Karachi: The Overseas Investors Chamber of Commerce and Industry (OICCI), voiced strong support to the government in its efforts to increase revenue collection and streamline the taxation structure of the country, while presenting in detail OICCI 2014-15 Taxation Proposals to FBR Chairman, Tariq Bajwa and Shahid Hussain Asad, Member Inland Revenue (IR) who had an interactive session with the OICCI members on March 28, 2014. FBR Member IR Operations and Member Customs also addressed the meeting at OICCI in Karachi.
Asad S. Jafar, President OICCI, appreciated the ongoing engagement initiative of the FBR Chairman and his top team with key stakeholders like OICCI whose members contribute over Rs 700 billion annually to the Federal and Provincial revenue.
Asad Jafar stressed that the OICCI key recommendations consider restructuring taxation system to facilitate investment and economic activity, facilitate the honest tax payers through timely settlement of issues, that all types of income are subject to tax, SRO’s are judicially eliminated and documentation of the economy be accelerated without any compromise.
M. Abdul Aleem, CE/Secretary thanked the FBR Chairman for meeting a key demand of the Chamber by issuing the approval notification for offsetting provincial sales tax against FBR sales tax liability.
Aleem presented the World Bank’s Ease of Doing Business (EODB) Index rating where Pakistan has sharply slipped from being 75 in 2010 to 110 in 2014 which has considerable negative implications in attracting FDI in the country. One of the key irritant in EODB has been the complications on paying taxes, including provincial and local taxes. OICCI highlighted concern on the frequent use of tax amnesty schemes as a disincentive to regular tax payers.
OICCI’s 2014-15 taxation proposals include several tax broadening measures to increase the tax to GDP ratio–like effective enforcement and administrative reforms, filing of Tax Returns by all income earning segments and individuals earning more than the threshold, better and more effective utilization of NADRA database and other data from documented sources available to FBR.
Other key proposals discussed were lowering of corporate tax rates, elimination or rationalization of minimum tax regime, faster processing of tax refunds, increasing incentives for attracting FDI, and involvement of OICCI in the exercise to review existing SROs to ensure minimum impact on FDI and continuing documentation of the economy.
Aleem also mentioned that reversal of some important documentation measures which were introduced through the Finance Act 2013-14 were frustrating for honest tax payers. Furthermore he suggested that FBR may consider reverting back to the old administrative structure of tax zones and cycles to identify new tax payers.
Chairman FBR, Tariq Bajwa, highly appreciated the role of OICCI members who collectively contribute over one-third revenue collections in Pakistan. Regarding the OICCI taxation proposals, the FBR Chairman informed that FBR plans to withdraw all SROs in an orderly manner soon and will ensure proper adjustments of SROs which are critically important for key factors in the economy.
He informed that contrary to the general view, FBR does not have full access to various data bases, including the NADRA. However FBR continues to review all tax broadening measures and expects that over 100,000 tax payers will be added annually based on actions which have already been initiated by FBR. In this respect he also mentioned that FBR is reviewing the self-assessment scheme and will make some structural changes to ensure a transparent system which is not exploited by tax evaders.
The FBR Chairman and his team also responded to various general and sector specific questions from the participants and promised to review in detail all matters along with the OICCI taxation proposals.
The full set of OICCI taxation proposals submitted to the FBR, include business sectors specific recommendations, strongly advocate that the most important focus of the government should be to substantially increase revenue collection to reduce the huge fiscal deficit, finance development projects to fuel the stagnant economy, expand poverty alleviation programs and meet necessary government expenditure.
More importantly increased tax collections should be made from those who have so far kept themselves out of the tax net to give confidence to the honest tax payers and to take out the root cause of unethical business practices in the country.
At the same time, OICCI has also recommended that new tax payers should be brought into the tax net by initiatives which convince them about the benefits of paying proper taxes rather than through coercion or harassment.
The Overseas Investors Chamber of Commerce and Industry (OICCI), a business chamber representing nearly 200 multi-national companies operating in Pakistan, is a very important stakeholder and contributor to the economy of the country. These member companies, whose major shareholders are from 35 different countries of the world, operate in 14 major business sectors of the country, including the financial services, oil, gas, energy, pharmaceuticals, chemicals, fertilizers, pesticides, cement, food, consumer goods, engineering, trading and others. 57 of the OICCI members are listed on the Stock Exchanges of Pakistan and 46 members are associates of the 500 largest companies of the world listed by the Fortune magazine in 2013.