KARACHI: The COVID-19 crisis would necessarily increase global and domestic demand for food security. This makes it incumbent upon the government to promote the agriculture sector to ensure availability of raw materials for the establishment of an agro-industry in the rural areas. That development would also arrest the increasing trend of urbanization.
The President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has suggested promotion of corporate farming to improve efficiency and to bring more investment and technology and to generate more jobs.
The SMEs are still under credit constraints. The State Bank of Pakistan provides refinancing facility for modernization of SMEs at a markup rate of up to 6% (2% SBP refinance rate and 4% banks' spread), but the commercial banks are reluctant to lend to the SMEs, and they are totally neglected despite the central bank's effort to redirect the focus of SMEs development to a greater extent. Hence we have proposed that mark-up on loans must be revised and SBP should keep monitoring and regulating the financial institutions etc.
Sources have been suggesting that an effective rate of GST is less than 5 percent. Since 2014 the FPCCI has been recommending abolishing of the refund culture.
The government should collect the GST at the rate of 5 percent. It will transfer the benefits to the end consumers and will lead to a control over inflation. It will also lead to poverty alleviation and generation of more economic activities.
Special Economic Zones (SEZs) being established in all the four provinces of the country should be expedited. Land and utilities there should be provided at marginal prices. After a concern starts production, a five-year exemption period should be granted to the industries in the SEZs.
Multiplicity of audits in a single year should be done away with and replaced with the concept of composite audit of registered taxpayers. New audit parameters should be enforced after consultation with all the stakeholders.
Taxpayers' Bill of Rights should be introduced to the Finance Bill 2020-21 so that the present situation of antagonism between the tax collection agencies and taxpayers is reconciled through a democratic process.
Simplified and simple tax policy must be announced for traders elaborating their tax liability in a simple and ordinary language.
The FPCCI suggests increase in the allowable limit of supplies of Rs50,000 to Rs100,000 where sales are made to the end consumer. In addition to increasing the allowable limit, it is also suggested that a waiver from the condition is allowed to suppliers who comply with 50% of the invoices issues. This 50% threshold may further be enhanced by 10% each month.
The condition of CNIC on unregistered sales introduced vide Finance Act, 2019 was not implemented in its true spirit due to various reasons. Therefore, in order to facilitate the RP, a general amnesty through legislation is proposed in the Budget 2020-21 regarding CNIC for the whole year 2020 starting from August 2019 to June 2020.
The Ministry of Commerce and FBR may allow import for re-exportation under DTRE Rules subject to value addition of 5% or 10%. Store owners abroad and overseas Pakistanis have shown keen interest in booking Pakistani manufactured goods to be delivered in Pakistan. It is proposed that such goods, where orders are booked from abroad and FE is sent in Pakistan through banking channels, may be treated as exported goods and may be exempted from local duty and taxes or partial exemption may be given in the form of fixed duty drawback/rebate of tax to be notified.
The FPCCI proposes to simplify the DTRE Scheme seeking 3-4 documents instead of record keeping with so many documents.
Current rebate rates are between 1-2.5% whereas it is proposed to enhance rates between 5-11%.
The commercial exporters contributing to the country's exports may be entitled to receive rebate/subsidy.
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