KARACHI: Business community has suggested curtailing powers of tax officers while invoking provisions of sales tax laws.
(more…)Tag: FPCCI
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One percent sales tax proposed on every stage of supply chain
KARACHI: Business community has proposed imposing one percent sales tax on every stage of supply chain of five export oriented sector without input adjustment.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its budget proposals for fiscal year 2020/2021 said that Finance Act, 2019 abolished zero rating regime extended to five major export sectors i.e. textile, leather, carpets, sport goods and surgical goods by rescinding SRO 1125(I)/2011.
Sudden removal of zero rating for export oriented sectors has proved fatal for already struggling export oriented sector as the same has resulted accumulation of huge refunds, which in turn has forced genuine taxpayers to knock the doors of tax officers for issuance of their RPOs, which has further promoted harassment and opened up a new window of bribery.
Withdrawal of zero rating has caused liquidity issues even for large exporters.
The removal of zero rating has made it almost impossible for exporters to stand anywhere near global competitors.
Moreover, in order to get maximum possible input tax adjustment, suppliers who are able to supply locally as well as in international markets are preferring local sales at the cost of exports to get maximum possible input tax adjustment.
This has resulted in visible decline in quantitative exports of these sectors, damaging foreign exchange reserves and worsening current account deficit.
The FPCCI proposed that Sales Tax at one percent on total value of supply may be charged at every stage in supply chain of these sectors without any input adjustment.
An example of finished garment chain is given as follows:
i. import or local purchase of fiber – 1 percent
ii. ginning – 1 percent
iii. spinning – 1 percent
iv. knitting/weaving – 1 percent
v. dying – 1 percent
vi. cloth – 1 percent
vii. garment stage – 1 percent
In this way, say in case of a finished garment product, exchequer will collect 7 percent sales tax.
All the raw materials including chemicals and dyes which were included in the erstwhile SRO 1125(I)/2011 dated 31-12-2011 be also subject to 1 percent Sales Tax without adjustment as it will incur no loss to the government exchequer.
The above sales tax in the value chain without input tax adjustment will provide the required revenue to exchequer on one hand, while on the other, the same will relieve the taxpayers of liquidity issues being faced by them in form of huge refunds.
This will also save administrative costs and time of the Board, enabling the force field force to focus on broadening tax base and real revenue collections.
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FPCCI suggests introducing taxpayers’ bill of rights
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has recommended introducing taxpayers’ bill of rights in the forthcoming budget.
The apex trade body in its proposals for budget 2020/2021, said that the present situation of antagonism between the tax collection agencies and taxpayers needs to be reconciled through a democratic process and implementation of Taxpayers’ Bill of Rights.
The goals fixed under Pakistan Raises Revenue (PRR) Project, estimated at US $1.6 billion, of which financing by World Bank is $400 million, cannot be achieved through handpicked experts (mostly coming on donors’ dictates) who are completely oblivious to the mundane realities of Pakistan.
The bad faith, antagonism and mistrust prevailing between the government and taxpayers can only be removed through a process ensuring a just and fair tax system in Pakistan for which the blueprint and roadmap is available, and we need no foreign funding.
The only thing lacking is political will to debate, promote research on the various challenges and find out workable solutions. This process will certainly require some time.
Meanwhile, PTI Government in order to restore the confidence of the taxpayers should immediately start the process of enactment of Taxpayers’ Bill of Rights.
The draft of Taxpayers’ Bill of Rights was prepared for the first time in 2014 by a sub-committee, constituted by the Federal Tax Ombudsman (FTO), in which Dr. Ikram Ul Haq had put in his best skill to suggest the balance between the rights of taxpayers and authority of tax collectors.
Thereafter, the Tax Reforms Commission (TRC), after 18 months of its establishment, also presented the same in its final report submitted in February 2016. However, until today no practical step has been taken to implement it.
It is high time that the incumbent Government should introduce the Taxpayer Bill of Rights in the finance bill 2020-21
The FPCCI further said that it is a time that we should focus on macroeconomic management issues including budgetary consideration which can have positive effect on long term business efforts towards capital formations and investment of trust and justice in the tax policies and obligations of tax statutes.
Independent Tax Adjudication System, which was promised two decades back during the period of General Parvez Musharraf be included in the ensuing Finance Bill, 2020. Some of the actions were taken but un-sustainability and cascaded developments remain absent. The prosecutors continue to remain adjudicators in the system.
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Immunity from audit against CNIC condition demanded
KARACHI: The business community has demanded the Federal Board of Revenue (FBR) to give immunity from audit against CNIC condition for tax year 2020.
In its budget proposals for fiscal year 2020/2021, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) demanded amnesty from audit against Computerized National Identity Card (CNIC) condition for tax year 2020.
