Karachi, May 12, 2024 – The Overseas Investors Chamber of Commerce and Industry (OICCI) has put forth an innovative approach to tackle the challenge of tax registration within the highly undocumented retail sector.
With the submission of proposals for the upcoming budget 2024-25, the OICCI aims to revolutionize the taxation framework, particularly focusing on bringing retailers into the tax net.
The OICCI emphasizes that the wholesale and retail sector plays a pivotal role in the supply chain of manufacturers and importers. Consequently, the documentation of this sector is intricately linked with the business transactions of manufacturers and importers. To address this issue, the OICCI recommends amendments to sections 236G and H of the Income Tax Ordinance, 2001, proposing an income tax withholding mechanism applicable across the board, with a suggested minimum rate of 10%.
Presently, only specific goods are subject to tax withholding, often at a minimal rate not exceeding 0.5%. The OICCI advocates for the expansion of tax withholding to cover a broader range of goods, supplemented by comprehensive reporting of sales by manufacturers and importers, including details of unregistered buyers.
As part of the proposed measures, wholesalers and distributors would be mandated to furnish information such as names, CNICs, NTN, and addresses of their customers in their sales tax returns and withholding statements. Failure to comply with these requirements would lead to penalties, including the disallowance of a portion of income tax and input tax, as suggested by the OICCI.
Furthermore, for Tier-1 retailers, encompassing sectors like jewelers and property dealers, the OICCI urges the Federal Board of Revenue (FBR) to ensure the strict implementation of 100% Point of Sale (POS) integration. This integration is already mandated by law for sales tax purposes, and the OICCI emphasizes the need for robust enforcement measures to ensure compliance within this segment.
The OICCI’s proposals represent a comprehensive and forward-thinking approach to address the challenges associated with tax registration in the retail sector. By advocating for stricter measures and enhanced reporting mechanisms, the OICCI aims to foster greater transparency and accountability within the retail industry, ultimately contributing to a more robust and equitable taxation system.
As the budget deliberations for the fiscal year 2024-25 continue, the OICCI’s recommendations are expected to garner significant attention from policymakers and stakeholders, as they seek to navigate the complexities of tax reform in pursuit of economic growth and stability.