Federal Board of Revenue (FBR) chairman Shabbar Zaidi said on Saturday that local industry could not be promoted unless the issues of smuggling, under-invoicing and Afghan Transit Trade are addressed at the earliest. He was speaking at the Lahore Chamber of Commerce & Industry (LCCI). The LCCI acting president Faheem-ur-Rehman Sehgal, Minister of State for Revenue Hammad Azher, Provincial Minister for Industries Mian Aslam Iqbal, and former presidents and executive committee members were also present on the occasion.
The FBR chairman said the main theme of the Federal Budget 2019-20 is the development of industrial sector and to generate employment opportunities. He said keeping in view the problems of business community regarding customs duty, valuation and clearance, ratio of Green Channel would be taken to 60 percent. He said sales tax registration process has been automated and no official would visit business place for the sales tax purpose while certification for imports would also be automated soon. "Automation in the FBR was need of the hour and the government wanted less human inference in the tax system by utilizing modern technology to strengthen its transparency and accountability system," Shabbar Zaidi added.
Zaidi said suggestions of fixed tax on the retail shops up to 240 sq ft area and tax on the basis of electricity bill from shops consisting of 240 to 1000 sq ft are under consideration. He said bonds have already been issued to resolve the issue of refunds. He said the business community would be consulted on zero-rating if new system of refunds doesn't work.
To a question, he said the FBR is ready to consider new legislation for small and medium steel Melters. While answering another question, the chairman said condition of buyer's CNIC has not yet been applied.
He said turnover tax on sugar dealers has been slashed to 0.25 percent. Only those dealers are not lifting sugar stocks, who don't want to come under the tax network, he said, adding that there is no shortage of sugar in the country. "I am only responsible for Rs 3.26 per kilogram increase in the sugar price," he added. Our focus would be construction of houses which would accelerate activities in other industries, he asserted.
The FBR chief announced that there would be no audit more than once as it creates harassment among the businessmen. He said price of ghee and cooking oil was not increased on the direction of prime minister but added that duty would be adjusted if required.
He said withholding tax on import of raw materials has been slashed and efforts are afoot to make the imports easier. He said all reasonable demands would be fulfilled to facilitate the business community. "We are cooperating with the business community to redress their problems and there would be no misuse of powers by the FBR officials." He said not a single bank account was attached after the 8th May.
LCCI acting president Faheem-ur-Rehman Saigal said certain measures taken in the federal budget 2019-20 would prove to be counterproductive for the industrial sector which contributes around 70 percent to tax revenues and the economy as whole. The overall increase in taxes, particularly the import duties would enhance smuggling and also increase the share of black economy. He said govt should resolve these anomalies in consultation with stakeholders so that the country can get of this economic crunch.
He said although the decision of exemption of custom duties on more than 1600 industrial inputs would help in making the local industry more competitive, however the increase in Additional Custom Duties (ACD) on 3000 items would impact vital industrial inputs and increase the cost of doing business of our industry. He recommended that this ACD should be taken back.
"The proposal that retail shops having an area in excess of 1000 square feet would be included in Tier-1 where it would be mandatory to integrate their point of sales (POSs) with FBR's computerised system so that sales are reported in real time, needs to be reviewed holistically owing to a few reasons", he said and added that firstly, the constructed area is not an indicator of business volume as many shops in the far flung areas have extremely low business volumes as compared to shops with similar areas in the commercial hubs.
"The abolishing of Final Tax Regime in favour of Minimum Tax Regime can result in an unjustifiable hike in tax liabilities of commercial importers, commercial suppliers of goods, and contractors as they operate on very low profit margins where their tax on actual profit is often less than the minimum tax. It can adversely impact our imports of vital raw materials and can hence hamper the performance of industrial sector.
LCCI demands that government should either restore the Final Tax Regime or cap the Minimum Tax Regime at 2 percent", he added. He said the suppliers who deal with unregistered dealers are required to pay tax on 10 percent profit margin while in reality; their profit margins in these times of economic crunch are around 2-3 percent. The government should remove this anomaly on urgent basis.
He said a lot of changes have been made in the taxation regime for retailers without taking them into confidence. Before the budget 2019-20, the Tier-I retailers had the option of paying 2 percent tax on their turnover. Now the standard rate of 17 percent will be charged to retailers which will have the adverse impact of shrinking the tax base owing to cumbersome procedures of maintaining sales tax records. Furthermore they will not be allowed to claim input tax on their already purchased stocks. LCCI acting president suggested that the rate of Sales Tax be reduced to 10 percent and the retailers should be allowed to claim input sales tax on their previous 6-month stock.
Comments
Comments are closed.