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Tag: KCCI

  • 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.

  • 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.