Sindh urged to bring down sales tax rate at 10 percent

KARACHI: Sindh Revenue Board (SRB) has been suggested to bring down sales tax on services rate to 10 percent from existing 13 percent to encourage registration of more taxpayers.

Overseas Investors Chambers of Commerce and Industry (OICCI) in its budget proposals 2020/2021 submitted to the SRB, said that the expectations of the investors that the SRB will continue the reduction of Sales Tax rate on services to 13 percent, as done in fiscal year 2016-17, remained unrealized.

“Although, investors appreciate that the Sales Tax rate in Sindh province at 13 percent is the lowest in the country, it remains higher than comparative regional tax rates.”

The OICCI suggested that to keep in-line with the regional developing countries, reduction in sales tax on services should be made by 1 percent in the Sindh Finance Act 2020-2021 and gradually reduced to 10 percent over the next three years for registered entities, whilst the current rate should be maintained for unregistered entities.

This will encourage registration to avail the benefits of input adjustment.

The OICCI also suggested that the option to opt for the basic rate or normal regime should be given to all the service providers who fall under the reduced/fixed rate regime.

This option will reduce the cost of doing business for recipient of services as lower tax is not available for input tax adjustment, the OICCI added.

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