FPCCI seeks 6-month tax relief to survive recession

ISLAMABAD: The adverse impacts of COVID-19 pandemic on economy may lead to negative growth rate, deterioration in current and fiscal balance, disruption in supply chain, high jobless rate etc, thus its handling mandates out-of-the-box actions and relief for the business sector, industry officials said on Friday.

These views were expressed by officials of Federation of Pakistan Chambers of Commerce and Industry during a video-link conference with the Federal Board of Revenue (FBR) to discuss the trade association’s proposals for the Federal Budget 2020-21.

The FPCCI team was led by Mian Anjum Nisar, president, FPCCI whereas the FBR team consisting of Javed Ghani, Member Customs and Dr. Hamid Ateeq Sarwar, Member IR, was headed by Nausheen Javaid Amjad, chairperson FBR.

“This underscores the need to take extraordinary steps to support trade and industry to ensure their survival on sound footings such as reduction in utility tariffs; taxation rates (income tax/WHT, sales tax , FED etc) at least for six months and thereafter may be reviewed keeping in view of the economic scenario,” said Anjum Nisar, the chairman FPCCI, during the video-meeting.

According to Nisar, the corporate tax rate @ 29 percent in Pakistan is highest in the region which due to multiplicity of taxes (2 percent WWF + 5 percent WPF) goes up to 36 percent and as such provides incentive for its evasion and encourage corruption.

Zakaria Usman, convener of the FPCCI Budget Advisory Council, urged the FBR that the FPCCI should always be consulted in preparation of policies related to trade and industry so that it should also extend its cooperation in their implementation and enforcement.

Usman proposed to waive the demurrage and detention charges, keeping in view of the lockdown situation due to COVID-19. He further urged that the customs tariff be levied on the basis of cascading to curb post-budget anomalies. He also proposed to encourage import substitution industries and export of non-traditional items.

Abdul Qadir Memon, member BAC, in his presentation of Direct Taxes proposed that wherever the income was generated it be taxed without discrimination; corporate tax rate be reduced gradually @ 1 percent annually as high tax rate discouraged investors.

“WHT regime be revamped by abolishing those WHT which generate insignificant revenue for ease of doing business and reducing cost of doing business, uniform rate of WHT be levied and WHT Agents be incentivised; a uniform tax rate may be levied on AOP, individuals and small companies.”

Memon also proposed the turnover tax on distributors be reduced and brought at par with dealers; the income from property be taxed at a uniform rate of 15 percent of the gross rent as full and final discharge of tax liability.

“Tax credit @ 3 percent available to a manufacturer on 90 percent of his sale to registered person up to June 2017 be restored, while the tax credit for investment under Section 65B may also be restored,” he suggested.

Ashfaq Tola proposed that tax credit, like companies should also be allowed to AOP and individuals as they also make investment.

Zeeshan Merchant, member BAC, said the number of WHT be reduced by exempting low yielding avenues like telephone bill, school fees etc.

Zakaria Usman proposed the rental income from property, AOP or individual and company be taxed at a uniform rate of 15 percent of the Gross Rent as full and final discharge of tax liability, as it had also increased the rent of warehouses etc., and as such has escalated cost of doing business.

In her reply, the FBR chairperson, said the tax on distributors would be uniformed; tax rates including minimum tax rates would be reviewed for reduction; WHT paid would be posted on IRIS w.e.f June, 2020; Exemption Certificate Law would be amended and rationalised; option would be given to remain in PTR or opt for normal tax regime; greenfield industry issue would be resolved in consultation with Engineering Development Board (EDB).

Regarding CNIC condition the FBR head said an agreement had been made with the traders and could not be reversed. “Refunds are fully automated under FASTER; amendment in Annexures-F&H should be identified by the exporters for FBR consideration; tax on machinery would be abolished; reduction in sales tax rate would not be reduced to a single digit as it would bankrupt the economy of the country and further tax rate would be reduced,” she added.

In response to the customs issues raised by the FPCCI, FBR’s Nausheen Javed said, regulatory duty on tyres would be considered for abolishment in the next budget.

She proposed to hold second round of the meeting to discuss the FPCCI proposals in detail for consideration and incorporation in the forthcoming Federal Budget 2020-21.