Upcoming budget: OICCI proposes ‘long-term’ policies

Wants consistency in implementation to lure investors.

KARACHI: With the federal budget around the corner, the Overseas Investors Chamber of Commerce and Industry (OICCI) has urged the government to formulate long-term and consistent policies that would sustain for at least five years in order for investors to make complete business plans.

The chamber said this within its budget proposals it submitted to the FBR chairman.

The 54-page OICCI budget proposals cover over 100 wide-ranging recommendations, including proposals to incentivise investors, broaden the tax net through documentation of the economy, simplify the tax system and reorganise the FBR.

To attract new Foreign Direct Investment, upfront levy of withholding income and sales tax at the import stage on plant and machinery should be exempted for new foreign investment, said the proposal.

The chamber has proposed that there should be only two tax regimes for companies assessed under Large Taxpayers Units (LTU) or those registered under the Sales Tax Act: the normal tax regime based on taxable income or under the Alternate Corporate Tax (ACT) mechanism.

The assesse should be given the option to opt for one of the two regimes and this option taken should then be made binding for five years. Minimum Tax Regime (MTR) should be withdrawn on oil marketing companies, refineries, LNG terminal operators, etc. where the application of MTR is resulting in an effective tax rate of over 50%.

To avoid delays in processing income tax and sales tax refunds, the OICCI proposed that the period for scrutiny of these refunds should be legally reduced to 30 days. All current refunds should be released against a bank guarantee before June 30, 2015, followed by an audit of those refunds.

The OICCI has also given detailed proposals for broadening the tax base and identifying new potential taxpayers. It recommends that all income earners should pay taxes equitably, including on income from agriculture related activities and government and banks-saving schemes.

All income earners, without exception of any sector, should be registered with proper national tax number (NTN). The tax authorities should ensure that all NTN holders file annual income tax/wealth returns and wealth reconciliation statements, the proposal added.

Published in The Express Tribune, April 2^nd, 2015.

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