After KTBA, FPCCI also criticises FBR's 'digital payments' measure

A day after the Karachi Tax Bar Association (KTBA) termed it anti-business and contradictory, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has also called on the Federal Board of Revenue (FBR) to defer its digital payments measure, stressing that the amendment has been made without taking the business community on board.

KTBA calls FBR's digital payments measure 'anti-business, contradictory'

In a letter addressed to FBR Chairman Dr Muhammad Ashfaq Ahmed, Mian Nasser Hyatt Maggo, president FPCCI, said the business community has been facing “serious issues in its working environment”, adding that a “committee on digital means” comprising FPCCI and FBR officials be formed to make this policy business-friendly.

“We strongly recommend to defer this policy for four months, and immediately form a committee,” stated the letter, a copy of which is available with Business Recorder.

“Currently, it is not possible for the business community to adopt this policy.”

The FPCCI stated that the amendment made in clause (I) section 21 and intersection of the clause (la) in the income tax ordinance, 2001 to the corporate taxpayers to switch over to the digital mode of payments under Tax Laws (3rd Amendment) Ordinance, 2021 has been made without taking the “point of view” of the business community.

“In every meeting, we had requested you to kindly include us in the policy-drafting phase or at least take our point of view prior to formulating any policy for the business community.

“But unfortunately, every time the FBR is neglecting FPCCI.”

The FPCCI, the apex body of the entire trade and industry of Pakistan, also asked for the grounds on which the FBR was making such policies, highlighting the issues that are being raised by the trading and business community.

“Currently, post-dated-cheques are used as a means to ensure payments due against sales on credit. Under the proposed ‘digital means’, it would appear that this security will no longer be available to suppliers, and buyers may have to pay in advance.

“The FBR needs to ensure that all suppliers/service providers accept this mode of payment. Especially in the case of individuals or AoPs.

Pursuit of going digital: FBR’s latest measure draws business community’s ire

“A precise and concise definition of the term ‘digital means’ needs to be provided by the FBR to avoid ambiguity and interpretational issues.”

The FBR’s latest measure has come under scathing criticism already with the KTBA arguing that it “is remarkably in contradiction with other modes of payment through banking channels”. Earlier, the measure also drew criticism from the business community that said a “culture change” cannot be implemented overnight.

Multiple members of the business and trading community Business Recorder had reached out to said that the amendment, which has currently been put off till November, challenges the current transaction culture prevalent in the country.

A carrot-and-stick approach to challenge

The measure comes as Pakistan looks at ways to increase documentation of the economy. While it has taken a carrot-and-stick approach in its push to document, some measures have been more successful than others.

Many believe the measures have targeted those already in the tax net.

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