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Tag: KCCI

  • FBR urged to abolish withholding tax, minimum tax for commercial importers

    FBR urged to abolish withholding tax, minimum tax for commercial importers

    KARACHI: Federal Board of Revenue (FBR) has been urged to abolish withholding tax and minimum tax for commercial importers in the upcoming budget 2021/2022.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for the upcoming budget said that commercial Importers of raw material pay withholding tax at 2 percent up to 5.5 percent which can only be possible if the gross profit is 30 percent, while the margin is not more than 2 to 3 percent on raw materials sold without value addition or change in form.

    By amendment to Section 148 of Income Tax Ordinance, 2001 through Finance Bill 2018-19, WHT paid on import of raw materials by commercial importers has been converted to minimum tax and the importers have been taken out of fixed tax regime (FTR).

    The chamber said that the concept of WHT is unique to Pakistan’s Tax regime which in fact is tantamount to putting the burden of tax-collection from undocumented entities on the compliant tax payers and avoiding the responsibility to broaden tax-base.

    After acquiring unprecedented powers to access information under Section 56 A and 56 B in Income Tax Ordinance, 2001, FBR and its subordinate departments must take the responsibility to identify non-compliant and undocumented entities/persons instead of laying the onus on existing taxpayers.

    The chamber proposed that concept of minimum tax and withholding tax may be abolished.

    Tax Payers may be allowed to pay certain Fixed Tax or opt for Audit regime and pay taxes in accordance with actual tax liability on Income.

    Furthermore, all Taxes deducted have to be adjustable against actual tax liability.

    Giving rationale, the chamber said that the commercial importers who are a major source of revenue will be able to resume their business and contribute to revenue as well as promotion of SMEs.

  • Jurisdiction of big taxpayers given to CTO

    Jurisdiction of big taxpayers given to CTO

    KARACHI: Federal Board of Revenue (FBR) has transferred jurisdiction of big volume taxpayers to Corporate Tax Office (CTO) instead of dedicated tax offices for big taxpayers i.e. Large Taxpayers Office (LTO).

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 pointed out that the FBR had created new LTOs which deal with taxpayers having a turnover of Rs.1 billion or more.

    However, FBR has changed the taxpayer’s jurisdictions abruptly without any intimation.

    Jurisdiction of some tax payers has been transferred from LTO to CTO despite having a turnover of Rs.7 to Rs8 billion which has created a great deal of confusion and hardship. Difficulties in transfer of soft data/hard copies of tax records from one jurisdiction to other has created problem in processing of refunds and other issues.

    The chamber urged the FBR to correctly and transparently implement the said policy.

    Transfer of Jurisdiction should be streamlined and made easier with prior intimation and valid reasoning.

    Taxpayer data will be available for longer period to be checked by himself at one place and it will also facilitate taxpayers.

  • Commissioner Appeals should be empowered to grant stay up to 90 days

    Commissioner Appeals should be empowered to grant stay up to 90 days

    KARACHI: Federal Board of Revenue (FBR) has been urged to authorized commissioner appeals to grant stay up to 90 days instead existing 15 days.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 said that currently Commissioner (Appeals) grants stay for 15 days only and after expiry of the stay the taxpayer has to file repeated extensions until the decision of the Appeals. Relevant Sections are: ITO 2001 Section 128 (1A)

    The chamber said that this is a cumbersome process which is quite unnecessary and causes undue hardship.

    The KCCI proposed that amendment should be made to Section 128 (1A) of the ITO 2001, to increase the stay duration to Ninety (90) days instead of 15, and extend order timeline to 180 days instead of the existing 30 days.

    This will eliminate unnecessary documentation and save time of both the taxpayer and the Commissioner (Appeals).

  • KCCI demands restoration of normal business timings

    KCCI demands restoration of normal business timings

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Saturday demanded the government of Sindh to restore business timings for markets during the holy month of Ramazan ul Mubarak as restriction imposed on timings may result in disastrous for traders and shopkeepers.

    Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce and Industry (KCCI) Shariq Vohra, while expressing sheer dismay over Sindh Govt’s decision to allow limited business timings from Sheri to 6:00PM and complete closure of businesses on Saturdays and Sundays, urged to revoke the relevant notification without further loss of time and allow all types of businesses to operate at full capacity throughout Ramazan otherwise the people, instead of dying due to diseases caused by coronavirus, would die themselves because of poverty, unemployment, mental stress, hunger or starvation.

