KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in their budgetary proposals has urged the Federal Board of Revenue (FBR) to reduce the standard rate of minimum tax from 1.25 per cent to 1 per cent.
The proposals for the budget were prepared under the Chairmanship of Senior Vice President FPCCI Syed Mazhar Ali Nasir, who suggested to enhance the threshold of turnover for charging of minimum turnover tax from Rs10 million to Rs50 million and exclude the companies having a gross loss position for the year from the purview of minimum tax by restoring the position of law prior to Finance Act 2016, allowing them to carry forward the minimum tax paid in the year of loss.
The FPCCI’s SVP during a meeting elaborated that the minimum tax rate has intermittently changed over the years from 0.5 per cent to 1 per cent and vice versa but it has never increased beyond 1 per cent.
“It seems that the government, instead of broadening the tax base, and enhancing the tax-to-GDP ratio is resorting to squeeze the minuscule number of existing taxpayers to achieve a higher tax collection target by increasing the tax rates. This runs counter-productive to the government’s efforts of bringing the new and potential taxpayers in the tax net as high tax rates provide incentives for its evasion and corruption”, he added.
FPCCI argued that the increase in exemption limit of turnover tax from Rs10 million to Rs50 million would help the companies in true declaration of turnover. Similarly, giving the exemption from payment of minimum tax to the companies, who are in the gross loss situation, would provide them relief, he concluded.
