ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has proposed to the Federal Board of Revenue (FBR) to reduce tax rates to help increase the competitive edge of indigenous products in both local and global markets, to broaden the tax base, curtail parallel economy etc., as high tax rate provide incentives for tax evasion and corruption and results in high costs of doing business.
The proposal is a part of the FPCCI presentation being prepared under the chairmanship of FPCCI Sr Vice President Syed Mazhar Ali Nasir, and would be presented by the FPCCI to the high echelons of Ministries of Finance and Commerce and FBR for incorporation in the Federal Budget 2018-19.
It disclosed that out of more than four million NTN holders, the number of tax filers were 2.1 million in 2006-07, which declined to 1.57 million in 2011 and 1.39 million in 2017. “This shows that FBR has lost one million return-filers during the last 10 years despite prescribing higher withholding tax rates for non-filers who are happy to pay more by way of advance tax instead of filing returns”. This underscored the need to take measures to facilitate those who are already existing taxpayers and contributing in the national tax pool to emulate potential taxpayers to come in the tax net voluntarily through persuasion instead of prosecution, he added.
The FPCCI has also expressed concerns on over-burdening of the manufacturing sector whose contribution in GDP was 20.9 per cent and share in tax payment was 70.4 per cent as against the agriculture sector whose contribution in GDP and tax payment was 19.5 per cent and 1.2 per cent respectively in 2016-17. Keeping this in view, the FPCCI has proposed a comprehensive action plan for broadening the tax base and to improve tax-to-GDP ratios.
The FPCCI while analysing the worldwide average corporate tax rates has also proposed to gradually reduce the high corporate tax rate to 25 per cent as the present rate of 30 per cent due to multiplicity of taxes (2 per cent WWF and 5 per cent WPF) goes upto 37 per cent and erodes the competitive edge of Pakistani products against other regional and global economies.