The FPCCI said that the condition of CNIC on unregistered sales was introduced in the Finance Act 2019 but it was not implemented in its true spirit because of various reasons.
The FPCCI highlighted that in July 2019 was initially exempted of CNIC condition through legislation.
From August 2019 to January 2020, the condition was relaxed through agreement between shopkeepers and FBR.
Thereafter, from late February 2020 till unforeseen future, there has been tremendous pressure on the markets due to complete lockdown of the whole country because of the ongoing COVID-19 pandemic.
The FPCCI said that CNIC condition has been causing cashflow issues since its implementation which will further intensify during the current pandemic of COVID-19, especially for registered taxpayers.
Therefore, in order to facilitate the registered Taxpayer, a general amnesty through legislation is requested in the next budget regarding CNIC condition for the whole tax year 2020 starting from August 2019 to June 2020.
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FPCCI praises central bank for reducing policy rate to nine percent
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has praised the central bank for reducing policy rate by two percent to nine percent from 11 percent.
In a statement issued on Friday, Mian Anjum Nisar, President, FPCCI appreciated reduction in the policy rates by 2 percent from 11 percent to 9 percent by State Bank of Pakistan (SBP) in view of the current situation and banks should follow SBP immediately accordingly.
The reduction in policy rate by 4.25 percent in a month is commendable step of the government in the present situation that will positively affect cost of doing business and will encourage Investors and Industrialists to make new investment in the country.
The president FPCCI also said that the pandemic COVID-19 has affected the global economy and pushed to the depression resulting contraction in the economic activities and a threat to unemployment.
He told that the expected long-terms affects are more severe than the previous great depression losses.
He apprehended that the economy of Pakistan will contract by 1.5 percent due to COVID-19 in the current fiscal year and the government has to take immediate measures to protect the trade and industry that will ensure future employment, economic growth and socio-economic prosperity.
Present available resources must be utilized to safeguard the trade and industry so that our industry could be able to compete with global world after this crisis.
The whole economy is in lock down situation since last 26 days, and will continue for 3 months which is building liquidity crunch and our policies should address post CORONA situation so that business can run and jobs can be secured.
He also said that affected countries have considerably reduced interest rates and Pakistan’s trade and industry is also in a dire need to further reduction in the interest rate to nearly 5 percent so it could be sustain under the prevailing conditions.
He further stated that foreign exchange reserves are increasing due to assistance from IMF, World Bank, Asian Development Bank and other friendly countries so SBP also control and manage the market more effectively particularly the exchange rates.
FPCCI chief emphasized that the SBP Scheme of loans to industry for salaries payment of employees should be interest free and the government should also contribute in it as it will be a liability to payback with interest for the period when industry is closed and workers are at homes.
The scheme needs to be revisited with the consultation of the stakeholders who are facing multidimensional problems and are able to guide the policy maker under this terrible situation.
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Why non-filers happy in paying high withholding tax rates, FPCCI asks FBR
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over lower number of return filers and asked Federal Board of Revenue (FBR) to identify reasons that why non-filers happy in paying higher rate of withholding tax.
According to a statement on Thursday, the FPCCI has finalize proposals for upcoming budget 2020/2021.
The proposals have been drafted keeping in view of the objectives of (i) Revamping Taxation System (ii) Documentation of Economy (iii) Employment generation through Industrialization (iv) Promoting a responsive and equitable Taxation System (v) Infrastructure Development (vi) Trickledown effect of the fiscal space to the grass root level etc., and would be submitted to the concerned quarters within fortnight”.
This was stated by Mian Anjum Nisar, President, FPCCI and Zakaria Usman, Convener of the FPCCI Budget Advisory Council.
Elaborating the methodology of the budget proposals exercise, they stated that the FPCCI with a consistent commitment to developing and promoting a modern, responsive and equitable taxation system, has formulated these proposals on the basis of impartial, unbiased and transparent manner after taking a painstaking lengthy process which involved incorporating feedback received on matters related to revenue and taxation throughout the year from our members located across the country and input obtained from our member trade bodies, stakeholders, tax practitioners, knowledgeable people etc., through invitation of proposals, organizing workshops and holding a series of Budget Advisory Council meetings wherein these proposals were discussed in detail and some contradictory proposals were re-examined and final proposals were redesigned in line with the best interest of the country.
They informed that the FPCCI Budgetary document consists of three Volumes – Vol-I discusses issues / solution of macroeconomic nature ; Vol-II contains policy issues relevant to Taxation (Sales Tax, FED, Income Tax and Customs) ; while Vol-III contains Industry Specific Proposals received from FPCCI members .
