KARACHI: Business community has recommended to bring the sales tax rate to a single digit in order to incentivize documentation and improve compliance.
Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 said that the rate of sales tax at 17 percent in Pakistan is among the highest in the region.
“Realistically such high rate of Sales Tax is in fact a disincentive to documentation and compliance.”
Mostly the indirect taxes at such high rate at source encourage smuggling, evasion, under-invoicing and mis-declaration. It has been a disincentive to documentation of supply chain and has only burdened a narrow base of registered manufacturers, importers and traders.
The chamber proposed that the rate of sale tax should be reduced to a single digit on all sectors to reduce cost of inputs and provide support to reduce prices of consumer goods as well as the cost of exports.
Giving rationale, it said that industry / economy will boost up, raise in the tax base, promote the documented & registered economy, and will generate revenue with growth.
Smuggling, under-invoicing and mis-declaration will be curtailed. Fake and Flying invoices eliminated.
