WEB DESK: Every year before the budget, Overseas Investors Chamber of Commerce and Industry (OICCI) advances certain policy proposals for the consideration of the government which are generally not outlandish or unreasonable.
The key taxation proposals for the budget for 2016-17 of the OICCI include the request to the government to take the largest tax contributors on board before finalisation of the annual Finance Bill in order to get their views on any negative impact of the proposed policy changes on investment, including FDI.
A policy board comprising the chairmen of the federal and provincial revenue authorities should be formed to ensure synchronisation of the policies, standard tax rates and removal of all anomalies/conflicts between the laws of different revenue boards. Administration of taxation system should be simplified and made consistent based on the use of state of the art technology that could eliminate inefficiency and corruption. FBR should be made an autonomous body on similar lines as SBP and IRS of the US.
A thorough review of the customs regime should be done to take into account issues of counterfeiting, smuggling, rationalisation of duty structure and fixing of import tariff prices. Unauthorised imports should be curbed by bringing at least three OICCI members representing the brand owners on the policy board of valuation. The Afghan transit trade agreement should be reviewed. An appropriate legislation to ensure that all income earners pay taxes equitably, including on income from agriculture-related activities and all kinds of government and banks’ saving schemes should be passed and all income earners, without exception of any sector, should get themselves registered and obtain proper NTNs.
The culture of amnesty schemes should be completely eliminated as it discourages the honest taxpayers. Regular co-ordination should be done with relevant authorities of countries, considered as tax havens for stashing away illegal wealth. An independent “Research and Analysis Unit” should be formed in the FBR headed by a Member and including representatives from leading business chambers to guide the revenue collection from all sectors in proportion to their earning potential.
OICCI has also come up with certain specific proposals. The credit under section (u/s) 65A of the Income Tax Ordinance should be increased to 5 percent and made available to all taxpayers. A rebate of 5 percent should be given to companies which are issuing invoices electronically. Import duty on machinery and equipment (not locally manufactured) has been increased from 5 percent to 10 percent.
This should be reversed and government should zero-rate such imports. Upfront levy of withholding income and sales tax at import stage on plant and machinery should be exempted from new foreign investment to attract new FDI. FBR should exempt companies registered with LTUs from withholding income tax under section 148 on raw material and capital goods at import stage. It was also proposed to give special tax incentives to specific sectors including automobile, banking, leasing, insurance, chemicals/pesticides/fertilisers/paints, cement, oil exploration and production companies, pharmaceuticals, telecommunication and tobacco industry from the next financial year.
We feel that the proposals of the OICCI for the coming budget are quite comprehensive and make a lot of sense. Also, there is no doubt that a great deal of hard work must have been put in to ensure that the suggestions made by a reputed body of investors and industrialists are not impracticable or superfluous. As such, these recommendations need to be taken seriously by the relevant authorities and be accommodated, wherever possible.
Source: Business Recorder