Karachi, June 22, 2023 – Finance Minister Ishaq Dar has assured the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the apex trade body of Pakistan, that anomalies in the budget for the fiscal year 2023-24 will be addressed, according to a statement released on Thursday.
During a meeting with a high-powered delegation from FPCCI, the finance minister agreed in principle to rectify major anomalies in the finance bill to address the concerns and issues raised by the business, industry, and trade community, as stated in the FPCCI statement. The meeting was attended by Tariq Bajwa, Special Assistant to the Prime Minister on Finance; Ashfaq Tola, Chairman of the Reforms & Resource Mobilization Commission; and senior officials from the Federal Board of Revenue (FBR).
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Irfan Iqbal Sheikh, President of FPCCI, informed that Ishaq Dar had pledged to review the anomalies presented by FPCCI regarding income tax, withholding tax (WHT), sales tax, Federal Excise Duty (FED), and customs. The objective is to reduce the cost of doing business in Pakistan and enhance investor sentiment in the country. Notably, the finance minister has accepted the demand to broaden the tax base instead of burdening existing taxpayers.
Sheikh highlighted that parity would be ensured between industrial and commercial importers of raw materials in terms of income tax through WHT, aiming to create a level playing field. Similar treatment will be extended to logistics, goods carriers, and oil transporters.
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During the discussion, Section 99-D of the Income Tax Ordinance (ITO) was deemed inequitable as it only taxed gains, profits, and dividends without considering losses and other adverse economic factors. Consequently, the imposition of additional tax will be reevaluated. Additionally, the reconsideration of the re-imposition of a 10 percent tax on bonus shares was agreed upon.
Sheikh strongly opposed the super tax under Section 4-C of the ITO, stating that it is counterproductive for business, commercial, and industrial activities in the country. He emphasized that the business community should not be penalized for generating revenue, employment, and reasonable profits.
FPCCI expressed concerns over deceptive marketing of Special Economic Zones (SEZs) as facilities with tax holidays, while turnover tax has been imposed on them. They demanded the withdrawal of the turnover tax to align with the tax holiday claims.
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Engr. M. A. Jabbar, Vice President of FPCCI, suggested providing a level playing field to local manufacturers to promote import substitution. He reiterated the demand for a fair protective and retaliatory mechanism to address excessive scrutiny and harassment by taxation authorities. Jabbar also called for the exclusion of the condition of local manufacturing for duty-free imports of goods for power generation and advocated for tax parity between imports and local manufacturing of solar systems.
Jabbar emphasized the need to eliminate the requirement of providing a CNIC (Computerized National Identity Card) at the time of sale, considering it illogical and likely to encourage fraudulent invoicing. The business community urged the protection of taxpayer data and privacy, adherence to taxpayer rights as per the constitution, and the utilization of Section 33 of the Federal Tax Ombudsman Ordinance for alternative dispute resolution.
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The assurance by Finance Minister Ishaq Dar to address the anomalies in the budget has been welcomed by the business, industry, and trade community, who hope that these measures will create a favorable environment for conducting business and stimulate economic growth in Pakistan.
