The Overseas Investors Chamber of Commerce and Industry (OICCI) has put forward a comprehensive proposal aimed at revamping the withholding tax (WHT) regime for the telecom sector in Pakistan, as part of its recommendations for the upcoming budget 2024-25.
In its proposal, the OICCI emphasized the need for a fundamental restructuring of the current withholding tax system applicable to the telecom sector. The chamber underscored the importance of simplifying the tax collection mechanism while ensuring that there is no loss of revenue to the national exchequer.
One of the key highlights of the proposal is the suggestion to shift towards a real-time payment system for advance tax under Section 147 of the Income Tax Ordinance, 2001, to be done on a quarterly basis. According to the OICCI, this approach would streamline the tax collection process, making it more transparent and efficient. It would also alleviate operational burdens associated with maintaining extensive records, particularly concerning advance tax on utility bills and imports.
The OICCI’s recommendations for revamping the WHT regime in the telecom sector include:
1. Quarterly Advance Tax Collection: The proposal advocates for collecting taxes under the advance tax mode on a quarterly basis, as opposed to the current system. This change aims to enhance the efficiency of tax collection while ensuring regular revenue streams for the government.
2. Exemption for Companies: Companies listed in the Active Taxpayers List (ATL) and those that have fulfilled their annual tax liabilities in advance should be exempted from the requirement to obtain separate withholding tax exemption certificates under various sections of the Income Tax Ordinance, 2001. This streamlining measure aims to reduce bureaucratic hurdles for compliant businesses.
3. Streamlined Payment Process for Non-Residents: To facilitate timely payments to non-residents, the period for obtaining an exemption certificate from the Commissioner (currently set at 30 days) should be shortened to 15 days. Additionally, in cases where there is no confirmation within the stipulated 15 days, the request should be deemed approved. This adjustment seeks to expedite payment processes and enhance overall business efficiency.
The proposed overhaul of the WHT regime in the telecom sector aligns with broader efforts to create a more conducive business environment in Pakistan. If implemented, these measures could significantly improve the ease of doing business, promote investment, and foster economic growth in the country. As stakeholders await the government’s response to these recommendations, anticipation grows regarding the potential impact on the telecom sector and the broader economy.
