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Tag: KCCI

  • 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.

  • FBR suggested to abolish multiple audit provisions

    FBR suggested to abolish multiple audit provisions

    KARACHI: The Federal Board of Revenue (FBR) has been suggested to abolish multiple provisions of audit under Income Tax Ordinance, 2001 and simplify procedure for ease of doing business.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 said that presently audit proceedings can be started u/s 177 as well as through balloting u/s 214C and like-wise enquiries can also be made by the Commissioner u/s 122(5A). There is a concept of a special audit panel u/s 177(11) as well.

    Sub-Section 7 is ambiguous and provides the Commissioner and his sub ordinates with a tool to harass, extort and victimize any taxpayer at will.

    The Commissioner can re-open the Audit of any person or firm at will on unsubstantiated grounds. SEC.177 SUB-SECTION 4: Any person employed by a firm to conduct audit function may be authorized by the Commissioner to exercise powers under sections 175 and section 176.

    The KCCI said that revenue collection through such recovery proceedings is hardly Rs.92.0 Billion whereas the costs due to litigation, involvement of entire tax collection machinery and declining number of tax filers, is far more than the collection.

    Multiple audits under various provisions have eroded the trust of tax-payers in the FBR. RTOs and LTUs. Audit functions under various Provisions have created confusion and complexity in Tax regime.

    Such provisions are also prone to misuse and a source of harassment.

    The chamber proposed that all audit functions should be brought under one provision of Income Tax Ordinance rather than various over-lapping provisions with clear and well defined parameters. Audit Parameters should be transparent and open to taxpayers.

    Further, Sub-Section 7 may be deleted.

    Powers of the Commissioner and sub-ordinate officials should be curtailed to restore the trust of Tax Payers and encourage broadening of tax-base.

    Such Audits should be restricted to specific queries or objections and call for relevant document only rather than opening and re-opening a comprehensive audit every time.

    Giving rationale the KCCI said that bring transparency and clarity to audit functions and rules governing the same.

    Prevent harassment to tax payers and abuse of powers by Inland Revenue officials. This will also help in broaden tax base by restoring confidence in the system.

  • Commercial, industrial utility connections must be brought into tax net

    Commercial, industrial utility connections must be brought into tax net

    KARACHI: Federal Board of Revenue (FBR) has been urged to bring all persons having industrial and electricity utility connections into tax net to ease tax burden on existing taxpayers.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2021 said that currently the taxpayers and filers of income tax returns, particularly industrial entities are overburdened with multiplicity of taxes.

    Overburden of taxes on already registered taxpayers is depriving them of level playing field and business viability against non-taxpayers.

    The chamber proposed that all the entities engaged in business having commercial and industrial utility connections but are out of tax base should be brought to tax-net making them taxpayers and filers.

    According to NEPRA Industry Report 2019 and FBR Tax Directory Data 2018, the number of commercial and industrial consumers is higher as compared to registered Tax Payers with a huge difference, who must be brought into tax-net as they are commercial and industrial entities but out of tax-net.

    The chamber said that it would ease down the burden of taxes over registered taxpayers and shall also broaden the tax base resulting to further documentation of economy.

  • Tax recovery through bank accounts should only from unregistered persons

    Tax recovery through bank accounts should only from unregistered persons

    KARACHI: Federal Board of Revenue (FBR) has been urged to restrict its powers of tax recovery from bank accounts on unregistered persons.

    In its proposals for budget 2021/2022, Karachi Chamber of Commerce and Industry (KCCI) pointed out Section 140 of Income Tax Ordinance, 2001 that is related to recovery of tax from persons holding money on behalf of a taxpayer.

    According to the law for the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –

    (a) owing or who may owe money to the taxpayer; or

    (b) holding or who may hold money for, or on account of the taxpayer;

    The chamber said that this provision and further access to information on bank accounts under other provisions of law, have been counter-productive and led to a flourishing cash economy. Many innovative ways have been evolved by businesses similar to block-chain and a local hundi system. Such provisions only affect the documented businesses while the entire undocumented sector is immune from such laws.

    The KCCI said that access to bank accounts may only be limited to accounts of unregistered persons with unusually high amounts of transactions.

    Commissioner should only be authorized to obtain information about the funds in accounts and to seek clarification as to the nature of transactions and sources of funds. Such persons may be brought into the tax-net.

    The chamber said that it will:

    1. Relief to the registered persons and restore confidence in banking system. Encourage official transactions.

    2. Bring unregistered persons into the tax-regime.

    3. Stimulate economic activities and growth. Increase bank deposits which may be used for lending to industry.

  • FBR suggested to stop intelligence, investigation raids

    FBR suggested to stop intelligence, investigation raids

    The Karachi Chamber of Commerce and Industry (KCCI) has called upon the Federal Board of Revenue (FBR) to reevaluate its approach to tax enforcement, urging a halt to the aggressive raids conducted by the Directorate of Intelligence and Investigation.

