The Lahore Chamber of Commerce and Industry has demanded of the Federal Board of Revenue to bring down the rate of turnover tax on the motorcycle dealers from existing 1 percent to 0.2 percent. The demand was raised by the LCCI president Irfan Qaiser Sheikh after having a meeting with a five-member delegation of Motorcycle Dealers Association comprising Sheikh Talib Nahid, Huyum Bhatti, Khawar Saeed, Sheikh Waheed Akhtar and Mohammad Munir.
LCCI Senior Vice President Kashif Younis Meher was also present in the meeting. Sheikh said that there was no second opinion about it that motorcycle dealers demand for cut in the rate of turnover tax was justified as the margin of net profit in the context of turnover, ranges from 0.50 percent to one percent and normal tax on profit shall in any case be less than one percent of the turnover but the motorcycle dealers are legally bound to pay one percent tax of the turnover which is neither prudent nor sustainable.
How could motorcycle dealers survive when they give their little profit to the Federal Board of Revenue in the shape of one percent turnover tax, he said. He added that Federal Board of Revenue should understand the ground realities and curtail to 0.2 per cent from existing one per cent on the motorcycle dealers who are fighting for their survival.
Earlier, Sheikh Talib Nahid, head of the delegation told the LCCI president that the business undertaken by the dealers was not in nature of free trade but it had to be undertaken, in accordance with the requirements of the manufacturers, secondly that the profit margin of the dealers was fixed and depended upon the purchase price fixed and sale price suggested by the manufacturers.
He said it is also important to point out here that the ratio of return as compared to the volume of capital involved is too low to sustain but because of fast moving of the products, the entrepreneur survives. He said that the dealers out of the meager gross margin has to bear, its fixed cost administrative and financial expenses and subtraction thereof leads to minimum net profit ranging from 0.5 percent to one percent of the total turnover.
He said that similar was the position, with regard to cigarettes distributors, flour mills, petroleum dealers and persons dealing in fast moving goods and considering the business restraints of the above said categories the rate of minimum tax was reduced to the extent of 0.2 percent by issuing the SROs No 69(1)/2010 dated 3rd February 2010, No 174(1)/2011 dated 5th March, 2011 and No 1086 (1)/2011 dated 30th November 2011. Since the economical and business conditions of motorcycle dealers are similar that of cigarette distributors, flour millers and petroleum dealers, therefore, the LCCI should convince the FBR help in present case as well, he added.
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