AGL 38.15 Increased By ▲ 0.90 (2.42%)
AIRLINK 121.51 Decreased By ▼ -2.51 (-2.02%)
BOP 5.85 Increased By ▲ 0.23 (4.09%)
CNERGY 3.75 Increased By ▲ 0.03 (0.81%)
DCL 8.40 Increased By ▲ 0.15 (1.82%)
DFML 40.89 Increased By ▲ 0.62 (1.54%)
DGKC 84.60 Decreased By ▼ -1.14 (-1.33%)
FCCL 32.70 Increased By ▲ 0.10 (0.31%)
FFBL 65.50 Decreased By ▼ -1.00 (-1.5%)
FFL 10.05 Decreased By ▼ -0.11 (-1.08%)
HUBC 103.80 Increased By ▲ 0.70 (0.68%)
HUMNL 13.25 Decreased By ▼ -0.15 (-1.12%)
KEL 4.43 Increased By ▲ 0.18 (4.24%)
KOSM 7.09 Decreased By ▼ -0.09 (-1.25%)
MLCF 37.50 Decreased By ▼ -0.80 (-2.09%)
NBP 60.25 Decreased By ▼ -4.76 (-7.32%)
OGDC 172.25 Decreased By ▼ -1.55 (-0.89%)
PAEL 24.80 Decreased By ▼ -0.10 (-0.4%)
PIBTL 5.70 Decreased By ▼ -0.10 (-1.72%)
PPL 141.69 Decreased By ▼ -1.01 (-0.71%)
PRL 22.72 Decreased By ▼ -0.26 (-1.13%)
PTC 14.74 Decreased By ▼ -0.37 (-2.45%)
SEARL 64.56 Decreased By ▼ -0.79 (-1.21%)
TELE 7.14 Increased By ▲ 0.14 (2%)
TOMCL 35.50 Decreased By ▼ -1.41 (-3.82%)
TPLP 7.29 Decreased By ▼ -0.05 (-0.68%)
TREET 14.20 Decreased By ▼ -0.08 (-0.56%)
TRG 51.75 Increased By ▲ 2.05 (4.12%)
UNITY 26.60 Increased By ▲ 0.45 (1.72%)
WTL 1.22 Decreased By ▼ -0.02 (-1.61%)
BR100 9,483 Decreased By -118.3 (-1.23%)
BR30 28,371 Decreased By -202.1 (-0.71%)
KSE100 88,967 Decreased By -1319.8 (-1.46%)
KSE30 27,827 Decreased By -515.9 (-1.82%)

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has suggested that the rate of income tax on the corporate and non-corporate sectors be reduced by 10 percent.
In its budget proposal for the years 2006-07, the federation has proposed that the present statutory limit of exemption under the income tax law be increased from Rs 100,000 to Rs 200,000.
FPCCI recommended that the withholding tax on payment of technical fee should be reduced from 15 percent to 5 percent, enabling the flow of more technical services and investment.
The federation noted that the current scam of misuse of exemption certificate issued to the alleged manufacturers for import of goods (raw material without withholding of tax under section 148) has put commercial importers and others at a disadvantage and they are not able to compete.
The higher rate of 6 percent on import of goods is having adverse effects on the economy. FPCCI suggested (a) income tax, withholding tax be reduced from 6 percent to 2 percent for both commercial and industrial importers which will be non-adjustable/non-refundable for both. (b) The value for the purpose of withholding tax should be substituted in line with the judgement of honourable Supreme Court of Pakistan reported ads 2005 PTD 194 (SC).
FPCCI proposed that the rate of withholding tax on supplies be reduced to 2 percent and the sub-section (2) of section 153 be substituted in line with the recent judgement reported as 2005 PTD 194 (SC) which is as," the gross amount payable for sale of goods shall exclude the sales tax if any payment is made in respect of the sale".
The federation noted that the old-fashioned fiscal theory that tax rates must be higher to provide larger revenuer for state has long been discarded. The modern fiscal policy pursued by most of the progressive countries is to make revenue grow by enlarging the tax base, and not by increasing tax rates. The major impediment in expansion of tax base in the country is high raters of taxes whether direct or indirect.
The FPCCI pointed out that out of 145 countries of the world the corporate rate of tax in 138 countries is lower than in Pakistan.
About broadening the tax base and minimising the avenues to evade tax, to create a fair society and to generate more employment opportunities the FPCCI recommended a number of steps including (i) complete details and data bases of all the owners/ holders/ allotees of the property (including residential, commercial, industrial) cars, club membership, utilities (including residential, commercial and industrial), vehicles, credit cards, investment in fix deposits, national saving schemes and stock be prepared and on the bases of above information a complete profile may be generated.
(ii) National Tax Number should be made mandatory for purchase/ sale, transfer of immovable property (no exemption whatsoever), motor vehicle, club membership, credit cards, registration with CDC and distribution of profit/ markup exceeding Rs 200,000 per annum.
(iii) The registrar and co-operative housing society for registration, transfer of immovable property (industrial, commercial, residential and agricultural), motor vehicles registration authorities, clubs (private and Public) credit card issuing authorities, central depository company and finical institutions distributing profit more than Rs 200,000 should submit quarterly statements for all the transactions during the period.
(iv) The exemption under section 111(4) of the ordinance to the foreign exchange brought into Pakistan through proper banking channels should only be allowed to those remittances that are invested in the business/ industrial undertakings.
(v) In line with foreign investors and in order to tap local investment a scheme should be announced and the investment made should not be questioned.
(vi) In order to increase tax-GDP ration the taxes must be equitable and fair between different classes of society. All the segments of the society, including agriculture, should be brought into the tax net so that they may contribute their share to the exchequer.
(vii) Like any other commercial activity, sales, purchases of immovable property and shares of listed companies should pay its due share of revenue in the form of capital gains tax. The government may consider re-introduction of the capital gains tax at the provincial level along with the concept of indexation of cost. In order to streamline the taxation on sale purchase of immovable properties. It is necessary to rationalise the collectorates rates for the purpose of stamp duty.
(viii) Presently the withholding tax on import of cellular phone and its accessories are exempted under clause 56 of the Part IV of the second schedule. During the financial year 2005-06, the import of such items is expected to reach Rs 25,000 million. It is suggested that a minimum of one percent tax be imposed on cellular phone and its accessories and the tax so deducted should be considered full and final liability.
(ix) Filing of wealth statement should be made compulsory for all taxpayers.

Copyright Business Recorder, 2006

Comments

Comments are closed.