FPCCI for reducing sales tax to 10 percent

President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Muhammad Saeed, has proposed reduction in sales tax rate from 15 percent to 10 percent in 2005-06 budget. He has suggested that raw material not manufactured locally should be allowed to be imported at zero-rated duty. This will help to bring input cost down and gear up the performance of industry.
He said that a minimum cushion or difference in custom duty of at least 10 percent should be provided between imported finished products and imported intermediary products for local manufacturing of similar products competing imports.
The Federation chief advised CBR to be careful while implementing Gatt 'code of valuation' and Custom Administrative Reforms (CARE).
On issues like misdeclaration, quality and value of products, the Federation chief has some reservations. These reforms are required to implement in line with international standards.
The punishment proposed in sector 156(21) 14A is very harsh and likely to create importers/ exporters as hardened criminals.
The FPCCI chief fears that this provision will be used for harassment and shall create unnecessary volume of litigation's.
He proposed that section 32_a should be suitably amended in consultation with FPCCI.
The SRO 554, which provides relief to the importers of machinery for export purpose it has been suggested that SRO 554 be extended up to June 30, 2005.
The FPCCI chief recommended that the rate of corporate tax be reduced from 35 percent to 30 percent to bring it at par with India. Similarly, maximum income tax rate for private limited companies and firms be reduced by 25 percent.
To enlarge tax base in the country, it has been suggested that the database prepared on results of survey should be utilised and new taxpayers be unearthed. He further suggested that all exemptions be gradually eliminated and all segments of society be brought under tax net.
The FPCCI chief suggested that rate of income tax at import stage on commercial imports be reduced to 2 percent and be calculated after the levy of import duty only. At present there is 6 percent income tax at import stage on commercial importers which is calculated after levy of import duty and sales tax on the imports which collectively account for around 8.5 percent of cost and freight value.
The provisions are ambiguous, deceptive, harsh and un- warranted, he understand that whosoever touches customs documents or comes in the way of customs clearance of the imported cargo shall be held responsible either directly or indirectly for fraud.