    In a statement issued, Chairman BMG and President KCCI stated that they have been urging the Sindh Government through letters to avoid imposing such unpopular decisions at a very crucial time as this was the peak season and if businesses are disallowed to carry out activities for two consecutive days and compelled to observe limited business timings during the remaining working days, it will prove to be disastrous for them throughout next year.

    “We have sent letters to Chief Minister Sindh, Local Govt. Minister, Chief Secretary and Commissioner Karachi and also dropped messages from time to time but haven’t received any response which is a bit disappointing as we were not expecting this kind of response from Sindh Govt. which has always responded to KCCI’s pleas”, said Zubair Motiwala Chairman BMG, “Closure of businesses for two consecutive days and allowing them to operate with limited timings during the remaining days would result in bankrupting many businesses, trigger massive unemployment and chaos.”

    Referring to large number of complaints being received from the shopkeepers of almost all the commercial markets of Karachi who were constantly seeking KCCI’s assistance, Chairman BMG stressed that the government has to come up with some other feasible solution which could save everyone from the pandemic and also ensure zero damage to the poor shopkeepers and small traders who cannot afford any further shocks. “In this regard, the business and industrial community is ready to fully comply with all the SOPs but closure would bring much more difficulties and miseries than opening and controlling the pandemic through the implementation of SOPs”, he added.

    He further said, “These are challenging times and every member of the civil society is facing problems due to COVID crises. Perhaps, it is time when the government should think about extending monetary help to citizens especially the small shopkeepers who are now in net debt position and even paying rents to owners of their business premises has really become difficult.”

    “It is the finding of our Research Department that many shopkeepers have already gone bankrupt and they are running their businesses in anticipation that this season of Ramazan will pull them out of crises. Hence, it is imperative that government should understand the real situation faced by the trading community”, he added.

    “Yes! it is necessary to implement but these SOPs, as the trading argues, are not seen on roads, mosques, public places and big shopping malls. In such a situation, how Karachiites will be saved from COVID if they are closed for two days”, Zubair Motiwala questioned.

    Chairman BMG, therefore, stressed that the notification must be immediately withdrawn while the administration should be effectively utilized for strict implementation of the Standard Operating Procedures (SOPs). “If the administration was able to strictly get the lockdown enforced last year, then why it is not being used for strict implementation of SOPs”, he asked, adding that the Sindh government will have to alleviate the predicament of businessmen instead of aggravating them.

    President KCCI Shariq Vohra also cautioned that shutting down shops for two days and limited business hours would lead to creating a chaotic situation as the people would find no other option but to come out on streets to protest due to rising unemployment and poverty.

    Keeping in view the overall situation and grievances suffered by the business and industrial community, President KCCI hoped that the Sindh government would look into this serious issue and take steps to save businesses and the economy from further disaster.

    On behalf of the entire business community of Karachi particularly the small traders and shopkeepers, Chairman BMG and President KCCI appealed the government to review the decision to shut down all types of commercial/ business activities for two consecutive days a week and allowing limited business hours till 6:00PM which is tantamount to mass killing of the already perturbed small traders and shopkeepers who are in deep crises and struggling really hard to somehow keep their businesses alive.

  • Taxpayers not to worry on system generated past six years audit notices: CCIR

    Taxpayers not to worry on system generated past six years audit notices: CCIR

    KARACHI: Taxpayers should not worry on audit notices of past six years as most of those were system generated and Federal Board of Revenue (FBR) is trying to resolve the issue, a top FBR officials said on Monday.

    While discussing tax issues at Karachi Chamber of Commerce and Industry (KCCI), Dr. Aftab Imam, Chief Commissioner Inland Revenue (CCIR) of Corporate Tax Office (CTO) Karachi explained the issues pertaining to audit notices.

    He said that FBR was well-aware of this issue and it has been observed that most of them were system generated notices and the business community should not worry as FBR was trying its best to resolve this issue.

    “There is no need to re-submit those documents again at the FBR which have already been submitted for audit and only the missing documents should be provided with a covering letter in which it should be clearly mentioned that the following relevant documents have already been provided while the missing documents are being sent,” he added.

    He also assured to analyze the issue of higher turnover tax on yarn traders as compared to the profit margin and look into the possibility of restoring it back to 0.1 percent from 1.5 percent in the next budget.

    The Chief Commissioner CTO mentioned that FBR was seriously working towards creating ease for the business community as the economy would only flourish when the businesses flourish that would automatically improve the tax revenue for the country. “Hence, we want to facilitate the business community and keeping in view FBR’s approach, most of the issues being faced today would be resolved in the next one-an-a-half year as we are very keen to create a tax-friendly environment”, he added.

