Right direction: Despite reservations, OICCI terms budget ‘commendable’
Incentives mark substantial step towards economic growth.
20% is the reduced tax rate for projects where 50% of capital is arranged through FDI. DESIGN: CREATIVE COMMON
KARACHI:
The Overseas Investors Chamber of Commerce and Industry (OICCI) – an umbrella organisation of 196 multinationals – has termed the budget incentives a monumental step towards the revival of economic growth.
OICCI President Asad Jaffar said the government’s plan for fiscal year 2014-15 to reduce the deficit to below 5%, increase tax collection by 24% and increase the Public Sector Development Program (PSDP) by 25% is commendable.
“The tangible incentives proposed in the budget especially to the textile sector and new FDI in manufacturing and construction industries is seen as a credible effort,” said Jaffar.
However, he said the proposed economic goals are largely dependent upon robust efforts to deliver the targeted tax collection of Rs2.8 trillion.
“Overall, the budget proposals appear business friendly and OICCI supports the three-year fiscal policy parameters announced.”
The targets of raising the tax-to-GDP-ratio by 1% annually to a target of 13% by 2016-17 together with the investment-to-GDP-ratio of 20%, is admirable.
The focus on increasing the level of direct taxation is also in the right direction together with new measures to improve the efficiency of the tax regime.
The incentives for exporters are quite timely and should lead to substantial increase especially of value-added textiles. Similarly, incentives to the farming and housing sectors including the proposed insurance and loan guarantee schemes are positive moves to deliver growth.
The reduced corporate tax rate to 33% as per plan will build confidence amongst the large tax paying corporate sector, although this reduced rate, OICCI opined, should also have been applicable to the banking sector. The marginal reduction in taxes for telecom sector together with new, albeit still low, taxation on retail sector is a welcome move.
However, OICCI is concerned that withholding tax regime has been expanded rather than reduced and that final tax regime for sectors has not been implemented.
A reduced income tax rate of 20% has been announced for projects where 50% of capital is arranged through FDI in the form of equity. OICCI commends the proposal to introduce different advance tax slabs for taxpayers and non-tax payers, thus urging the latter to become a part of the tax net.
Published in The Express Tribune, June 5th, 2014.
The Overseas Investors Chamber of Commerce and Industry (OICCI) – an umbrella organisation of 196 multinationals – has termed the budget incentives a monumental step towards the revival of economic growth.
OICCI President Asad Jaffar said the government’s plan for fiscal year 2014-15 to reduce the deficit to below 5%, increase tax collection by 24% and increase the Public Sector Development Program (PSDP) by 25% is commendable.
“The tangible incentives proposed in the budget especially to the textile sector and new FDI in manufacturing and construction industries is seen as a credible effort,” said Jaffar.
However, he said the proposed economic goals are largely dependent upon robust efforts to deliver the targeted tax collection of Rs2.8 trillion.
“Overall, the budget proposals appear business friendly and OICCI supports the three-year fiscal policy parameters announced.”
The targets of raising the tax-to-GDP-ratio by 1% annually to a target of 13% by 2016-17 together with the investment-to-GDP-ratio of 20%, is admirable.
The focus on increasing the level of direct taxation is also in the right direction together with new measures to improve the efficiency of the tax regime.
The incentives for exporters are quite timely and should lead to substantial increase especially of value-added textiles. Similarly, incentives to the farming and housing sectors including the proposed insurance and loan guarantee schemes are positive moves to deliver growth.
The reduced corporate tax rate to 33% as per plan will build confidence amongst the large tax paying corporate sector, although this reduced rate, OICCI opined, should also have been applicable to the banking sector. The marginal reduction in taxes for telecom sector together with new, albeit still low, taxation on retail sector is a welcome move.
However, OICCI is concerned that withholding tax regime has been expanded rather than reduced and that final tax regime for sectors has not been implemented.
A reduced income tax rate of 20% has been announced for projects where 50% of capital is arranged through FDI in the form of equity. OICCI commends the proposal to introduce different advance tax slabs for taxpayers and non-tax payers, thus urging the latter to become a part of the tax net.
Published in The Express Tribune, June 5th, 2014.