Overseas Investors Chamber of Commerce and Industry (OICCI) in its Taxation proposals for the upcoming Fiscal Budget 2024-25, has emphasized the importance of utilizing databases like ‘NADRA’ and the ‘FBR Malomooat Portal’ for comprehensive tax coverage for all income earners.
OICCI recommends the implementation of measures to discourage cash circulation and promote digital transactions. This includes initiatives such as the promotion of digital payment platforms like RAAST introduced by the State Bank of Pakistan (SBP), mandatory digital invoicing across all sectors, and the establishment of robust infrastructure to support digital payments through fintech solutions, POS invoices, e-Invoices, and mobile wallets.
Additionally, OICCI suggests providing business incentives to FinTechs and merchants for financial inclusion and accelerating the transition towards a cashless economy, along with demonetizing Rs. 5000 notes to deter cash-based transactions.
OICCI underscores the significance of harnessing different data sources, including withholding statements and submissions from entities such as banks and utility companies, to identify potential taxpayers without imposing additional burdens on compliant entities.
OICCI also called for the adoption of data mining techniques and advanced analytics tools to identify patterns and anomalies indicative of potential tax opportunities or unreported income.
The recommendations also advocate for the time-limited review of tax exemptions and concessions, investigations into ‘Nil’ tax returns, and the elimination of Amnesty Schemes to promote a tax-compliant culture.
In pursuit of a digitally empowered economy, OICCI advocates for strategic interventions from both the public and private sectors. Acknowledging the current limitations of the IT infrastructure, particularly in rural areas, OICCI emphasizes the imperative of collaboration with international e-commerce companies and Fintech firms to facilitate the widespread adoption of digital payment systems nationwide.
To broaden the tax base and enhance revenue collection efficiency, OICCI presented a comprehensive set of recommendations focused on leveraging digitization and documentation of the economy. These recommendations advocate for the effective utilization of available data and information through advanced technological tools such as artificial intelligence (AI) and data analytics.
OICCI also presented a set of recommendations aimed at curbing tax evasion and promoting transparency in financial transactions. Measures include imposing income tax on all air tickets issued for foreign travel, targeting frequent travelers across business and economy classes.
Additionally, to address tax avoidance through temporary changes in tax residential status, OICCI recommends treating assets owned by such individuals as sold in the year they become non-resident for tax purposes.
OICCI suggested the elimination of exempt income, including pension, to ensure equitable taxation. In a bid to expand the tax base and improve compliance, OICCI proposes making the National Tax Number (NTN) mandatory for opening and maintaining bank accounts and issuing compulsory NTNs to non-filers for specific transactions such as vehicle and high-value property sales, foreign travel, and club memberships.
Moreover, OICCI suggests establishing mechanisms to monitor significant banking transactions of non-filers, including cash withdrawals and deposits, to uncover undisclosed assets or income, with a dedicated wing of FBR working in collaboration with the Financial Monitoring Unit (FMU) of the State Bank of Pakistan (SBP).
