The Overseas Chamber of Commerce and Industry (OICCI) in Karachi has proposed a reduction in the corporate tax rate and the general sales tax to increase the economic growth rate and the amount of inflows of direct foreign investment (FDI) in the country.
In the budget proposals for fiscal year 2017-18, the committee has recommended that the GST be reduced from its current rate of 17 percent to 13 percent, similar to that in other Asian countries, while the corporate income tax should be cut down to 25 percent from 30 percent. The committee further suggested that the super tax could also be abolished in the year 2018.
The OICCI, representing foreign and multinational companies in the country, the President of OICCI, Khalid Mansoor, stated that he thinks the tax reforms proposed by the body are “balanced and aimed at providing a level-playing field to investors, enhance the documentation of the economy, besides recommending certain structural and procedural changes to improve the overall taxation framework in the country.”
Furthermore, the OICCI also suggested that the government should think about foreign and domestic investments when making policies. The body actually recommends plans that will stimulate long-term investments of a period of 10 years, over which investors can base their plans and be sure about the economic future of the country and thus, hopefully, more willing to invest.
The FBR’s targets to the Large Taxpayers Units (LTUs) also need to be based on research-bound growth projections in different business sectors.
Likewise, the growth in tax collections should be done through broadening the tax base and adding new taxpayers or paying strict attention to those who have evaded paying taxes.
To make sure this is done effectively, the OICCI recommended setting up a research and analysis wing at the Federal Board of Revenue (FBR) which will be equipped with professionals and experts who will be responsible for providing economic and taxation projections of each sector.
The statement issued by the body also suggested that the Tax Reform Commission 2016 report should be implemented judicially and transparently with a periodical monitoring of the overall impact on tax administration and payee’s moral and motivation while also significantly increasing the number of taxpayers, revenue collection, and tax-to-GDP ratio.