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  • FBR proposed to restore sales tax zero rating

    FBR proposed to restore sales tax zero rating

    KARACHI: Federal Board of Revenue (FBR) has been proposed to restore zero-rating of sales tax with objective of ‘no payment no refund’.

    The FBR received proposals for the upcoming budget 2021/2022 from Karachi Chamber of Commerce and Industry (KCCI).

    It is highlighted that in the budget 2019-2020, the Federal Government rescinded SRO1125 and imposed 17 percent Sales Tax on erstwhile Five Zero-Rated Export Sectors and exporters are required to apply for refund after export of consignment.

    It is observed that the exporters who have filed their refund claims to date have received 35 percent of claims payment only while 65 percent of the refund claims are stuck up with the Government which is approximately 12 percent amount of exporter’s running capital.

    However, the profit margin of exporters is around 5 percent to 8 percent. Moreover, exporter can apply for refund only after export of consignment.

    In this manner their liquidity is stuck. Likewise, the exporters make purchases for production of export products at least six months in advance which is consumed based on export orders causing financial hardships.

    The KCCI proposed that it is imperative to revive SRO 1125 in its true spirit and reintroduce system of No Payment and No Refund of Sales Tax for the Five Export Oriented Sectors.

    Although the Government has streamlined the FASTER system, nonetheless, the exporters are facing liquidity crunch amid condition of filing claims only after dispatch of shipment which takes at least three months time. Consequently, the liquidity is held-up causing financial pressure on exporters.

    The chamber explained the benefits of reviving zero rating that the government must consider to restore and revive Zero-Rating under SRO1125 in real spirit or consider reduction in rate of Sales Tax from current 17 percent to 5 percent to facilitate the exports ensuring availability of required/ adequate liquidity and smooth Cash flow, to boost the confidence of Exporters to enhance their exports and cement their business ties with the foreign counterparts to capture true business potential.

  • KCCI proposes single digit sales tax rate

    KCCI proposes single digit sales tax rate

    KARACHI: Business community has recommended to bring the sales tax rate to a single digit in order to incentivize documentation and improve compliance.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 said that the rate of sales tax at 17 percent in Pakistan is among the highest in the region.

    “Realistically such high rate of Sales Tax is in fact a disincentive to documentation and compliance.”

    Mostly the indirect taxes at such high rate at source encourage smuggling, evasion, under-invoicing and mis-declaration. It has been a disincentive to documentation of supply chain and has only burdened a narrow base of registered manufacturers, importers and traders.

    The chamber proposed that the rate of sale tax should be reduced to a single digit on all sectors to reduce cost of inputs and provide support to reduce prices of consumer goods as well as the cost of exports.

    Giving rationale, it said that industry / economy will boost up, raise in the tax base, promote the documented & registered economy, and will generate revenue with growth.

    Smuggling, under-invoicing and mis-declaration will be curtailed. Fake and Flying invoices eliminated.

  • FBR urged to withdraw CNIC condition under sales tax law

    FBR urged to withdraw CNIC condition under sales tax law

    KARACHI: Federal Board of Revenue (FBR) has been urged to withdraw the mandatory requirement of Computerized National Identity Card (CNIC) on buying and selling under Sales Tax Act, 1990 till the time a sufficient number gets register for sales tax.

    Karachi Chamber of Commerce and Industry (KCCI) has highlighted the issue as by amendment to Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, and addition of 10th Schedule, it is mandatory to provide CNIC number of Unregistered person in the invoice. Similar statute has been added U/S.19A of Federal Excise Act, Sec.216A to ITO and Sec.156A of Customs Act.

    Moreover 3 percent further tax is also charged on sales to unregistered buyers even if the CNIC number is provided, which is totally unjust and tantamount to penalizing the registered persons who have to bear the burden of 3 percent further tax.

    The chamber said that rather than generating more revenue, this provision has resulted in proliferation of undocumented cash transactions.

    With hardly 45000 registered entities in Sales Tax Regime, it is very hard to find a registered buyer. This has affected the entire supply chain including manufacturers, importers and traders in Documented Sector and has led to greater advantage for smugglers and undocumented sectors as they do not have to face any such condition. Many registered person are now forced to issue flying invoices to registered persons to overcome CNIC condition and avoid 3 percent Further Tax.

    The chamber recommended that requirement of CNIC should not be mandatory till the time that number of registered persons in Sales Tax regime has substantially increased.

    Providing CNIC number should be optional and may be treated at par with STRN if provided in the Sales Tax Return.

    Further Tax on supplies to unregistered buyer should not be charged if CNIC number is provided in Sales Tax Return.

    In case CNIC number of unregistered buyer of Raw Materials is not provided, VAT may be charged at 1.7 percent on sellers of Raw Material.

    Giving rationale, the chamber said that it will discourage cash economy and encourage documentation by placing the trust in registered persons.

    Discourage Fake and Flying invoices which are issued to avoid 3 percent further tax.

    Enhance business transactions through banking channels and promote growth.