PAAPAM opposes alternative minimum tax

Urges govt to consider amendments in finance bill.

KARACHI: Pakistan Association of Auto Parts and Accessories Manufacturers (Paapam) Chairman Usman Malik on Wednesday lauded the government efforts to tax non-filers at higher rates but said that the levy of alternative minimum tax is unjust and must be withdrawn immediately.

Malik, in a statement, said that his association urges the government to consider appropriate amendments in the Finance Bill 2014 in the interest of the prevalent business climate of the country.

The proposed changes by Paapam will encourage the corporate sector to plough back their earnings into their current businesses rather than putting them in bank deposit schemes.  The release added that parliament should withdraw the untenable proposal of another kind of minimum tax, in addition to 1% minimum tax on turnover. Through this measure, it was proposed that the documented corporate sector will be forced to pay 17% minimum income tax on accounting profit (instead of current 33% tax on taxable income). This excess tax paid will be refundable over a long period of 10 years, thereby tying up the business liquidity desperately required for running the business.

It will be tantamount to disallowance of legitimate adjustable tax losses or legally admissible tax depreciation (allowed under the laws of the land), added the statement. But the most unfortunate part is that this 17% income-tax on accounting profit is applicable retrospectively, with effect from tax year 2014 (financial year ending on June 30, 2014), it said.

Published in The Express Tribune, June 19^th, 2014.

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