Tax incentives proposed for making new investments

Tax incentives proposed for making new investments

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.

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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.

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“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.

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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.

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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.