KARACH: The Karachi Chamber of Commerce & Industry (KCCI) on Tuesday said the government will have to look beyond the traditional approach to deal with the present situation and come up with out-of-the-box solutions to put the economy back on track.
The KCCI’s budget proposals for the upcoming fiscal year said importers may be allowed to arrange payment/remittance of foreign exchange through their own sources including outside of Pakistan and directly receive their import documents from suppliers without involvement of domestic commercial banks to overcome the unavailability of foreign exchange and decline in inflows
"The role of commercial banks in last few months has been questionable as vastly differing rates of US Dollar have been charged by banks keeping a high profit margin while preferential treatment is given to clients with high trade volume and the SMEs are generally ignored."
The KCCI demanded that the policy makers should explore other avenues to enhance revenues such as withdrawal of exemptions from PATA, FATA and Azad Kashmir, reduce government's administrative expenditure and size of the cabinet and perks, retirement benefits of officers in grade 17 to 22 in addition to reducing the size of PSDP to comply with IMF conditionalities.
KCCI proposed all audit functions should be brought under one provision of Income Tax Ordinance rather than various over-lapping provisions with clear and well-defined parameters. Audit Parameters should be transparent and open to taxpayers.
"Sub-Section 7 may be deleted and Powers of the Commissioner and sub-ordinate officials should be curtailed to restore the trust of Taxpayers and encourage broadening of tax-base," KCCI said, adding that such audits should be restricted to specific queries or objections and call for relevant document only rather than opening and re-opening a comprehensive audit every time.
KCCI also proposed that CNIC number of unregistered buyers provided by registered seller/supplier must be treated at par with STRN. 3 percent Further Tax on supplies to unregistered buyer should not be charged, if CNIC number was provided by registered seller in Sales Tax Return. In case CNIC number of unregistered buyers of Raw Materials is not provided, VAT may be charged at 1.7 percent on Sales of Raw Material.
KCCI said the sales tax invoices issued by sellers for goods sold to buyers in various other parts of the country should be treated as a valid document for clearance of all such goods. WHT may be revised to 2 percent on import of essential food items and be equal on all importers without distinction of commercial or industrial importer.
KCCI suggested that withholding income tax at import stage on raw materials should treated as Advance Tax and be adjustable against actual liability. Concept of Minimum WHT on import of Raw Materials may also be phased out and treated in normal tax regime. Distinction should be made between Importers of Finished Goods and Raw Materials who mainly cater to the industry and are fully documented.
KCCI also recommended that as the tax on reactive dyes was quite exorbitant, the Customs Duty on reactive dyes should be rationalized to a maximum of 3 percent and Additional Customs Duty may also be abolished by considering the fact that it was a basic raw material required for textile industry which was an export-oriented sector and this item cannot be used as finished end product.
KCCI also proposed to reduce the rates of Customs Duty to 2 percent, Sales Tax to 12 percent and WHT to 1 percent for both industrial and commercial importers of Polymers.
"Value Addition Sales Tax of 3 percent on Commercial importers be waived in order provide a level playing field. Commercial Importers do not add any value to raw material and sell it to Small Industries in the original form. Hence, the 3 percent VAT is unjustified in any case."