    He further sought business community’s assistance in identifying those millions of individuals who have been doing businesses of up to billions of rupees but they remain out of the tax net which was the basic reason for the exorbitant tax rates being suffered by the existing taxpayers. “The unregistered individuals have to be taken to task which would reduce the burden on existing taxpayers through reduction in tax rates”, he added.

    Earlier, President KCCI M. Shariq Vohra, while welcoming Chief Commissioner CTO, appreciated that dedicated efforts and prompt response by Chief Commissioner CTO towards amicably resolving the FBR-related taxation issues being faced by business community. “We hope that the FBR would incorporate maximum number of recommendations given by KCCI in its budget proposals which have been recommended in the larger interest of the country”, he said, adding that it has always been KCCI approach to highlight the general issues which are not faced by a few individuals only but by the majority of stakeholders from a particular sector. “Our proposals for upcoming Budget for FY 2021-22 carry pivotal importance and will have a positive impact on business and investment climate, ease of doing business and overall growth of the economy.”

    He was of the opinion that taxpayers face immense hardships in getting petty issues resolved because of the unnecessary hindrances being creates by FBR officials which not only fetches a bad image for the entire department but also discourages new individuals to come into the tax net which was a very issue that requires immediate attention.

    Shariq Vohra pointed out that many members of the business community have been receiving bulk audit notices nowadays in which huge number of documents for six years old cases of 2014 were being demanded which was not making any sense at all and it appears like an attempt to harass the business community. “The FBR, instead of intensifying the hardships for existing taxpayers, must take practical steps to somehow bring more and more people into the tax net which was in the larger interest of the country as it would not only improve the tax revenue but would also bring down the tax rates that would certainly go in favor of the economy”, he added.

    Former Senior Vice President KCCI Ibrahim Kasumbi, in his remarks, particularly mentioned that the furniture industry comprising workshops, employing artisans and manual labor, has been receiving notices from tax authorities and field officers in many parts of Pakistan and they were being compelled to get registered as Tier 1 retailers which was unjust and not practicable for this trade. Hence, FBR must stop harassing shopkeepers, showroom and workshop owners in the name of registration in Tier-1 and the employment of hundreds of thousands skilled workers artisans and laborers has to be protected while this important industry of traditional hand-crafted furniture has to be preserved.

    He further stated that consumption of black tea in Pakistan was 240,000 tons, but the imports through legal channels was hardly 100,000 tons due to high rates of customs duty, sales tax, regulatory duty (RD) and withholding tax (WHT). The remaining requirement was being fulfilled by smuggling, Afghan Transit Trade, and imports under various exemptions/concessions granted to Provincially Administered Tribal Areas (PATA) and Azad Kashmir. Hence, rates of customs duty, sales tax, RD & WHT have to be rationalized to prevent smuggling and massive leakage of revenue, he added.

  • FBR urged to allow commercial import of used cars to end auto assemblers monopoly

    FBR urged to allow commercial import of used cars to end auto assemblers monopoly

    KARACHI: Federal Board of Revenue (FBR) has been urged to allow commercial import of used and reconditioned cars of models up to five years old to end monopoly of local car assemblers.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 recommended the commercial import of used and reconditioned motor cars up to five years old.

    The chamber said that during the past 40 years, assemblers of automobiles have enjoyed protective duties, exemptions and virtual monopoly in Pakistan’s automobile car market.

    Contrary to initial agreements, the assemblers failed to implement deletion program up to 90 percent. Instead, they are importing CKD while they have created vendors who mostly import auto parts and supply to these assemblers.

    Consequently, the so called vendor industry is only producing low quality and non-mechanical parts which is clearly visible in locally assembled cars.

    So far the assemblers have only drained Pakistan’s foreign exchange reserves to the tune of billions of dollars.

    Quality of automobiles produced by the assemblers is so poor that not a single unit of these cars has ever been exported to any country.

    Despite such poor quality, artificial shortage is created to fetch a premium on the early delivery and allow undocumented investors to exploit genuine buyers.

    The chamber said that import of reconditioned cars more than 3 years old model has been restricted to favor the assemblers and exploit the middle class people of Pakistan who can no more afford to buy even a small 660cc to 1000cc imported or local car.

    Ironically, import of brand new cars of high capacity and premium brands is allowed which only benefits the elite. Middle class consumers have been deprived of their right to purchase reasonably priced used/reconditioned cars which have a better quality and safety standard than the locally assembled new vehicles.

    Clearly there is an element of corruption, connivance and vested interest involved in formulating auto-policies. Unfortunately, the vested interests are also resisting to change the policy to allow import of reconditioned cars by reducing the Tariff rates and also permit import of cars of up to five year old models.

