Double taxation denting amusement industry

Thousands of jobs in Sindh are at stake owing to double taxation that may root out the nascent indoor sports and games industry, which is now crippling at the very early stages of its development.

The emerging sector in the country with a lot of potential to create job opportunities is now also subject to 13% sales tax after enforcement of Sindh Finance Act, 2019, Clause 51B, while Excise Department has already been charging 25% Entertainment Duty on the sales of the Ride’s tickets at indoor parks. 

This double taxation will demoralize investment in the province and investors will reallocate investment to tap the potential in other countries/regions. And the removal of this anomaly will help long run economic growth, therefore, Sindh government should focus on long-run benefits as compared to short-run impact.

“The government of Sindh may take cognizance to save the Indoor Sports & Games Centers by waiving the E.D on Indoor Sports & Games Centers, as they are ready to pay the 13% sales tax to the Sindh Revenue Board, under the provisions of Clause 51B of the Sindh Finance Act, 2019, in the best public interest,” said a source.

Besides, the source added, officials of the said bodies are creating unlawful pressure upon the various Parks’ management to pay E.D which is unjustified, unfair and arbitrary and is irrelevant/unlawful, as the same is the double taxation.

It is to be noted that the definition of Entertainment Rules section 2(a), 2(d), and 3 clearly defines as “admission to an entertainment includes admission to any place in which the entertainment is held” whereas in this particular case no entertainment is taken place but the basic facilities are placed in order, to cater for the public need, interest and recreational purpose which are being provided in the “Indoor Sports and Games Center”, as such Entertainment Duty (E.D) levied by Excise & Taxation Department fall under the ambit of double taxation which is not only unjustified but also a reason for the collapse of Indoor Sports & Games Center. 

The source added that double taxation will crumple the recreational industry in the province and the general public will suffer due to heavy spending on recreation/indoor sports games.

“We may add that consequent upon introduction of levy of Sales Tax, the government of Sindh has abolished “Hotel’s Bed Tax” which was being collected under Finance Act 1965. It would not be out of place to mention that the other provinces, especially Punjab, are not collecting Entertainment Duty. In Punjab, under the Punjab Finance Act, only Sales Tax is being levied by Punjab Revenue Authority (PRA), from the current financial year,” reasoned the source. 

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