OICCI proposes WHT waiver
The Overseas Investors Chamber of Commerce and Industry (OICCI) has proposed the government to abolish the withholding tax (WHT) on telecom users and called for reducing the number of withholding taxes on different heads to five for filers from over 26 at present.
“Withholding tax on (telecom) subscribers should be abolished completely as majority of the subscribers fall below the taxable limit,” OICCI said in a set of budget proposals for fiscal year 2022-23.
It recommended that withholding tax reduction, made through Finance Act, 2021, should be reinstated at 8% for fiscal year 2022-23.
While briefing the media on Wednesday, OICCI Secretary General Abdul Aleem said withholding tax regime should be revamped and the number should be reduced from over 26 at present to five for tax filers “to reduce complexity and simplify compliance.”
The chamber submitted that tax on import of raw material – active pharmaceutical ingredient (API) – by pharmaceutical sector should be waived off because accumulation of sales tax refunds on imports created shortage of working capital.
“The submission of…sales tax return should be discontinued since they are utilised as a tool to delay refund processing.”
It further proposed that the sales tax refund adjustment should also be allowed against income tax liability for all the filers, including the pharmaceutical sector.
Tax authorities should simplify the documentation requirement for verification of input sales tax payment by limiting it to goods declaration, invoice and bank statement.
Aleem urged the government to implement track and trace system in the tobacco sector to discourage sale of illicit cigarettes. He argued that Pakistan had to forego earnings of around Rs70 billion per year in taxes due to the menace of illicit cigarette.
More than 200 local illicit cigarette brands are currently sold below the minimum price per pack of Rs62.67 set by the government of Pakistan.
The budget proposals recommended the levy of federal excise duty (FED) on locally manufactured vehicles to be reduced “to restore sales revenue of vehicles of auto sector while also increasing government revenue.”
The OICCI secretary general said that the requirement of filing reconciliation between annual withholding statement and audited accounts resulted in additional compliance burden on active taxpayers hence it should be abolished.
He said that the general rate of minimum tax under section 113 of ITO 2001 should be reduced to 0.25% in a phase wise manner for every filer. “The tax should be applicable on gross profits instead of turnover,” he recommended.
Published in The Express Tribune, March 31st, 2022.
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