    The chamber further said that enough protection has been given for decades to assemblers.

    The chamber has given a comprehensive tariff plan for import of used and reconditioned cars.

  • FBR urged to provide option for business principal activity in sales tax registration

    FBR urged to provide option for business principal activity in sales tax registration

    The Karachi Chamber of Commerce and Industry (KCCI) has called upon the Federal Board of Revenue (FBR) to address challenges in the business registration process, emphasizing the need for streamlined options in the IRIS registration form.

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  • Karachi Chamber welcomes appointment of Hammad Azhar as Finance Minister

    Karachi Chamber welcomes appointment of Hammad Azhar as Finance Minister

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Wednesday welcomed the government decision to appoint Hammad Azhar as the finance minister of the country.

    Chairman Businessmen Group (BMG) & Former President KCCI Zubair Motiwala and President KCCI Shariq Vohra, while warmly welcoming the appointment of Hammad Azhar as Federal Finance Minister, stated that the business & industrial community of Karachi highly appreciates and fully supports Prime Minister’s prudent decision and hopes that the newly appointed Finance Minister would take necessary practical steps to deal with some of the major economic crises being faced by the country.

    In a joint statement, Chairman BMG and President KCCI pointed out that Hammad Azhar will have to devise effective strategies on war-footing basis to deal with the menace of inflation which has terribly affected the lives of entire population, besides taking practical steps to bring down the exorbitant cost of doing business.

    Uncertainty continues prevails in every nook and corner of the country as the COVID-19 pandemic still remains largely active and the overall situation, which was already very challenging, has been worsening day by day. It seems that the third spell of the deadly virus was more dangerous and it has triggered a lot of anxiety amongst various businesses therefore, the next budget has to be declared as a “Relief & Rescue Budget”, they added.

    They opined that this change at the helm of affairs at the Ministry of Finance just ahead of budget has triggered some anxiety amongst business community and was likely to create a challenging situation hence, the government will have to take confidence building measures by taking the Karachi Chamber on board in the policy making process whether it was pertaining to SBP’s autonomy, budget making or any other taxation related issue.

  • FBR urged to remove CNIC condition on sales up to Rs100,000 by distributors

    FBR urged to remove CNIC condition on sales up to Rs100,000 by distributors

    KARACHI: Federal Board of Revenue (FBR) has been urged to withdraw condition of CNIC on supplies made by distributors to unregistered persons on sales up to Rs100,000.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 stated that under section 23(1)(b) of the Sales Tax Act, 1990 exclusion has been provided to retailers, whereby retailers supplying taxable goods to unregistered persons are not required to mention the CNIC unregistered customers, wherein the transaction value inclusive of sales tax does not exceed Rs.100,000.

    Due to the present provisions of the law, the distributors are facing a dilemma whereby small retailers are purchasing taxable goods valuing Rs.100,000 from mega stores (retailers) in order to avoid the requirement of providing the CNIC, resulting in loss of business for the Distributors who normally used to sell goods to such small retailers

    The KCCI proposed that FBR should extend similar exclusion of Rs.100,000 to distributors as well.

    Giving rationale, the KCCI said that it will help ease of doing business thereby resulting in enhancement of tax revenue.

  • FMCGs should be excluded from tax collecting agent

    FMCGs should be excluded from tax collecting agent

    KARACHI: Federal Board of Revenue (FBR) has been urged to amend laws to exclude manufacturers of fast moving consumer goods (FMCGs) from application of withholding tax under Section 236G and 236H on Income Tax Ordinance, 2001.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022, stated that manufacturers of electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam etc., collect advance tax at 0.1 percent for persons appearing on Active Taxpayers List (ATL) and 0.2 percent for non-ATL and 0.5 percent for ATL and 1 percent for non-ATL of gross of amount of sale to distributors, dealers, wholesalers and retailers.

    Most of the goods mentioned above are not fast moving consumer goods. The only FMCG is beverages on which the section 236 G & H are unjustly applied.

    This tantamount to discrimination for beverage manufacturers being the only manufacturer of FMCGs manufacturer class liable to above tax.

    It is not practically possible for manufacturer of FMCGs to collect income tax from dealers, distributors, wholesalers and retailers and it adds to the cost of consumer products.

    The KCCI proposed that the section may be appropriately amended to exclude the manufacturers of FMCGs from being collecting agents under section –236 G & H of the Ordinance.

    The chamber said that it would relieve the unjust burden of tax on consumer goods and enable manufacturers of FMCGs to pass the benefit to end-consumers.