KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has recommended amendments in tax laws related to taxpayers engaged in business of fast moving consumer goods (FMCG).
The OICCI in its proposals for budget 2022/2023 presented to Federal Board of Revenue (FBR) recommended certain changes for taxpayers engaged in business of FMCG.
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The chamber highlighted issue of imported items in Third schedule of Sales Tax Act, 1990.
It recommended: The words “in retail packing” to be mentioned with tea (serial no. 14) in order to clarify that sales tax at retail price is only applicable in case of imported finished tea in retail packing.
It further highlighted high withholding taxes on milk commission agents and recommended to exempt ‘milk’ from withholding tax whether it is purchased directly from the farmer or through commission agent.
The OICCI pointed out duty on essential diary and juice raw material and recommended:
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i. Duties should be withdrawn, or its rate should be minimized on import of raw/packing material for dairy and Juice sector which are not produced locally in sufficient quantity.
ii. Alternatively, duties can be minimized by introduction of quota system by placement of these items under Part III, Fifth schedule of the Customs Act, 1969. Quota can be restricted for registered manufacturers of dairy products only and can be allowed as a proportion of fresh milk purchases of those manufacturers.
The chamber highlighted First Schedule of Federal Excise Duty 2005 and Third Schedule of Sales Tax Act, 1990.
It recommended:
i. Serial No. 1 and 3 of Third Schedule of the Sales Tax Act, 1990 should be deleted.
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ii. Whereas Serial no. 4, 5 & 6 of First Schedule of Federal Excise Act, 2005 should be reduced from 13% to 10%, to provide level playing field to the Beverage Industry as given to other food industries.
The OICCI further recommended that the Federal Ministry of Health has been proposing health surcharge on sugary drinks. However, the Health Levy already exists in the form of FED. Hence no additional Health Levy should be considered. If a Health Levy is to be considered then FED can be abolished and a Health Levy in the form of a FED can be re-imposed, in consultation with the aerated waters industry.
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