KARACHI: Multinationals operating in the country have asked Finance Minister Miftah Ismail to gradually reduce the general rate of minimum tax to 0.25 per cent from the existing 1.25pc.
In a letter to the minister for finance and revenue ahead of the national budget announcement due next week, the Overseas Investors Chamber of Commerce and Industry (OICCI) demanded that the reduced rate should be applicable to gross profit instead of sales for oil marketing companies, refineries, LNG terminal operators, large chemical companies, authorised dealers of local vehicle manufacturers, distributors and traders — businesses that usually have high turnover and low margins.
Where the tax payable by a company is less than 1.25pc of its turnover, it’s required to pay a minimum tax equivalent to 1.25pc of the turnover, according to accountancy firm PricewaterhouseCoopers.
The OICCI sought relief from multiple taxation for its multinational members. The distribution of dividends within companies eligible for group relief should not be deemed a taxable event, OICCI Chief Executive M. Abdul Aleem wrote in the letter to the finance minister. “This is in line with the established global practice of protecting inter-corporate dividends from multiple taxation.”
To promote documentation and incentivise tax-compliant sectors, the OICCI said the government should restore the provision that gave tax credit of 3pc to companies that made 90pc of sales to sales tax–registered persons.
Published in Dawn, June 4th, 2022
