ISLAMABAD: The government is likely to shift the exporters from the Final Tax Regime (FTR) to the Minimum Tax Regime (MTR) scheme in the upcoming budget (2023-24) to encourage documentation.
In this connection, the Reforms and Resource Commission (RRMC) has proposed measures for the documentation of the economy.
The RRMC has recommended that Pakistan’s economy heavily relies on exports, and as such, the government has been taking various measures to promote and incentivize exports.
Export facilitation scheme to boost exports: FBR collector
One such measure is the FTR regime for exporters. It is recommended that the FTR scheme for exporters should be shifted to a Minimum Tax Regime (MTR) scheme in the first phase so as to encourage documentation.
“FTR of exporters should also be converted into MTR. Tax credit regime may be reduced to lower tax incidence however abolishment of FTR is necessary to improve documentation,” RRMC recommendation said.
In the next phase, exporters should be allowed to avail 100% tax credit subject to certain conditions, similar to the provisions under the law for Non-Profit Organizations (NPOs). To avail this benefit, exporters must maintain proper documentation and comply with relevant Government regulations.
The proposed MTR scheme can promote documentation in exports and incentivize exporters to maintain proper financial statements, ultimately leading to a more transparent and inclusive economy. This scheme can also help the government increase tax revenue, bringing in much-needed funds towards public services and development projects. The estimated revenue impact for the government will be positive, the RRMC added.
Copyright Business Recorder, 2023
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