KARACHI: Karachi Tax Bar Association (KTBA) has suggested tax authorities to allow tax incentives for new investments in order to promote industrialization in the country.

The KTBA in its proposals for budget 2022/2023 suggested the Federal Board of Revenue (FBR) to allow tax credit for making new investments by amending sections 65B, 65D and 65E of the Income tax Ordinance, 2001.

READ MORE: Tax credit extension for employment generation

The tax bar said sections 65B, 65D and 65E are related to tax credit for investment, newly established industrial undertaking and industrial undertaking established before July 01, 2011.

“These are not currently available to the taxpayers for new investments,” it said. Therefor it is not encouraging new investment.

READ MORE: Reintroduction of tax credit on registered sales proposed

“Tax credits may be provided for making investment in fresh/ existing industrial undertakings, such as tax credit under 65B of the Ordinance which may be restored. Simultaneously, time limit U/s.s 65D and 65E may be further extended up to June 30, 2025,” the tax bar said, adding that it will promote industrialization and new investment in the country.

READ MORE: Amendment sought in incentive to Greenfield industry

Besides, the KTBA also sought extension of tax credit on employment generation under section 64B of the Income Tax Ordinance, 2001. The tax bar said a manufacturing entity was allowed a tax credit of 2 per cent subject to maximum tax credit of 10 per cent on employing every 50 employees registered with Employees Old-Age Benefit Institution (EOBI) and Sind Employees Social Security Institution (SESSI). This credit is restricted for the companies formed up to tax year 2019. The tax bar due restriction, effort to generate documented employment would go in vein.

READ MORE: FBR invites Sales Tax proposals for budget 2022/2023

The KTBA proposed that the tax credit for employment generation by manufacturers under section 64B of the Ordinance should be extended up to Tax Year 2025 at least. “It is an excellent provision for promoting employment generation along with documentation of the same,” the tax bar added.

KARACHI: The Federal Board of Revenue (FBR) has been suggested to expand the tax credit on employment generation in order to create opportunities of employment.

Karachi Tax Bar Association (KTBA) in its proposals for budget 2022/2023 submitted to the FBR sought extension of tax credit on employment generation under section 64B of the Income Tax Ordinance, 2001.

READ MORE: Reintroduction of tax credit on registered sales proposed

The tax bar said a manufacturing entity was allowed a tax credit of 2 per cent subject to maximum tax credit of 10 per cent on employing every 50 employees registered with Employees Old-Age Benefit Institution (EOBI) and Sind Employees Social Security Institution (SESSI).

READ MORE: Amendment sought in incentive to Greenfield industry

This credit is restricted for the companies formed up to tax year 2019. The tax bar due restriction, effort to generate documented employment would go in vein.

The KTBA proposed that the tax credit for employment generation by manufacturers under section 64B of the Ordinance should be extended up to Tax Year 2025 at least.

READ MORE: FBR invites Sales Tax proposals for budget 2022/2023

“It is an excellent provision for promoting employment generation along with documentation of the same,” the tax bar added.

The KTBA also proposed the tax credit on 90 per cent sales should be also extended to persons making 90 per cent of purchases from persons registered under the Sales Tax Act, 1990 as well. The tax credit should also cover entities providing services and duly registered with the provincial sales tax authorities.

It will provide the much-desired stimulus to the documentation of the economy, the KTBA added.

READ MORE: FBR invites income tax proposals for budget 2022/2023

KARACHI: Karachi Tax Bar Association (KTBA) has suggested the tax authorities to reintroduce tax credit on registered sales in order to broaden the tax base.

The KTBA in its proposals for budget 2023/2023 urged the Federal Board of Revenue (FBR) to reintroduce the tax credit on registered sales by making amendment in Section 65A of the Income Tax Ordinance, 2001.

READ MORE: Amendment sought in incentive to Greenfield industry

The tax bar said to provide incentive for documentation of economy and increase of the tax base a tax credit of 2.5 per cent of tax liability was offered to manufacturers for Tax year 2009 who were making 90 per cent of their sales to persons registered under the Sales Tax Law. The tax credit was increased to 3 per cent by Finance Act, 2016. However, this Tax credit was deleted by Finance Act, 2017.

READ MORE: FBR invites Sales Tax proposals for budget 2022/2023

Due to deletion from the tax law, years of efforts to document the economy has been pushed backwards and that too without any warning and rationale.

Therefore, it is proposed the tax credit on 90 per cent sales should be also extended to persons making 90 per cent of purchases from persons registered under the Sales Tax Act, 1990 as well.

READ MORE: FBR invites income tax proposals for budget 2022/2023

The tax credit should also cover entities providing services and duly registered with the provincial sales tax authorities.

It will provide the much-desired stimulus to the documentation of the economy, the KTBA added.

READ MORE: Budget 2022/2023 to be presented in first week of June

KARACHI: The Federal Board of Revenue (FBR) has been urged to amend provisions related to incentive to Greenfield industrial undertaking.

According to proposals for budget 2022/2023 presented by Karachi Tax Bar Association (KTBA), incentive had been defined under Section 2(27A) of Income Tax Ordinance, 2001 related to Greenfield industrial undertaking.

READ MORE: FBR invites Sales Tax proposals for budget 2022/2023

The definition of Greenfield was introduced by Finance Act, 2020 through introduction of section 2(27A). One of the conditions to qualify as a Greenfield Industrial undertaking is that it is using any process or technology that has not earlier been used in Pakistan and subjecting this with requirement to get approval from Pakistan Engineering Board.

READ MORE: FBR invites income tax proposals for budget 2022/2023

The tax bar said the incentive is though enshrined in the books yet it is not practically availed due to onerous requirement relating to novel technology.

The KTBA proposed to delete the condition relating to use of any process and technology not earlier used in Pakistan under this definition. “This condition is impracticable in an economy like Pakistan which in still in process of adopting new technology and has no research and development of its own to bring new technical expertise.”

READ MORE: Budget 2022/2023 to be presented in first week of June

Abolishing this requirement would create opportunities for local businessmen to acquire technology from developed world and lay foundation for industry and manufacturing.

This can also result in import substitution which is much needed for our country, the tax bar suggested.

READ MORE: MoC invites tariff proposals for budget 2022/2023