Reforms & Revenue Mobilization Commission (RRMC) has proposed an income tax on exporters cashing in an exchange rate differential and not bringing foreign currency within the specified time period.
Accordion to sources, RRMC has suggested that the State Bank of Pakistan (SBP) carry out the task as the Federal Board of Revenue (FBR) cannot access the details of the transaction as the illegal benefit will be calculated on the basis of the difference in exchange rate after the specified days of exports and the day when the foreign currency is repatriated to Pakistan.
The action is aimed at penalizing exporters that delay foreign exchange repatriation in expectation of gain by rupee devaluation against other currencies and the overall revenue impact for the government.
RRMC has also recommended various measures to incentivize exports like a final tax regime (FTR) that should be shifted to Minimum Tax Regime (MTR) in the first phase to increase documentation and in the next phase, Government should allow a 100 percent tax credit to exporters contingent on particular conditions like maintaining proper documentation, similar to Non-Profit Organization (NPO).
The MTR scheme is expected to encourage documentation and transparency in the economy leading to more tax revenue for public and development services.