ISLAMABAD: The Federal Board of Revenue (FBR) Chairman Javed Ghani Monday said the government would withdraw more exemptions allowed to various sectors of the economy in the coming budget as total exemptions in the taxes had increased to Rs1.14 trillion.
He stated this during a meeting of the Senate Standing Committee on Finance, presided over by Farooq H Naek, in response to a question whether tax exemption can be given to those companies making use of their net profit two percent as corporate social responsibility for the welfare of locals.
“We are withdrawing tax exemptions and some would be withdrawn in the coming budget as total quantum of exemptions has increased to Rs1.14 trillion,” the FBR chairman said.
Another official of the FBR said that tax on profit was in accordance to the law and there was tax exemption to the Workers Welfare Fund (WWF) and the Workers Protection Fund (WPF) and tax exemption CSR would have serious implication on the direct taxes.
The chairman of the committee said that the FBR should consider giving tax exemption to CSR because this is for the welfare of the common man and could be a real step in the direction of a welfare state, provided if support is extended by the State.
The Finance Ministry opposed the suggestion.
The chairman of the committee said that some decision might have been possible, if the finance minister or the secretary finance would have been present in the committee, and the committee eventually decided to send the proposed amendment to the House with its recommendations.
An official of the SECP said that guidelines are issued to the companies in this regard and many companies are working for CSR.
The amendment in the Companies Act 2017 was proposed by Senator Javed Abbasi who stated that Pakistan is a developing country and there is a need for participation of the private sector to work on community welfare causes and for the benefit of all the stakeholders.
A mandatory corporate social responsibility is the need of the time to make it an obligation on the private sector to play an active role in the development of the society, and for improving the standards of life in Pakistan.
Members IR operation also briefed the committee about the track and trace system and stated that the system was introduced in 1845 in Europe, and Pakistan made an attempt first time to implement the track and trace of Tobacco in 2008 and since then five attempts have been made till 2019 but there was no success, primarily because of the lack of technical capacity.
He added that the industries were also not ready.
He said that now the process has been restarted after the assessing the reasons for failure, and during the last six months have been trying to cover maximum to roll out the system from July 2021, which would bring about considerable improvement in the tax collection. He said that track and trace system would be implemented first in cigarettes, sugar, cement etc, and in the next stage, beverages would also be covered.
Copyright Business Recorder, 2021