KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) has demanded that the government should impose no new taxes in 2022-23 while ensuring that anomalies and “harsh measures” introduced through the mini-budget are done away with.
Introducing the budget proposals for the next fiscal year on Wednesday, OICCI Secretary General M Abdul Aleem said the chamber of over 200 international investors hasn’t asked for any reduction in the corporate tax rate for 2022-23 given the dire economic situation requiring more fiscal space.
The chamber recommended industry-specific tax proposals to promote manufacturing and optimise revenue collection. Mr Aleem said revenue collection can go up by as much as Rs70 billion if the authorities curb tax evasion in the tobacco sector alone.
The OICCI has recommended that the minimum tax regime should be rationalised and immediately reduced to 0.25 per cent for businesses with high turnover and low margins such as oil marketing companies, refineries, LNG terminal operators, large chemical companies, authorised dealers of local vehicle manufacturers, distributors and traders. The OICCI has also asked for rationalising the complex withholding tax regime from 26 to five rates.
He called for enhancing the use of technology and data mining by leveraging substantial information already available with the Federal Board of Revenue (FBR) in relation to registered/unregistered businesses. The FBR should use such information for broadening the tax net instead of penalising the tax-compliant sector by disallowing their legitimate expenses and input sales tax, he said.
He also urged the government to do away with undue recurring audit, examinations, reviews and recovery proceedings. In a recent survey, OICCI members expressed their concerns on delayed tax refunds that must be settled within 45 days. Mr Aleem also called for the inter-adjustment of income tax refunds and sales tax refunds. This means the chamber wants the distribution of dividends within companies eligible for group relief to be considered a non-taxable event.
The OICCI has recommended the inter-corporate dividends in eligible group structures should be reinstated in line with the established global practice of protecting inter-corporate dividends from multiple-taxation.
It demanded that the tax rate for the banking sector be “aligned” with that for other sectors. Similarly, super tax relief, as granted to other industries, should be given to the banking sector, it added.
The OICCI secretary general said the government should align its policies with the best practices in the region to attract sizeable foreign direct investment in manufacturing, IT and other job-creating sectors.
Published in Dawn, March 31st, 2022
