Foreign investors slam problems in profit repatriation

ISLAMABAD: Foreign investors on Tuesday urged the government to remove bottlenecks in repatriation of profits as well as rationalise taxes to keep Pakistan on the radar of overseas businesses.

“The increasing taxation burden has become one of the main problems for the foreign investors and the biggest challenges for them are increasing difficulties in repatriation of profits, cost of doing business and intellectual property rights,” Bruno Olierhoek, president of Overseas Investors Chamber of Commerce and Industry (OICCI) told a news conference.

The OICCI, which represents 190 foreign companies in Pakistan, called for withdrawal of super tax, cut in corporate tax rate to 25 percent and reduction in general sales tax to 13 percent.

At a time when the foreign currency reserves are depleting at a rapid pace the OICCI said delays are occurring in transfer of money abroad. More precise facts would come on the surface when the survey related to difficulties faced by the foreign companies would soon be released.

The OICCI, contributing one-third in overall tax collection of the country, advised the government to broaden tax base by bringing all sectors of the economy into tax net and then provide relief to formal and documented sectors of the economy.

“We demanded of bringing retail and agriculture sectors into tax net,” Irfan Wahab, head of taxation committee of OICCI said.

Wahab, who is also chief executive of Telenor Pakistan, said no specific legal changes were made to restrict profit repatriation, but there were increasing complaints that procedural delays in sending money abroad were occurring.

On tax amnesty scheme, Secretary General OICCI Abdul Aleem said they had raised objections against it as the scheme was unjustified for honest taxpayers.

On political instability in the aftermath of Panama verdict, Aleem said the uncertainty impacted the overall sentiments of the investors. “Foreign investors are worried about the long-term policies in the country.”

The OICCI member companies have invested around $ 7.7 billion, out of total $8.6 billion in net foreign direct investment in the past five years.

Last year alone, OICCI members invested more than two billion dollars in expanding their facilities.

The OICCI, in its budget proposals for the next fiscal year of 2018/19, advised the government to eliminate super tax, which was slapped by the former finance minister for one year. Four years elapsed and tax is still intact.

Aleem said the OICCI demanded reduction in corporate tax rate to 25 percent in line with the regional average of 22 percent, uniform sales tax rate of 13 percent and withdrawal of taxes on undistributed profits and bonus shares and dividends.

Foreign investors also demanded of re-vamping of withholding tax regime, withdrawal of regulatory duty on raw materials imports and implementation of Tax Reform Commission’s recommendations.

Overseas Investors Chamber of Commerce and Industry members said the economy is undernourished and deserves many innovative measures, especially in the taxation system, to deliver on its potential.

The positive demographic profile of Pakistan, together with ongoing investment in China-Pakistan Economic Corridor and other infrastructure projects supported by public-private partnership can lead the country to the next level of economic growth and prosperity. “OICCI and its members remain committed to support in this endeavor,” a statement said.