The Overseas Investors Chamber of Commerce and Industry (OICCI) has submitted comprehensive taxation proposals for the upcoming budget 2022-23, highlighting various measures to facilitate business and Foreign Direct Investment (FDI).
The proposals promote the ease of doing business and documentation of the economy, besides broadening the tax base and enhancing the revenue collection to match the economic potential of the country.
Commenting on the taxation proposals, President OICCI, Ghias Khan, said, “Tax policies should be predictable, transparent, and consistent. The policies should be implemented for longer-term to attract large investment in industrial and infrastructure projects including from foreign investors.”
Considering the economic challenges facing the country post-COVID-19 and international cost pressure, the OICCI has not asked for any reduction in corporate tax rate and has emphasized that no new taxes should be levied during the year except for removing harsh anomalies and doing away from some of the measures introduced through the supplementary budgetary measures earlier in the year.
Besides general tax measures, the chamber has also recommended industry-specific taxation proposals to promote manufacturing and optimization of revenue collection in the country. The chamber has highlighted, as an example, that revenue collection can be increased by as much as Rs. 70 billion by strict monitoring of massive tax evasion in the tobacco sector.
The OICCI has strongly recommended that the minimum tax regime should be rationalized and immediately reduced to 0.25 percent for businesses dealing in sectors with high turnover and low margins. The OICCI members have asked for rationalizing the complex withholding tax regime from 26 to five slabs of rates only which negatively impacts the ease of doing business of all compliant taxpayers, especially in the manufacturing and services sectors.
The chamber has recommended enhanced use of technology and data mining by leveraging substantial information already made available to the Federal Board of Revenue (FBR) in relation to registered and unregistered businesses. The Federal Board of Revenue (FBR) should use such available information for broadening the tax net, instead of penalizing tax compliant sector by disallowing their legitimate expenses and input Sales tax through measures like those covered u/s 21(q) of Income Tax Ordinance, 23(1) and 8(1)(h) & (J) of Sales Tax Act,
The OICCI has emphasized doing away with undue recurring audits, examinations, reviews and recovery proceedings. OICCI members in a recent survey have also shown concern about delayed tax refunds which, it has recommended, be settled within 45 days and inter-adjustment of income and sales tax refunds be allowed in the law.
The chamber has again recommended Intercorporate Dividends (ICD) in Eligible Group Structures shall be reinstated [section 59B], in line with established global practice of protecting intercorporate dividends from multiple taxations, restoration of proviso regarding the incorrect provision of CNIC details by the purchaser and to increase the limit of the cost of the vehicle for depreciation to Rs. 5 million.
OICCI members believe in the potential of Pakistan which can be harnessed with the positive and regular engagement of relevant authorities and the private sector. There is a need to continuously improve and align policies and practices in Pakistan with the best in the region, to be able to attract sizeable FDI in the manufacturing, IT and services export and other job-creating sectors.
It is pertinent to mention here that 30% of OICCI member companies are listed on the Pakistan Stock Exchange and 50 members are associates of the 2020 Global Fortune 500 companies. OICCI members contribute, annually, over one-third of the revenue collections in the country by the federal and provincial revenue authorities and invest over $18.5 billion in new capital expenditure, since 2012.
