Concern at cut in foreign direct investment

LAHORE: Noted SME expert Rehmatullah Javed showed concern over the recent SBP data that foreign direct investment (FDI) has declined by 47 percent and debt burden is reaching 70 percent of the GDP at the end of the fiscal year 2017-18 as compared to the fiscal year 2016-17.

He called the situation alarming and urged immediate steps to improve the state of affairs. He welcomed the amnesty scheme and called it a step in right direction. Rehmatullah Javed also reiterated that the government must also reduce the corporate tax rate in Pakistan. He said the corporate tax rate in Pakistan was 31 percent. The tax rate on dividends is 12.5 percent for filers and 20 percent for non-filers. The remittance of profits to the head office abroad is treated as dividends and is taxed at 12.5 percent. He said the corporate tax rate in Bangladesh was 25 percent on listed entities and 35 percent for non-listed entities. The corporate tax rate in China is 25 percent. There is another much debated tax, called super tax, which was imposed through Finance Act, 2015, whereby 4 percent of super tax was payable by banking companies and 3 percent by other companies, he added.

According to the tax directory 2015-16, there are only 129 companies reporting their income above 500 million Pakistani rupees. He said the government was considering elimination of super tax rate in this finance bill.