Federation of Pakistan Chambers of Commerce & Industry (FPCCI) President Atif Ikram Sheikh Wednesday said FPCCI and FBR have agreed to consult, collaborate, and synergize on a comprehensive taxation reforms agenda.
Sheikh said this is the only way forward for the economy of Pakistan as revenue generation provides the very basis for any country’s fiscal policies and development plan – nonetheless, the same needs to be done in a consultative, inclusive, and pragmatic manner.
FBR Chairman Rashid Mahmood Langrial visited the Head Office of FPCCI at the Federation House in Karachi. He was accompanied by the FBR team and senior officials from various FBR departments who responded to questions from senior trade, industry, and media representatives.
Sheikh reiterated his earlier stance that the two guiding principles of any taxation reforms in Pakistan should be broadening the tax-base and simplification of the taxation system, coupled with rationalization of tax rates, facilitation, and incentivizing taxation culture.
Saquib Fayyaz Magoon, SVP FPCCI, presented the apprehensions and demands of FPCCI. He observed that FBR’s revenue target is Rs. 12.97 trillion – representing a 40 percent YoY increase – while the economy is growing at only 2 percent. This is a huge cause of concern for the business community and may result in new taxes, mini budgets, and taxing the already taxed even further.
He said the Finance Bill has significantly reduced the business community’s confidence in the government policies due to the abrupt withdrawal of 1 percent full and final liability for exporters and sales tax exemption on local supplies to registered exporters authorized under the Export Finance Scheme (EFS).
He highlighted that the Tajir Dost Scheme (TDS) was also implemented without consultation and TDS has missed its revenue collection target by 99 percent.
Magoon stressed that FPCCI has raised the issue of SRO. 350 (I)/2024 repeatedly and despite being amended two times over, it remains problematic as it was issued without consulting the stakeholders. FPCCI strongly advocates effectively reviving and expanding Alternate Dispute Resolution Committees (ADRCs) under customs, sales tax, federal excise duties, and income tax heads, he added.
He proposed that the Export Finance Scheme (EFS) needs to be simplified as it takes 3–4 months to complete the process due to complex procedures, the issue of duplicate documentation, and system glitches. Additionally, it lacks provisional quotas; transitioning between business structures and multi-product output from single inputs.
He warned that the inclusion of EPZs in the regular tax scheme will result in major losses and resentment among the investors. Additionally, local industry has been excluded from EFS as well whereas exporters have been unfairly excluded from the final tax regime (FTR). FPCCI once again demands the resolution of these discrepancies, he added.
Khurram Ejaz, Advisor to President FPCCI on FBR affairs, questioned why Pakistani ports and terminals cannot operate 24 / 7 examination, delivery, and handling like the rest of the world. He demanded that FBR’s LIVE project should be implemented to resolve issues of customs appraisement and said that modernized labs should be installed, and dwell times should be reduced.
FBR chairman agreed that tax rates should be curtailed to reduce tax burden and enhance compliance but said it is not possible in the current circumstances. He said that the last 2–3 years have been very painful for the economy but economic indicators have started to show improvement.
He also expressed optimism that interest rate may be further reduced by 1.5–2.0 percent soon and advocated for no more than a 3–4 percent premium in policy rate as compared to inflation numbers. He opined that the country has no other breathing windows in sight and promoting tax culture is the only viable solution.
Langrial stated that not even the top 5 percent wealthiest population is filing taxes and FPCCI’s demand is legitimate that tax evaders should be targeted instead of those already paying taxes for the past many decades. He also suggested that the model of paying back loans through borrowing even more money is no longer sustainable for the country.
On the demand of FPCCI, he advised FBR officials to minimize checking cargo within the limits of Karachi city as a pilot study and to only inspect or stop on concrete intelligence-based information for large consignments.
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