Lahore
Overseas Investors Chamber of Commerce and Industry (OCCI) has sent a letter to the Finance Minister Ishaq Dar informing him that the taxation measures proposed in the Finance Bill 2017-18 could jeopardize foreign investment and foreign direct inflows (FDI) coming under China-Pakistan Economic Corridor (CPEC).
OCCI has voiced its opposition against many tax measures suggested in the budget FY 2017-18. They said that “Super Tax” had only been implemented for one financial year, but this is the third year in a row that its being enacted. The letter also told, “super-tax, we understand, is collected from OICCI members whose headquarters management takes a negative view of such ad hoc measures and surprises every year.”
OCCI has resented the rise in minimum tax from 1pc to 1.25pc for chemical companies that enjoy a high turnover but low-profit margins. The letter mentioned that “If not corrected, this may substantially increase the effective tax rate beyond the corporate rate of 30pc for large manufacturing companies.”
Companies that don’t share 40pc of their profits as dividends have been slapped with 10pc tax in the budget FY 2017-18. OCCI slammed the move saying this will only lead to double taxation on companies, and won’t help in building capital formation that will help the economic growth and investment in the country.
The withdrawal of tax credit for the FY 2017-18 also surprised OCCI which had itself suggested to increase it to 5pc from 3pc which was enacted in last FY 2016-17. The letter mentioned “it is a matter of surprise that without any noticeable increase in the broadening of the tax base or documentation of the economy, this incentive has been withdrawn abruptly, which will be counterproductive and may encourage non-filers and those working against the documentation of the economy.”
