The business community submitted these proposals on Wednesday during an interactive session of trade representatives with tax officials. The session, chaired by Revenue Division Secretary-General M Abdullah Yusuf, was attended by heads of trade associations, including Tanveer Sheikh, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).
The representatives of the business and trade alleged that the existing tax policy was promoting growth of informal economy, where tax officials were ignoring the unregistered persons, who are operating out of the tax net, while registered persons were forced to pay maximum taxes, putting pressure on the already burdened taxpayers.
The private sector asked the officials to tax the agriculture income by encouraging provincial governments to use their constitutional right of taxing each deserving sector. They also demanded of the tax officials to abolish the heavy taxes imposed on petroleum products so that the cost of manufacturing could be reduced and exports would get a better chance of competing.
Tanveer said that the image of the income department had considerably improved. Previously, these tax offices were considered as 'slaughter houses', he said.
Endorsing CBR view, he said that the tax-to-GDP ratio should be 17 percent and there was need to expand the existing tax base. He demanded that provinces should be asked to tax the agriculture income to ensure contribution of each sector in national development.
He also suggested that services sector, poultry, livestock sector, and especially the SMEs, should be brought into tax net so that the burden of existing taxes should be shared equally by all deserving sectors of the economy.
He asked CBR to reduce the incidence of taxes of POL products to reduce the cost of production. He said that CBR had restored the confidence of the business community and there was need to improve this environment further.
Tariq Sayeed, a former FPCCI president, also supported the idea of taxing agriculture income and said that this would help in increasing the tax-to-GDP ratio.
He also asked CBR to remove tax distortion between WHT paid by commercial importers and industrial importers. He suggested that all importers of betel-nut be brought into the tax net due to huge profitability in the product.
He said that tax officials should ensure that Alternative Dispute Resolution (ADR) mechanism should be implemented vigorously. It is recommended that CBR should ensure implementation of committees findings within 30 days. It has been observed that ADR recommendations remained pending for 7-8 months at the level of CBR Headquarters. Collectors should themselves attend the meeting instead of sending their subordinate officials to ADR committees.
He said the customs department had failed to control the menace of under-invoicing, which is being done with the connivance of customs officials.
He also stressed that a uniform valuation of imported goods be ensured. Presently, one product is being cleared from four different customs station at four different prices leaving local producers with no option but to close their businesses.
Aptma representative demanded actual zero-rating of textile sector so that the country's share in the international market is secured. He said that multiplicity of taxes and levies was eroding the profitability of the entire textile sector and added that the knitting industry was shifting from Pakistan to Bangladesh due to these reasons.
Engr Jabbar demanded that CBR should follow the industrial standards at import stage as the products, which are about to expire or expired are being imported without any restriction.
He said that if CBR could effectively check under-invoicing on imports from China it could increase its revenues to Rs 40 billion. He suggested that import of those businessmen should be blocked who are not filing statements.
President of FATA chamber demanded tax incentives for rapid development, peace and employment generation in the area.
Nishat Mehbob, President Travel Agents Association of Pakistan asked the CBR to rescue the travel industry by reducing the tax rate from 10 percent to 2-3 percent. Computer vendor industry representative demanded 5-year sales tax exemption.
Representative from Paama also demanded effective control over under-invoicing and said that dealers of all major industries be registered for level playing field. Towel Manufacturers Association contested that audit of commercial importers was started despite commitment that no audit would be conducted. He also suggested improvement in registration and de-registration procedures.
Businessmen also raised reservations over the Duty and Tax Remission for Export (DTRE) scheme, where registered persons were deliberately tortured by auditors. Before granting each and every DTRE approval, auditors repeatedly visited the taxpayer's business premises and inquiries were conducted by deputy/additional collectors. If CBR talks about IT and electronic exchange of database, then why there is a need to physically go to the business premises causing harassment to the taxpayers. They also suggested improvement in the working of the CARE system.
He suggested that check-in time for fruits and vegetables at Karachi port should be reduced to save the perishable commodities from damage. It was brought to the notice of the officials that due to imposition of GST on computers hardware, the smuggling of these items has started and is damaging the local manufacturers and assemblers or investors.
Muhammad Idrees, Advocate, suggested that 2 percent CVT should be collected from all districts by amending the existing 40km municipal limit provision to new district limits. He said that CBR can effectively use income tax data for broadening the tax base.
He said that notices of filing returns have been served to some taxpayers of Islamabad and Rawalpindi where these taxpayers have also filed the returns. It seemed that some technical fault in the system had resulted in generation of computerised notices under section 114 of the Income Tax Ordinance 2001. There is need to remove the fault to rectify the error.
Association of Builders and Developers said that there is difference between the buying/selling of property and construction business. Representative of retailers association said that the Board could easily register over one million retailers by introducing reduced tax rates.