Budget proposals: the OICCI urges the government to facilitate companies, FDI and the ease of doing business – Business & Finance
KARACHI: The Foreign Investors Chamber of Commerce and Industry (OICCI) has submitted comprehensive tax proposals for the upcoming budget for fiscal year 2022-23 highlighting various measures aimed at facilitating business and FDI, promoting ease of doing business and documenting the economy in addition to broadening the tax base and improving revenue collection to match the economic potential of the country.
Commenting on the tax proposals, Ghias Khan, President of the OICCI, stressed that tax policies should be predictable, transparent and consistent. Policies should be implemented in the longer term to attract large investments in industrial and infrastructure projects, including from foreign investors.
Given the economic challenges the country is facing post-Covid and international cost pressure, OICCI did not call for any reduction in the corporate tax rate and stressed that no new taxes should be levied at the during the year, except to remove serious anomalies and remove some of the measures introduced through the supplementary budgetary measures earlier in the year.
Besides general tax measures, the chamber also recommended industry-specific tax proposals to promote manufacturing and optimize revenue collection in the country. The chamber pointed out, as an example, that revenue collection can be increased up to 70 billion rupees by strict monitoring of massive tax evasion in the tobacco sector.
The OICCI strongly recommended that the minimum tax regime be streamlined and immediately reduced to 0.25% for companies operating in high-turnover, low-margin sectors (e.g. oil marketing/ refineries/LNG terminal operators, large chemical companies, authorized dealers of car manufacturers, distributors and local traders, including large trading houses). OICCI members have called for streamlining the complex withholding tax regime from 26 to only 5 rates, which negatively impacts the ease of doing business for all compliant taxpayers, especially in the sectors of manufacturing and services.
OICCI recommended improving the use of technology and data mining by leveraging the substantial information already available to the RBF regarding registered/unregistered companies. FBR should use this available information to widen the tax net, instead of penalizing the tax industry by denying their legitimate expenses and sales tax on inputs through measures such as those covered by Sections 21(q) of the ‘Income Tax Ordinance, 23(1) and 8(1)(h) and (J) of the Sales Tax Act.
OICCI has focused on eliminating undue recurrent audits/reviews/reviews and recovery procedures. In a recent survey, OICCI members also expressed concern about backlogs of tax refunds which it recommended should be settled within 45 days and the inter-adjustment of tax refunds on income/sales tax must be permitted by law.
The chamber again recommended that intercorporate dividends (ICDs) in qualifying group structures be reinstated [section 59B]in line with the established worldwide practice of protecting inter-company dividends from multiple taxation, reinstating the proviso regarding incorrect provision of CNIC details by the buyer and to increase the limit of vehicle cost for the purpose of depreciation to Rs. 5000000.
OICCI members believe in the potential of Pakistan which can be harnessed through positive and consistent engagement from relevant authorities and the private sector. There is a need to continuously improve and align Pakistan’s policies and practices with the best in the region, in order to be able to attract significant FDI in manufacturing, IT and service export sectors , as well as in other job-creating sectors.
OICCI is the collective voice of over 200 members, representing all the major foreign investors in Pakistan, hailing from 35 different countries and operating in 14 different sectors of trade and industry. 30% of OICCI member companies are listed on the Pakistan Stock Exchange and 50 members are associated with Global Fortune 500 2020 companies.
OICCI members contribute, each year, more than a third of the revenue collected in the country by the federal and provincial tax authorities and have invested more than 18.5 billion dollars in new capital expenditure since 2012. OICCI members have invested 11 billion rupees in various CSR initiatives, benefiting more than 34 million underprivileged social strata.
Copyright Business Recorder, 2022