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ISLAMABAD: Finance Minister Muhammad Aurangzeb, Tuesday, conveyed to the Pakistan Business Council (PBC) that major changes have been planned in the Customs Act, 1969, and other customs laws to effectively address the issues of smuggling and misuse of the Afghan transit trade in the coming budget (2024-25).

A delegation of Pakistan Business Council (PBC) led by PBC Chairman Shabbir Diwan called on Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb at the Finance Division, here on Tuesday.

Chairman of the Federal Board of Revenue (FBR) Malik Amjed Zubair Tiwana also attended the meeting to discuss and understand the concerns of the business community.

A more detailed meeting between the FBR and the PBC would follow on the misuse of the Afghan Transit Trade Agreement (ATTA) and smuggling.

The PBC urged the phasing out of super tax which had effectively increased the corporate tax rate to

39 per cent.

The delegation from the PBC discussed the current economic outlook of the country with the finance minister and presented specific budgetary and tax proposals for consideration.

Federal Minister Aurangzeb acknowledged and thanked the PBC for their proposals, and asked the chairman FBR to take note of the same.

He discussed the ongoing digitalisation efforts of the FBR, aimed at bringing untaxed segments into the tax net. He assured that all actions would be taken with mutual consultation to ensure the best outcomes for both the government and the business community.

The PBC delegation appreciated the steps taken by the government to stabilise the economy and embark on a reform-centric programme.

It emphasised the need to use the upcoming federal budget to introduce long-term fiscal policies to allow business to invest, create wealth, generate jobs and produce higher tax revenues, instead of burdening it with a disproportionate share of taxes and thwarting its scale.

The PBC stressed the need to broaden the tax base by mining the significant amount of data already available and by increasing the incentive to formalise by raising advance taxes collected from utility bills of non-taxpayers.

The PBC also called for restoration of the letter and spirit of group taxation, including exemption of multiple tax on inter-corporate dividends enacted under the Finance Act 2007-8, subsequently withdrawn, revived and withdrawn yet again. Besides, according to global norms, this was also essential to facilitate local group participation in the government’s privatisation program.

The PBC urged the phasing out of super tax which had effectively increased the corporate tax rate to 39 per cent. With multiple taxes on inter-corporate dividends and further super tax on holding company profit and its dividends, the effective tax rate for shareholders can amount to over 68 per cent. It also called for stemming “brain drain” from the country and from the formal to the informal sector due to high taxes on salaried employees.

The PBC was also concerned by the flight of investors abroad due to the ill-conceived and highly contested capital value tax, with insignificant tax revenue potential. At a time when Pakistan was trying to attract investment from abroad, its own citizens were leaving with some giving up their citizenship. The PBC also urged a reduction in the corporate tax rate to 25 per cent to align with developing countries and also to remove the anomaly of higher tax as compared to AOPs and sole traders.

The finance minister appreciated the PBC’s recommendations and shared his ministry and the FBR’s commitment to increasing the tax base by aggressively pursuing the untaxed and under-taxed sectors.

He shared the progress on digitalisation and the plans to restructure the FBR.

Copyright Business Recorder, 2024

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Pakistani May 15, 2024 01:29pm
Changing the laws are probably the easy part but implementing them is the actual challenge especially when the influential are involved in the process.
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