Moreover, the FPCCI would also submit its proposals to meet the challenges being faced by the trade & industry due to outbreak of COVID-19 as its severe and adverse impacts on various aspects of Pakistan’s economy is quite discern which may lead to negative growth rate, deterioration in current and fiscal balance, disruption in supply chain, increased unemployment etc.
The FPCCI Chief Mian Anjum Nisar added, “The Macro Economic proposals contains long term action plan to boost exports ; promotion of Branding ; Enhancing SMEs sector ; Monetary Policy ; Creating Employment Opportunities through industrialization ; Taxpayers Bill of Rights ; Independent Tax Judicial System etc”.
Zakaria Usman, Convener of the Budget Advisory Council disclosed, “In Direct Taxes, it has proposed to the Federal Board of Revenue (FBR) to reduce the tax rates to help increase competitive edge of indigenous products in both local and global markets; broadening of tax base; curtail parallel economy etc., as high tax rates provide incentives for tax evasion and corruption and results in high cost of doing business.
At present the total numbers of NTN holders in Pakistan are over 4 million, however, the FBR has miserably failed to obtain return of income from such NTN holders and increase the number of active taxpayer during the last decade.
They added that according to a study, 2.1 million Pakistanis (individuals) filed income tax returns in 2006-07 which shows that FBR during the last 14 years could not fetch much tax filers, despite prescribing higher withholding tax rates for non-filers”.
“This underscores the need that FBR should conduct a study to find out what has gone wrong that even after penalizing the non-filers, they are happy to pay more by way of advance tax instead of filing returns”.
He proposed that it is desirable that measures should be taken to facilitate to those, who are already existing taxpayers and contributing in the national tax pool in all manners, so that they become goodwill ambassador for FBR.
“Resultantly, since many years, the registered taxpayers are less than 1 percent of the population of our country, which need to be enhanced”, he concluded.
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Prolonged industry closure to be harmful: FPCCI
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the apex trade body of the country, urged the authorities to evolve strategy of functioning business activities during lockdown to prevent spread of coronavirus.
FPCCI President Mian Anjum Nisar, while criticizing arrest of businessmen urged the relevant authorities to take serious notice of the situation.
He also urged to devise Standard Operating Procedures (SOPs) to the trade and industry for smooth functioning as the economy of Pakistan may not face prolonged closure of the industry that will be harmful for the entire nations.
He expressed serious concern over unfavorable behavior towards the trade and industry that are supporting the government to ensure economic sustainability in this crises where every segment of economy is suffering.
He said that legal/representative forums are available to complaint against violation by any member of the business community. On the other hand the entire trade and industry has assured to the government for economic progress despite various challenges due to prevailing condition under COVID-19.
However, such attitude discourages commercial activities to support the government policies and programs.
Mian Anjum Nisar President FPCCI seriously expressed his concern over the arrest/detention of a member of the business community and termed it a discouraging environment for businesses where the industry is facing lot of challenges to compete and complete exports order that Pakistan needs to continue to bring foreign exchange through exports.
He further told that the exporters are losing orders, nearly 70 percent export orders has been cancelled due to global environment and for completing remaining 30 percent we need to function smoothly adherence to health precautionary measures.
But under such circumstances where industry has to be closed, no lay off labors, no facility for shipments, cash flow, banking and market obligation, how all these requirements could be met out when the authorities and agencies creating such problems of harassment and arrest/ detention of industrialists.
He stated that at this time of global crises where most of the countries are losing trade and facing drastic decline in exports the government should follow policies that are favourable to industry and avoid from strict actions against trade and industry of the country.
Those are following precautionary, safety and security measures at their factories to protect the environment from spread of virus may be supported uninterrupted production activities.
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FBR extends time limit to 25 days for GD filing
KARACHI: Federal Board of Revenue (FBR) on Monday extended time limit for filing goods declaration to facilitate traders and importers, who were facing difficulties due to lockdown.
The FBR extended the time limit for filing of goods declaration from the existing 10 days of arrival of goods to further 15 days (total 25 days) for all Import General Manifest (IGMs) filed between March 17, 2020 and April 07, 2020.
The FBR said that the customs collectorates across the country were operating normally, however, on account of the ongoing lockdown by provincial governments to address the prevailing pandemic of COVID-19, the importers and clearing agents were facing hardship in filing of goods declaration within the time limit prescribed under Customs Act, 1969.
The consequent penalty on this account is causing undue hardship to the traders as the circumstances for late filing, which was beyond their control.
The FBR said that it had received requests from the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce and Industry (KCCI) for extension in the time limit for filing of goods declaration.
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FBR urged to defer CNIC condition for six months
KARACHI: Business community has urged Federal Board of Revenue (FBR) to defer CNIC condition on purchases above Rs50,000 for at least six months.
