The Overseas Investors Chamber of Commerce and Industry (OICCI) has urged the government to remove the super tax from the budget for the next fiscal year (FY24).
OICCI presented its key taxation proposals for the upcoming budget to Finance Minister Ishaq Dar on Saturday. In a statement, OICCI President Amir Paracha highlighted that the economy is currently under stress and the GDP growth forecast for the near term is negative to marginally positive, which along with high inflation and interest rates and fast weakening currency has the potential to substantially dent the profitability of tax paying sectors next year.
OICCI has recommended the abolishment of super tax for all sectors and capping the corporate tax rate of 29 percent, and no further increase in the effective tax rate which is already greater than the regional competitive rates. The recommendations also call for elimination/reduction of minimum tax especially for listed companies and companies in the regulated sectors.
OICCI also recommended the simplification of the withholding tax regime, with existing 200 different tax rates for 24 WHT sections, to make it more convenient and business-friendly.
It has also stressed the urgency for broadening the tax base to boost revenue collection according to the proportionate share of each sector of the economy, especially trade, services, real estate, and agriculture.
OICCI stressed that sufficient data is available in the system to significantly broaden the tax base and arrest revenue leakage. OICCI has estimated that with dedicated efforts to collect revenue from all segments of the economy, the tax-to-GDP ratio can be increased in a few years to 16 percent, from the current ratio of less than 10 percent. OICCI has also recommended that a significant portion of current Federal Board of Revenue (FBR) resources, at least 30 percent, should be assigned to the Broadening of Tax (BTB) unit.
It highlighted massive excise duty evasion by the tobacco industry, duty-not-paid goods, and under-invoicing, which adversely affect tax revenue. To ensure transparency, OICCI has recommended that the import data should be made publicly available. Further, it has also asked that Customs valuation should be done by using the latest method of valuation including, online search and matching international and regional pricing, and taking local legal brand owners on board.