return filers

  • PSX demands slashing CGT rates on disposal of shares

    PSX demands slashing CGT rates on disposal of shares

    KARACHI: Pakistan Stock Exchange (PSX) has demanded the government to reduce capital gain tax (CGT) rates on disposal of shares in the forthcoming budget 2022/2023 to attract local as well foreign investors.

    The PSX in its budget proposals submitted to the Federal Board of Revenue (FBR) suggested that CGT rates on listed securities should be brought in line with other regional and OECD countries and with the CGT on sale of immovable property.

    READ MORE: FBR suggested reduce corporate tax rate for listed companies

    This is essential to eliminate the tax driven distortion between different asset classes. Further, the CGT on all derivatives and future contracts traded on PSX to be taxed in line with future commodity contracts traded at PMEX.

    The PSX suggested introduction of registered savings (RSIA) and investment accounts and individual savings account (ISA). It proposed that the government should introduce a mechanism and regulatory structure for the launch of RSIAs or ISAs to help channel savings towards productive investments.

    “These schemes will help channel capital which is invested in unproductive areas and from the large undocumented sector into productive parts of the economy,” the PSX added.

    READ MORE: Tax cut suggested on dividend paid by exempt entities

    The stock exchange suggested grandfather provision for tax treatment for listed companies on the PSX. “In order to encourage companies to list, their tax status should be grandfathered at the time of listing application i.e. no new cases for past tax returns should be opened, except for such pending cases on which proceedings have already been initiated under the Ordinance, before the date of listing application, will continue as per the provisions of law.”

    The PSX urged the authorities to rationalize tax rates for companies listed on the stock exchange. “Reinstatement of the repealed Section 65C of the Income Tax Ordinance, 2001 amended to allow tax credit to certain companies meeting the prescribed requirements of free float.”

    READ MORE: PBC suggests reducing further tax to stop flying invoices

    The stock exchange proposed to eliminate minimum tax regime for listed companies. “Minimum tax regime should be eliminated or reduced for listed companies as such companies are documented and compliant with specific documentation requirements of various statutes,” it proposed.

    The PSX recommended enhanced tax credit for listed small and medium enterprises (SME). “In order to encourage small and medium enterprises to get listed on the SME Board, the rate of tax for such listed SME companies should be lowered by giving tax credit of 50 per cent of tax payable for three to four years and 20 per cent onwards of the tax payable,” it proposed.

    READ MORE: Commercial importers misusing tax registration

    The stock exchange stressed the need for documenting real estate sector and promotion of REITs structures. The PSX recommended: exempt advance tax on property transfer to / from a RIET Scheme; remove sunset clause for all categories of RIET; reduction of minimum tax rate applicable to RMCs in line with Asset Management Companies i.e. 30 per cent.

    In order to unlocking potential of private fund, the PSX suggested: insert proper definition of private fund referring to 2015 regulations; reinstate exemption of profit and gains to be given to all categories of private equity and venture capital including private fund; revision of Capital Gain Tax rates as provided for mutual funds, CIS and REITs; specified exemptions to include private fund.

    READ MORE: FBR urged to massively reduce tax rates for return filers

    For levelling tax for corporates, the stock exchange suggested: inequality of taxation of businesses should gradually be removed by reducing corporate tax rate/increasing tax rates for Association of Persons (AOPs); restoration of exemption on inter-corporate dividend between companies eligible for group taxation.

    The PSX said that provincial sales tax on services – jurisdiction issues should be settled in council of common interest. The wording of the laws enacted by the Sindh Revenue Board, Punjab Revenue Authority and Khyber Pakhtunkhwa Revenue Authority are overlapping. “The matter being of equal relevance to all the provinces and affecting the entire services sector, may be placed on the agenda of the Council of Common Interests so that a sharing formula for each province can be devised.”

    The stock exchange demanded the authorities of consistent and long term tax policies. It said the government must move away from short term measures and frequent changes in tax regime and adopt long term measures to promote savings and investment and development of the capital market.

  • FBR suggested reduce corporate tax rate for listed companies

    FBR suggested reduce corporate tax rate for listed companies

    KARACHI: Pakistan Business Council (PBC) has suggested the Federal Board of Revenue (FBR) to lower the corporate tax rates, especially for listed companies.

    The PBC in its proposals for budget 2022/2023 recommended reduction in corporate tax rate to 20 per cent.

    READ MORE: Tax cut suggested on dividend paid by exempt entities

    The council in its proposals for reducing the cost of doing business in Pakistan, said all companies except banking companies and companies defined in section 2 of Income Tax Ordinance, 2001 are subject to be taxed at 29 per cent on taxable income

    It recommended that the rate of income tax on companies should be gradually reduced to 20 per cent to align with the taxation rate of other countries in the region.

    READ MORE: PBC suggests reducing further tax to stop flying invoices

    Listed companies should be given the first benefit of the lower taxation rates as compared to other companies to further encourage transparency and documentation.

    The PBC said that through section 113C of Income Tax Ordinance, 2001 Alternate Corporate Tax (ACT) was imposed on companies at the rate of 17 per cent on accounting profits.

    READ MORE: Commercial importers misusing tax registration

    It recommended that Section 113C should be abolished as there is already minimum tax on goods and services

    The council further said that currently under Section 154(3B) of the Ordinance, every direct exporter and an export house registered under the Duty and Tax Remission for Exports Rules, 2001 provided in Sub -Chapter 7 of Chapter XII of the Customs Rules, 2001 shall, at the time of making payment for a firm contract to an indirect exporter shall deduct tax at 1 per cent of the payment made.

    READ MORE: FBR urged to massively reduce tax rates for return filers

    “This 1 per cent tax deduction shall be considered as final tax on the income of the indirect exporter. This clause should be extended to all exporters under various schemes like EFS, EOU etc. to remove differential treatment under various export schemes,” it recommended.

    The Commissioner has been empowered to modify the withholding tax recovery order, companies would thus be required to maintain records and details for an indefinite period of time. Failure to provide such records could be used as a tool by the tax authorities to create undue tax demands in order to achieve their revenue targets.

    READ MORE: FBR urged to make Google pin location must for retailers

    Sub-section (3) of Section 161 should be omitted for avoiding record retention for unlimited period. The limitation of time be provided under the law for initiating and concluding the monitoring of withholding tax proceedings, like those for non-monitoring proceedings which is also important for harmonization.

    Section 15A(1)(h) of Income Tax Ordinance 2001. As per Finance Act 2020, deductibility of administrative collection charges has been restricted to 4 per cent of revenue as compared to 6 per cent previously.

    Renting of property is also a business and various administrative and collection charges are incurred which normally exceed even the 6 per cent threshold.

    The allowable threshold should be allowed on actual basis as is the case in other sources of income or at the very least be restored to 6 per cent of gross rental revenue