In a statement Saquib Fayyaz Magoon, Convener of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) standing committee on Sales Tax and Chairman Indenters Association of Pakistan (IAOP), urged Government to pay attention on economic crises due to lockdown for prevention of coronavirus pandemic and has demanded Prime Minister to defer CNIC Condition for 6 months on sale of goods to unregistered persons in view of the current economic crisis.
Magoon Said due to situation caused by the coronavirus, all payments to exporters have been stopped and export orders canceled while the economic activities have also stopped. While there has been a severe crisis of cash flow in the market, therefore, by defer the condition of the CNIC will improve the cash flow situation, otherwise there will be another major financial crisis.
He also requested the government to accept sales tax returns without CNIC and said that in the current economic crisis, now we will depend largely on the local consumer industry, who are already in crisis due to the CNIC condition.
Prime Ministers adviser on commerce Abdul Razzaq Dawood in which he assured that cash flow would not be affected by the Coronavirus.
So if he wants the cash flow not affected then CNIC Condition must defer for minimum six months so that business activities can be restored as usual.
Magoon pointed to the difficulties facing the businessman community over the ban on courier companies due to the lockdown, said the original document of import shipment could not be reached in the banks.
So as long as the lockdown is in place, the State Bank should issue clear instructions to the banks that the EIF be approved on the copy of the document to ensure uninterrupted clearance of imported goods. Because the original documents are required for EIF approval.
Due to not being provided original documents is causing constraints and importers are not able to file a GD which is causing consignment storage and shed charges.
Saquib Fayyaz Magoon appealed the Prime Minister Imran Khan that in view of the serious situation caused by the coronavirus, a directive should be issued to the State Bank that the EIF be approved on the copy of the document at the time of payment by the importers to the banks.
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FPCCI calls for strategy to save national economy amid global meltdown on coronavirus epidemic
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the apex trade body of the country, has urged the government to outline strategy to save national economy in the wake of global meltdown on coronavirus epidemic.
FPCCI president Mian Anjum Nisar in a statement on Saturday urged the government to take preventive measures and develop strategy to protect the pace of economic and trade progress of Pakistan from likely impacts of world economic slowdown apprehended by leading think tanks due to the recent global spread of the novel coronavirus.
Globally, more than 145,682 people have been diagnosed with coronavirus. The death toll above 5436, in China death toll 3173, South Korea, mass testing has turned up over 6,000 cases and more than 60 deaths.
Italy has confirmed more than 17660 cases, along with more than 1200 deaths. Iran has announced 514 deaths and 11364 cases. The United States confirmed 41 deaths from the outbreak, along with more than 1264 confirmed cases.
Mian Anjum Nisar said that in order to safe national economic system from the impacts of slowdown of world economy due to coronavirus and other global economic challenges government should announce economic relief package to protect trade and industry of the country. He informed that the Europe is now the “epicentre” of the global coronavirus pandemic.
The Europe Union (EU) is the second biggest trading partner of Pakistan where around 20 percent of Pakistani exports have duty-free access to the Europe, while 70 percent avails preferential treatment.
FPCCI under the current scenario has organized a consultative session seeking feeding back from the stake holders on likely impact of this coronavirus on Pakistan’s foreign trade.
The session was attended by Dy. Governor SBP Dr. Murtaza Syed, Dr. S.M. Qaiser Sajjad Secretary General, Dr. Samreen Sarfarz Pakistan Medical Association, Dr. Adil H. Haider Dean Aga Khan Medical University, Dr. Ijaz, health department of Sindh Government, Aga Fakhar Hussain Additional Secretary Industry & Commerce Sindh, Dr. Saeed SINA Welfare Trust, Prof. Dr. Zarna Wahid, Dow University of Health Sciences, Pakistan National Shipping Corportation and KPT. The session was chaired by Sheikh Sultan Rehman Vice President FPCCI.
The chief of the apex trade body also informed that the US Congress has voted for a US $ 50 billion emergency funding package to fight the coronavirus. Several central banks around the world, including the U.S. Federal Reserve, have lowered interest rates to support their economies amid the coronavirus outbreak. Lowering interest rates make borrowing costs cheaper and could encourage business to take loans and spend which will in turn stimulate the economy. He further stated that the IMF is making available US $ 50 billion in emergency funding to help poor and middle-income countries.
Mian Anjum Nisar President FPCCI emphasized that as the inflationary trend shows declining that support to reduce interest rates while on the other hand to boost and safe economic activity all segment of economy needs to be supported and facilitated to contribute in economic growth.
Other- wise we will again face economic crises, lower industrial growth and shifting of industrial units in sick industry. Government should also reduce the cost of doing business and encourage the domestic & foreign investors to make investment in country at this critical time when the global economy is shrinking.