Pakistan Software Houses Association ([email protected]) has approached Chairman Federal Board of Revenue (FBR) Javed Ghani for resolution of key tax issues faced by the IT industry and proposed 13 point taxation agenda to the FBR including change in the income tax regime for IT firms, sales tax withdrawal on local software products, digital payments and sales tax exemption on the e-commerce supply chain to promote e-commerce.
FBR officials informed ProPakistani that [email protected] has requested the tax authorities to resolve these issues on a top priority basis. [email protected] informed the Chairman FBR that the tax remains one of the biggest concerns of the IT sector.
This sector is a service sector and most of the companies are Micro, small, and medium enterprises (MSMEs) who find it difficult to manage the tax authorities, and that causes either loss in their growth or even flight of talent/investment to business-friendly countries.
Officials said that the [email protected] is also ready to make a detailed presentation to the Chairman FBR that the how can FBR can play an effective role in increasing IT exports, creating more jobs, increasing the direct and indirect tax revenue from the IT sector and bringing thousands of IT companies into the tax net.
The FBR and the [email protected] may jointly finalize a scheme which will support IT business growth.
[email protected] has taken up the following issues with the FBR for immediate action:
- Classify [email protected] as a non-profit organization (NPO) so that [email protected] limited funds can be used for economic growth instead.
- Creation of online complaint/support Cell.
- Create special national online Cell for IT sector.
- Create central body for any inter-provincial or provincial-federal tax dispute.
- Process income tax refunds of IT companies, at no fees, and processed within the current financial year.
- Sales tax waiver on local software products to promote local products/IP development and innovation.
- Sales tax waiver on digital payments to promote cashless society (Punjab Revenue Authority has made it 5 percent from July 1, 2020).
- Sales tax waiver on the e-commerce supply chain to promote e-commerce.
- Sales tax payment upon collection; compared to 15 days as demanded today while the collection cycle in real business is 60-90 days and MSME fails to grow.
- No notices to salaried employees if that their only income source.
- Minimum income tax of 2 percent to be one percent; with 2 percent tax many pay excess tax while never get refunded/adjusted.
- Change of income tax regime for IT firms; allow withholding tax exemption once the deducted income tax in the financial year reaches the estimated tax liability.
- Input sales tax to be fully adjustable for IT equipment and other necessary items.
According to official sources, the FBR Chairman has taken up the matter and has asked for early processing.
A few meetings, in this regards, are expected next week.