Multinationals demand super tax abolishment, unhappy over concessions given to retailers
Business
Say some proposed measures damaging to the objective of widening tax base
KARACHI (Web Desk) – Demanding reversal of various taxations measures introduced by the government in the next fiscal year 2023-24 budget, the multinationals operating in Pakistan said some of the proposals, like the concessions for the retail sector, would negatively affect the objective of broadening the tax base.
They described the retrospective increase in super tax rate from 4 to 10 per cent as inequitable and unfair and said the government had seemingly increased the corporate tax rate from 29pc to 39pc indefinitely.
In a letter addressed to Federal Board of Revenue (FBR) Chairman Asim Ahmed, the Overseas Investors Chamber of Commerce and Industry (OICCI) called for abolishing the super tax altogether, saying it was introduced in 2022 only as a temporary measure.
The letter read that the proposed additional tax on income with a capped rate of 50pc — introduced for extraordinary gains arising from economic factors to be determined by the federal government for the preceding five years — was “ambiguous and unclear”.
According to the OICCI, the term ‘unexpected income, profits and gains’ isn’t clearly defined, thus having the potential to be misused, while the retrospective nature of the move for the last five tax years and with no accommodation for losses appear is unjust and hindering businesses. It would result in a flood of litigation if the additional tax is approved by the parliament.
When it comes to the one percentage point increase in withholding tax rates on the sale of goods and services, the OICCI recommended that the structure should be simplified with lowered rate for compliant taxpayers.
The OICCI is of the opinion that some of the proposed measures will hurt the efforts aimed at broadening the tax base and demanded reintroduction of the CNIC requirement on retail transactions above a certain threshold, making the point-of-sale system mandatory for sales tax and its integration with the traders’ income tax returns.
When it comes to the retail sector, the multinationals say the exclusion of retailers – like jewellers and those running their businesses in shops measuring a specified covered area – from the definition of Tier-1 retailer is against the concept of the broadening of tax base.
Similarly, the OICCI is against to granting the immunity on foreign remittances proposed in the budget with an enhanced limit to the equivalent of $100,000 per year.
