‘Anomalies in finance bill threaten economy, livelihoods’
PHOTO: FILE
Concerns are mounting among businessmen across various sectors as they call on Finance Minister, Ishaq Dar, to swiftly address the alarming anomalies present in the finance bill for the fiscal year 2024. These anomalies, if left unattended, could potentially have adverse effects on the economy and the livelihoods of countless individuals.
Following a meeting with Dar, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), President, Irfan Iqbal Sheikh expressed his apprehensions regarding discrepancies in customs duty rates between finished products and their raw materials. Specifically, Sheikh highlighted the inconsistency in import tariffs for non-woven fabric, Polypropylene in primary form, and Polyester Staple Fiber. He emphasised the need to restore the previous tariff rate of 11% for non-woven material, as stated in the first schedule of the customs act.
Moreover, Sheikh drew attention to another anomaly in the finance bill concerning the imposition of a 10% Regulatory Duty (RD) on uncoated wood-free paper (HS Code 4802), despite the existence of Anti-Dumping Duty ranging from 11% to 39% on the same item. This double taxation is perceived as unjust, as the presence of Anti-Dumping Duty should negate the need for RD to be imposed.
The Karachi Chamber of Commerce & Industry (KCCI) has put forth a proposal suggesting that the Super Tax should only be applicable for the Tax Year 2023, aligning with its original intention as imposed through the Finance Act 2022 for a one-year period. However, if discontinuing it this year is not feasible, the KCCI recommends reducing the maximum rate of this levy from 10% to 4%.
The KCCI has also raised concerns about the introduction of the ‘additional tax on income, profits, and gains,’ which imposes a maximum rate of 50% on exceptional incomes resulting from economic factors determined by the federal government over the preceding five years. The KCCI advocates for the elimination of this proposed section, asserting that any income already subject to taxation under normal circumstances should not be subject to additional taxation. Furthermore, given the already high existing income tax rates, this supplementary tax would burden the documented sector.
Regarding the amendment in the definition of associates, the KCCI advises against its implementation as it would categorise a majority of the suppliers involved in imports or the buyers involved in exports as associates, contradicting the original intent of the law.
The FPCCI president also addressed concerns in the pharmaceutical sector, pointing out that the custom duty on pharmaceutical raw materials (HS Code 2933.4990) has increased from 3% to 20%. This drastic increase is anticipated to create a shortage of medicines and drugs in the market.
Sheikh stressed the importance of trade facilitation without impacting notification, urging that shipping lines or shipping agents should manage the return or re-export of goods, cargo, or containers to the destination port as requested by the consignee without any payment of port authority, shipping line, or shipping agent charges on account of detention, landing, storage, terminal handling, or warehousing costs during imports.
He also highlighted the issue of sales tax being collected on bulk packed teas weighing more than 5KG, as there is no clarification in the third schedule that identifies tea as retail packing. This results in unfair and illogical taxation on the price of bulk packed teas.
The KCCI recommended that bonus shares, not within the scope of income, should not be taxed, as it would create unnecessary hurdles for industrialisation and its growth. Additionally, the bill’s proposed tax holiday for Small and Medium Enterprises (SMEs) exclusively in the agro-based industry in rural areas should be extended to all areas, including urban regions, to incentivise investment in agro-based industries across the board.
The KCCI also commended the bill’s proposal to exempt non-residents from advance income tax collection under certain conditions. However, they suggested that all unregistered persons should be required to mandatorily file income tax returns and report advance tax payments, subject to exclusions given under the law. Furthermore, the KCCI recommended that property registration authorities be liable to charge a 2% tax under section 7E on all property tax challans issued to non-filers, thus broadening the tax net and rationalising tax collection on immovable properties.
Published in The Express Tribune, June 25th, 2023.
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