Businessmen concerned at proposed tax on windfall gains profits

ISLAMABAD: Leading business associations, Monday, unanimously raised their voice against the budgetary measure of taxation of windfall gains profits before the Senate Standing Committee of Finance.

The finance committee completed the review of the sales tax, customs duty, and federal excise duty (FED) measures under the Finance Bill, 2023, at the Parliament House. The committee will resume income tax measures on Tuesday (today).

Through a video link, Karachi Chamber of Commerce and Industry (KCCI) President Mohammed Tariq Yousuf informed the committee that the new section 99D (additional tax on certain income, profits and gains) of the Income Tax Ordinance, 2001, should not be applied retrospectively on the past and closed transactions.

The proposed provision should only be applied prospectively. Instead of introducing measures to broaden the tax base, the FBR has restored 0.6 percent withholding tax on banking transactions of non-filers.

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) former president Mian Anjum Nisar informed the committee that the minimum turnover tax should not be applicable on loss-making companies. Our industry cannot survive and compete with regional countries in the presence of the current taxation structure, utility rates, and increased cost of doing business, he said.

FPCCI Vice President Engr MA Jabbar strongly suggested that the forum of the Federal Tax Ombudsman (FTO) should be used for the resolution of disputes between the FBR and the taxpayers under the informal Alternative Dispute Resolution (ADR) mechanism.

The FBR’s Alternative Dispute Resolution Committees (ADRCs) are empowered by the tax officials working as members of the committee.

The representatives of the business community from Faisalabad stated that the (additional tax on certain income, profits and gains) under new section 99D of the Income Tax Ordinance 2001 is a more harsh and big measure when compared with the enhanced rate of 10 percent super tax.

The taxation of windfall gains profits would badly affect exporters. “An extraordinary measure has been taken by seeking extensive powers by the Federal Board of Revenue”, the Faisalabad-based businessmen added. Fahad Waheed from the Islamabad Chamber also explained the legal implications of section 99D on the business community.

Copyright Business Recorder, 2023