OICCI seeks minimum tax regime of 0.25pc for sectors with low margins

KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) in budget proposals for 2022-23 has suggested rationalising minimum tax regime down to 0.25 per cent for businesses dealing in sectors with high turnover and low margins.

Recommended sectors included oil marketing, refineries, LNG terminal operators, large chemical companies, authorised dealers of local vehicle manufacturers, distributors, and traders, including large trading houses.

The proposals highlighted various measures to facilitate business and foreign direct investment, ease of doing business, documentation of the economy, as well as broadening of the tax base to enhance revenue collection.

Briefing a select group of journalists, OICCI Secretary General Abdul Aleem said the proposed policies should be “implemented for longer term to attract large investment in industrial and infrastructure projects including from foreign investors”.

Considering the economic challenges post-Covid and international cost pressure, the OICCI has not asked for any reduction in corporate tax rate, but urged the government not to levy any new taxes, remove harsh anomalies and do away with some of the measures introduced through the mini-budget.

Besides general tax measures, the chamber has also recommended industry-specific taxation proposals to promote manufacturing and optimise revenue collection in the country. It recommended strict monitoring of massive tax evasion in the tobacco sector, which would increase revenue collection by as much as Rs70 billion.

OICCI has strongly recommended that the minimum tax regime should be rationalised and immediately reduced to 0.25 per cent for businesses dealing in sectors with high turnover and low margins.

It recommended bringing down the withholding tax regime from 26 to five rates only as it had a “negative impact on ease of doing business of all compliant taxpayers, especially in the manufacturing and services sectors”.

Technology and data mining of already available information with the Federal Board of Revenue (FBR) in relation to registered/unregistered businesses should be used to broaden the tax base instead of penalising tax compliant sectors.

OICCI has emphasised on doing away with undue recurring audit/examinations/reviews and recovery proceedings. OICCI members in a recent survey have also shown concern on delayed tax refunds which, it has recommended, be settled within 45 days and inter-adjustment of income/sales tax refunds be allowed in the law.

The chamber has again recommended reinstatement of inter-corporate dividends (ICD) in eligible group structures in line with established global practice of protecting inter-corporate dividends from multiple taxation, restoration of proviso regarding incorrect provision of CNIC details by purchaser and to increase the limit of cost of vehicle for the purpose of depreciation to Rs5 million.

“OICCI members believe in the potential of Pakistan which can be harnessed with positive and regular engagement of relevant authorities and private sector,” participants were told.

There was need to continuously improve and align policies and practices in Pakistan with the best in the region, to be able to attract sizeable FDI in the manufacturing, IT and services export and other job creating sectors.