Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has urged the Federal Board of Revenue (FBR) to reduce the standard rate of minimum tax from 1.25% to 1% and exempt loss-making units from minimum tax.
In its budget proposals, FPCCI called for enhancement of the threshold of turnover for charging minimum turnover tax from Rs 10 million to Rs 50 million. It further proposed to exclude the companies having a gross loss position for the year from the purview of minimum tax by restoring the position of law prior to Finance Act 2016. It also sought to allow them to carry forward the minimum tax paid in the year of loss.
FPCCI budget proposals were prepared under chairmanship of senior vice president Syed Mazhar Ali Nasir said that the minimum tax rate has intermittently changed over the years from 0.5% to 1% and vice versa but it has never increased beyond 1%.
"It seems that the government, instead of broadening of tax base and enhancing tax-to-GDP ratio, is resorting to squeeze the already minuscule number of existing taxpayers to achieve a higher tax collection target by increasing the tax rates," he said, adding that it runs counter to the government efforts aimed at bringing new/ potential taxpayers in the tax net because high tax rate would compel many to tax- evasion and corruption.
He argued that increase in exemption limit of turnover tax from Rs 10 million to Rs 50 million would help the companies to submit true declaration of turnover. Similarly, exempting the companies, who are in the gross loss situation, from payment of minimum tax would provide them relief, he said.
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