Foreign investors demand inter-adjustment of tax refunds

Foreign investors demand inter-adjustment of tax refunds

The Overseas Investors Chamber of Commerce and Industry (OICCI), representing foreign investors in Pakistan, has put forth a series of demands to the Federal Board of Revenue (FBR), with a key focus on the inter-adjustment of income and sales tax refunds as part of the law.

In its proposals for the upcoming budget 2022/2023, the OICCI highlighted the need for streamlining the processing of outstanding refunds to enhance the ease of doing business in the country.

Foreign investors have cited delays and procedural complications in the processing of income and sales tax refunds, urging authorities to allow inter-adjustment of these refunds as an integral part of the law. The OICCI emphasized the significance of clearing all pending tax refunds in an organized and prearranged manner, calling for greater efficiency in the system.

According to the chamber, the verification of input sales tax on services should commence automatically as soon as a taxpayer files an application for a refund. The OICCI proposed that the entire tax refund process should be completed within 45 days, ensuring a timely and transparent resolution for investors.

The introduction of Management Information System (MIS) on the Integrated Risk Information System (IRIS) has been acknowledged by the OICCI as a valuable tool. The chamber suggested the implementation of an online self-verification system for refunds using MIS on IRIS. Under this proposal, taxpayers applying for a refund verification under Section 170 would have the option to select Centralized Payment Reference Numbers (CPRNs) online against each relevant section where tax deduction or collection has occurred. This would create a virtual verification file, simplifying the processing for assessing officers. Manual verification would only be necessary in case of any discrepancies, focusing on missing CPRNs.

In addition to the tax refund concerns, the OICCI had previously urged structural reforms in Pakistan Customs to bring illicit trade into the tax ambit. The chamber recommended the use of the latest methods of valuation, including online search and matching international and regional pricing. To effectively combat unauthorized imports of counterfeit products, the OICCI called for the registration of brands with customs authorities in coordination with the original brand owners registered in Pakistan.

The OICCI emphasized the importance of making import data a public property (with restrictions) to ensure transparency. This move would aid in the enforcement of Section 25A of the Customs Act, 1969, allowing for the takeover of goods in cases of illicit trade.

As Pakistan continues its efforts to attract and retain foreign investment, the demands put forth by the OICCI underscore the necessity for a responsive and streamlined regulatory environment, aimed at facilitating business operations and fostering investor confidence. The upcoming budget will be closely watched for potential reforms in line with these recommendations.