The Overseas Investors Chamber of Commerce and Industry (OICCI) has recommended the government to abolish the Super Tax which was imposed on companies earning more than Rs. 150 million last year. Cement, steel, sugar, oil and gas, fertilizers, textiles, automobiles, tobacco, and other industries were among them.

In its taxation proposals for budget 2023-24, OICCI urged the General rate of Minimum Tax u/s 113 of ITO 2001 to be reduced from 1.25 percent to 0.25 percent. “Considering current economic turmoil and inflationary pressure on prices and cost, the minimum tax should be abolished, at least for listed companies,” it added, among other recommendations.

The Chamber further urged the government to encourage the use of alternative energy resources in the telecom sector, such as solar, by reducing the customs duty on batteries and scrapping the additional customs duty and regulatory duty.

The Chamber said there should be a single sales tax rate across all jurisdictions to remove the anomalies and undue hardships being faced by the telecom sector in terms of compliances in different jurisdictions, thus, providing ease of doing business. Further, in line with International and Regional practices a uniform service tax law may be drafted and agreed upon by the tax authorities of the Provinces and Federal, for implementation in their respective jurisdiction.

Telecom: Auction/Renewal of licenses, Battery Imports

OICCI recommends the removal of advance tax on the auction/renewal of spectrum licenses. This tax should be abolished being irrational. Further, the telecom sector has already paid huge amounts of advance taxes much beyond its tax liability and no such advance tax is collected on grants of other licenses like oil exploration, it said.

The Chamber recommends reducing the custom duty rates for batteries (8507.6000 and 8507.2000) from 11 percent and 20 percent to 5 percent and abolishing Additional Custom duty (2 percent and 6 percent) and Regulatory duty (5 percent), as these batteries are used with solar and power systems and are a core asset for telecom infrastructure services provider. Reduction in duties will further encourage alternate energy resources for the Telecom sector e.g. solar etc.

Tobacco

Besides the telecom sector, OICCI proposed to not increase excise duty on cigarettes before sufficient measures are taken to control illicit cigarette trade.

The chamber noted that the federal excise duty (FED) on the processing of raw tobacco increased from Rs. 10 per kg to Rs. 390 per kg but the measure hasn’t been implemented yet. It has proposed not to maintain the measure only further but also to ensure its true implementation at the GLTs.

Pharma

OICCI suggests the restoration of the zero-rated regime for pharmaceutical DRAP-registered products by restoring the position prior to the Finance Act, 2022. Other recommendations include:

Pending sales tax refunds under FASTER Pharma System to be processed within 72 hours

Abolishment of the 3 percent value-added tax on the import of finished pharma products

Sales tax on excipients and packing materials to be brought down from 18 percent to 1 percent

Advance tax on the Import of LNG

A reduced rate of 1 percent as advance tax is collected by the Collector of Customs in case of the designated buyer of LNG on behalf of the Government of Pakistan imports LNG. The reduced rate should be allowed for all buyers of LNG, the Chamber suggested.

Minimum Tax at Import Stage for Fertilizer Makers

OICCI recommends Minimum tax rate should be reduced to 0.2 percent for listed chemical companies with high turnover and low margins.

It further asks the authorities to make necessary amendments in the revenue regulation to reduce the sales tax and import duties on the import of micronutrients.

The Chamber also wants dealers of Chemical sectors to be removed from the scope of Section 236G who are already paying tax on their commission income under Section 233 of the Ordinance and are also appearing in ATL

Overall, the Chamber has called for the harmonization of federal and provincial sales tax laws, as well as the creation of a uniform service tax law agreed upon by provincial and federal tax authorities for implementation in their respective jurisdictions.

Source: Pro Pakistani