Karachi March 30, 2022: The Overseas Investors Chamber of Commerce and Industry (OICCI) has submitted comprehensive Taxation Proposals for the upcoming Fiscal Budget 2022-23 highlighting various measures to facilitate business and FDI, promote the ease of doing business and documentation of the economy beside broadening the tax base and enhancing the revenue collection to match the economic potential of the country.
Commenting on the Taxation proposals, Ghias Khan, OICCI President, highlighted that “Tax policies should be predictable, transparent, and consistent. The policies should be implemented for longer term to attract large investment in industrial and infra-structure projects including from foreign investors”. Considering the economic challenges facing the country post COVID and international cost pressure, the OICCI has not asked for any reduction in corporate tax rate and has emphasized that no new taxes should be levied during the year except removing harsh anomalies and doing away from some of the measures introduced through the supplementary budgetary measures earlier in the year.
Besides general tax measures, the chamber has also recommended industry specific taxation proposals to promote manufacturing and optimize revenue collection in the country. The chamber has highlighted, as an example, that revenue collection can be increased by as much as Rs 70 billion by strict monitoring of massive tax evasion in the tobacco sector.
OICCI has strongly recommended that the Minimum Tax regime should be rationalized and immediately reduced to 0.25% for businesses dealing in sectors with high turnover and low margins, (eg. Oil Marketing/ Refineries/ LNG Terminal Operators, large chemical companies, authorized dealers of local vehicle manufacturers, distributors, and traders, including large trading houses). The OICCI members have asked for rationalising the complex withholding tax regime from 26 to 5 rates only which negatively impacts Ease Of Doing Business of all compliant tax payer especially in the manufacturing and services sectors.
OICCI has recommended enhanced use of technology and data mining by leveraging substantial information already made available to FBR in relation to registered/unregistered businesses. FBR should use such available information for broadening tax net, instead of penalizing tax compliant sector by disallowing their legitimate expenses and input Sales tax through measures like those covered u/s 21(q) of Income Tax Ordinance, 23(1) and 8(1)(h) & (J) of Sales Tax Act,
OICCI has emphasized on doing away with undue recurring audit/ examinations/ reviews and recovery proceedings. OICCI members in a recent survey have also shown concern on delayed tax refunds which, it has recommended, be settled withing 45 days and inter-adjustment of income/sales tax refunds be allowed in the law.
The chamber has again recommended Intercorporate Dividends (ICD) in Eligible Group Structures shall be reinstated [section 59B], in line with established global practice of protecting intercorporate dividends from multiple taxation, restoration of proviso regarding incorrect provision of CNIC details by purchaser and to increase the limit of cost of vehicle for the purpose of depreciation to Rs. 5 million.
OICCI members believe in the potential of Pakistan which can be harnessed with positive and regular engagement of relevant authorities and private sector. There is need to continuously improve and align policies and practices in Pakistan with the best in the region, to be able to attract sizeable FDI in the manufacturing, IT and services export and other job creating sectors.
OICCI is the collective voice of over 200 members, representing all the largest foreign investors in Pakistan, coming from 35 different countries and operating in 14 different sectors of trade and industry. 30 percent OICCI member companies are listed on the Pakistan Stock Exchange and 50 Members are associates of the 2020 Global Fortune 500 companies.
OICCI members contribute, annually, over one third of the revenue collections in the country by the federal and provincial revenue authorities and invest over US$ 18.5 billion in new capital expenditure, since 2012. OICCI members invested PKR 11 billion in various CSR initiatives, benefiting over 34 million underprivileged sections of society.