Prior to budget (2010-11), the tax was chargeable at the rate of 0.5 percent. In order to rationalise this levy vis-à-vis the taxes payable in corporate cases returning taxable incomes, rate of minimum tax for the cases returning losses was enhanced to one percent in budget (2010-11).
The FBR has received presentations from different sectors that the rate of one percent turnover tax is high in cases where overall turnover of companies is higher. The sectors like pharmaceutical distributors and others have requested the FBR to reduce the rate of the turnover tax.
The turnover tax at the rate of 0.5 percent was applicable for the last many years on companies suffering losses or not paying taxes due to exemptions or 'brought forward losses'. No enhancement in the tax rate was made ever since. The FBR was of the view that such loss making companies should contribute towards the exchequer at the minimum rate of one percent of the total turnover, which was a minor increase as compared to raise in inflation for the past many years.