Manufacturers, cos: Govt working on 1.2pc turnover tax solution: FD official

ISLAMABAD: Dr. Najeeb A Memon, Director General (Head of Tax Policy Office), Finance Division assured business community Wednesday that the government is working on the issue of resolving 1.25 percent turnover tax on companies.

During the session on, “Designing Tax Policies for Optimal Revenue Generation” at the “Dialogue on the Economy” held by the Pakistan Business Council on Wednesday, Dr Najeeb was addressing the concerns of the business community.

It was the first effective interaction of the Director General (Head of Tax Policy Office), who expressed resolve to use tax policy as a tool to facilitate private sector, business community and foreign investors for attracting investment, encourage documentation and expanding the tax net.

Senior representatives of private sector stated that the 1.25 percent minimum tax on the turnover payable for certain categories of manufacturers and companies. In many cases, the net profit of the companies is less than the 1.25 turnover tax and their whole profit goes in payment of turnover tax.

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Demonstrating full commitment to resolve taxation related anomalies of private sector, Dr. Najeeb was optimistic that the government understands the concerns of the business community and we will address the concerns of the business community regarding turnover tax. We will resolve all problems of the business community and would not allow discrimination in tax policies for the business community.

Top tax policy official admitted that the tax administration is facing difficulty in collecting taxes from the informal sectors of the economy having significant share in the GDP.

Director General, Tax Policy Office stated that the Federal Board of Revenue (FBR) is strengthening its capacity to collect taxes through automation and digitization.

“We are encouraging formal sector to work only with the registered vendors and not with un-registered vendors within the supply chain,” he said.

He added that the creation of the tax policy office at Ministry of Finance is a big step of the government and we will address root causes of the problems through effective tax policy decisions.

Business community present in the event highly appreciated the positive role of Dr Najeeb assuring them for drafting investor friendly tax policies.

Sajjad Taslim Azam FBR Member, Inland Revenue (Policy) stated that 5.9 million income tax returns have been filed this year and FBR is expecting 7million returns. However, when asked about the tax paid along with the returns, the FBR Member do not have the numbers. However, it was pointed out that many returns are ‘nil filers’ and not paying any tax with the returns.

FBR Member Policy added that the FBR is going through a transition phase and moving towards digitization including track and trace and point of sales (POS) etc to broaden the tax base and control tax evasion in the country.

Shabbir Diwan (CEO – Gatron industries limited pointed out that heavy taxation, energy issues and security concerns are some of the issues which are impediment to investment in the country.

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