Tax collection approach termed ‘highly flawed’

LAHORE:Tax experts, business tycoons, policymakers and economists in a conference here termed tax collection approach highly flawed which needs revision. “Uraan Pakistan’s pilots are businessmen, and they should be provided business-friendly environment. Until local investors are satisfied, foreign investment will not come. Federal budget 2025-26 is not a business-friendly budget”.

“National Budget Conference” was organised here jointly by Institute of Cost & Management Accountants (ICMAP) and Mir Khalil-ur-Rahman Memorial Society. In his address, Ghulam Mustafa Qazi, President of ICMAP International, said, “In this conference, we will review the budget to see whether the tax collection targets set are achievable, and what obstacles are in the way in meeting them. Government representatives present here will consider the recommendations from this conference”.

Adil Amin, Director of Telco Integrators, said changes have turned direct tax laws into draconian laws. “A culture of oppression has developed in our country where raising one’s head is not tolerated”, he stated.

He said the definition of fraud has been broadened, while Inland Revenue officers given excessive powers. Anyone who does not issue a sales tax invoice will be categorised as fraudster, he commented, adding Inland Revenue officers can detain a businessman even on suspicion.

“In such a situation business environment will become very tough for business community”, he observed. He commented, “A man running a business worth 50 billion may have CFOs, but he can be detained on mere suspicion”. Granting such powers is dangerous, he said.

Adil Amin said commissioners have been given authority for tax registration. Sales tax registration has been made mandatory for the lower-middle class. Some aspects of tax fraud, he said, are very alarming - fictitious documents and irregularities in returns have also been included. “Those who do not deposit withholding tax within three months will also be charged with tax fraud”, he added.

Nasir Qureshi, President of ICCI, termed the budget conventional. He said Rs4 billion is reported to have been allocated in the budget for construction of a cancer hospital in Islamabad, whereas construction of such a hospital is possible through CSR funds.

He said the focus of budget-makers is on investment, which means there is no growth. “A business-friendly environment must be provided to the businesses. Businessmen are like migratory birds - they fly to a place where environment is business-friendly”.

He noted foreign investment comes to where business environment is favourable. The federal budget is being presented to protect IPPs, he viewed. Naeem Siddiqui, Advisor to President of FPCCI, said business community is not afraid of taxes. The industry should be given opportunities to work peacefully, he asked. He suggested industries providing employment to 1,000 people should be exempted from taxes. On the contrary, notices are issued, he regretted, adding confidence of industry should be restored. “The definition of tax fraud has been widened, even broader than Section 302”, he remarked.

Anil Peter, a tax expert, said, “A 10pc tax is being introduced in FATA, whereas taxes are usually introduced at 3-4pc. We are imposing an 18pc tax on a 2pc growth rate”. Tariq Iqbal, Secretary FBR, said, “The role of FBR is that of a tax collection agent. We have to implement the policy set by others. The FBR does not make policies”.

Usman Shaukat, President of Rawalpindi Chamber of Commerce, said businessmen need to be given confidence. An emergency should be imposed in the export sector. “If local investors are not satisfied, where will foreign investment come from?. Red tape and bureaucratic hurdles should be eliminated”, he suggested.

The CEO of Cost & Management Accountants said, “Cost management accountants, doctors and engineers should be given representation in the assembly. Our role should be in policymaking, and reserved seats should be allocated for us in the assembly”, he demanded.

Asad Hamid, head of ACCA, Abid Qayyum Suleri, Executive Director of SDPI, Faraz Fazal, President of Islamabad-Rawalpindi Tax Bar Association, Naeema Ansari, spokesperson of Women’s Chamber, also addressed the conference.