‘Tax concessions of Rs120bn to be withdrawn in budget 2016/17’

KARACHI: Haroon Akhtar, Special Advisor for Revenue to the Prime Minister, has said the government is planning to withdraw concessions amounting to Rs120 billion in the budget 2016/17.

He was discussing budget proposals submitted by Overseas Investors’ Chamber of Commerce and Industry (OICCI) in a meeting, said a statement issued by the OICCI on Monday.

Akhtar said the government was phasing out the concessionary regime and in the last fiscal year about Rs221 billion were withdrawn, which were given through SROs.

The advisor said the government was aggressively pursuing initiatives to broaden the tax base and warned tax evaders that the FBR was very well equipped with data and skill to apprehend them.

He was confident that it was only a matter of time the tax evaders, including those not paying duty on cigarette and other products, would be caught and punished severely. He also referred to the recent Voluntary Tax Compliance Scheme (VTCS) and said it was part of the tax broadening process.

He mentioned that the Federal Board of Revenue (FBR) IT infrastructure was undergoing substantial improvement which would not only connect various available databases to identify new tax payers but also address operational issues of taxpayers.

Akhter found the Tax Reform Commission report to be of high quality and informed he was chairing a committee to monitor its implementation on a priority basis.

He further informed that the entire government machinery including the Prime Minister of Pakistan, were focusing on increasing the level of foreign direct investment (FDI) as per Pakistan’s economic potential. He said the China-Pakistan Economic Corridor (CPEC) project investment of $46 billion, out of which $36 billion relates to energy projects, would be a game changer for the economy and the people of Pakistan.

Highlighting the key achievements of the government since 2013, he mentioned the improved overall security environment, especially in Karachi and Baluchistan, reduction in the level of electricity and gas load shedding, lowering of inflation, reduction in bank borrowing rates, reduced fiscal deficit, GDP growth going up from 2-3 percent to beyond 4.5 percent for the first time in many years, comfortable foreign exchange reserves, robust performance of PSX index, besides improvement in the international economic ratings of the country.

Akhter was confident that the vastly improved macro-economic parameters provide a launching pad for growth oriented economic policies in the upcoming budget.

FBR Member Inland Revenue (Policy) Rehmatullah Wazir said the OICCI recommendations would be evaluated and some of the FDI related measures like extending the timelines of some of the incentive schemes under section 65 of the IT ordinance and giving additional credits for electronic invoicing would be given priority.

Earlier, OICCI President Shahab Rizvi highlighted salient features of the OICCI Taxation Proposals which focused on boosting economic and employment growth opportunities. The proposals recommended that tax policies need to facilitate rapid economic growth of about seven percent annually, and help attract large investment, especially FDI. Also, measures to broaden the tax base, increase revenue collection, and improvement in the taxation structure were must to realise the true economic potential of Pakistan.

OICCI Secretary General Abdul Aleem referred to some of the specific recommendations, including the need to reduce corporate income and sales tax rates and to bring them in line with regional practices, and settlement of all pending tax refunds within a reasonable time of one to two months.