OICCI for bringing every sector of economy under tax net
15 March, 2012
KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) representative body of the foreign businesses operating in Pakistan has recommended documentation of all sectors of the economy for broadening the tax base and eradicating tax evasion.
KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) – representative body of the foreign businesses operating in Pakistan – has recommended documentation of all sectors of the economy for broadening the tax base and eradicating tax evasion.
“All legal entities including individuals, association of persons, corporate and NGOs/NPOs should file annual tax returns, as well as wealth statements, irrespective of their source of income, if the total income for the year is in excess of the government approved threshold which currently is Rs350,000. In case the earned income falls under the exempt category then exemption may be claimed separately,” OICCI has suggested to the government in its proposals for the federal budget 2012/2013 released on Wednesday.
“Furthermore all such individuals and legal entities should get themselves registered and obtain their NTN (national tax number) and tax authorities should ensure that all NTN holders file tax returns,” it added.
The proposals represent collective view of 189 foreign investors who are members of the chamber and are some of the world's leading multinational companies belonging to 33 countries and operating in 14 sectors of the Pakistan's economy.
The chamber suggested measures which can help the Federal Board of Revenue (FBR) in documentation and eliminating tax evasion. “FBR should obtain details of all customers of financial institutions whose investments exceed a certain threshold during a year,” it suggested.
“Art exhibition halls, hospitals, hotels holding large receptions for catwalks and sale of branded/designer dresses, airlines, travel agencies, etc should be asked to provide names and addresses of their customers beyond a minimum threshold to the FBR,” it added.
The FBR has been advised to regularly interact with leading tax and administrative experts to determine additional measures required for enhancing the number of taxpayers and taxable entities.
OICCI president Humayun Bashir said that the budget proposals are balanced and aimed at broadening the tax base. “The proposals also recommend certain structural and procedural changes to improve the overall taxation framework,” he added.
Bashir urged the FBR to share the details of 700,000 affluent people who were identified in 2011 as potential tax evaders or assesses. He also demanded special privileges, recognition card and special counters at immigration for people declaring income more than Rs10 million annually or pay taxes above Rs2 million.
The tax proposals for next fiscal year, OICCI recommended that agriculture and other sectors' income should be brought in to tax net that would help in providing an equitable treatment to all segments of the economy.
All venues where economic business activity takes place should be registered with the FBR, the OICCI said and added: “All names and addresses of individuals, organisations, holding offices or events at such venues should be provided to the FBR, who should ensure that income tax returns and wealth statements are filed by such persons/entities.”
In Pakistan, the organised sector is subject to high levels of compliance whereas the unorganised sector appears to have an implied amnesty.
“To overcome these gaps, several mechanisms, structural and procedural recommendations have been outlined in this segment,” it suggested.
A uniform corporate tax rate of 30 percent is proposed for all businesses irrespective of their legal status. It will help in encouraging corporatisation and expansion of companies, the OICCI said.
The chamber said that goods exported from Pakistan have reached Afghanistan should be verified on the basis of documentation by the Pakistani authorities. The OICCI said that the government must attract foreign direct investment, especially in the manufacturing sector, to grow the economy and provide jobs for the youth.
It further suggested that a new duty slab of zero rate should be created for all industry raw materials and machinery imported in the country by newly set-up plants, for a period of five years, for which local equivalent are not available.