APBF opposes 0.6 percent withholding tax

KARACHI: The All Pakistan Business Forum has criticised the Senate’s recent decision to impose a new 0.6-percent withholding tax on all banking instruments valued at over Rs50,000, according to a press release issued by the APBF.
The president of the organisation, Ibrahim Qureshi, described the new tax as an unnecessary burden which will have negative effects on the country’s business and trade activities. At the same time, he said, it will hike up inflation by increasing operational costs for small industries and the business community at large.
The Senate’s Standing Committee on Finance and Revenue recently approved withholding tax on all banking instruments valued at over Rs50,000 for those who fail to file their returns. The committee decided to impose a 0.3 percent tax on all banking transactions for filers of tax returns and 0.6 percent for those who failed to do so. Besides cash withdrawals, these tax rates will be applicable to demand drafts, pay orders, SDRs, CDRs, STDR, call-deposit receipts and RTCs.
Qureshi said that although the APBF fully supports the government’s efforts to expand the tax net and urges its thousands of members to pay taxes and file their returns, the business community has disagrees with such indirect taxation.
He said measures like the one called for by the Standing Committee on Finance and Revenue are “certainly not advisable” for low-income economies like Pakistan. Imposition of such indirect taxes in Pakistan will strongly discourage financial activities through banks and regulated institutions.
The common man will be inclined to avoidance of this tax by using unregulated and illegal financial channels. This, in turn, will result in big revenue losses for the government, according to him.
It is more advisable to create healthier revenue streams for the government, by formulating taxation which is more direct, so that tax evaders and profiteering enterprises are specifically targeted.
The government should also consider reducing the GST on electricity to nurture small industries and businesses.