The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has recommended to the Federal Bureau of Revenue (FBR) to tax the income that is derived from transactions.
In its budget proposal for 2008-09, the FPCCI noted that despite continuous boom, the stock market players/ investors were not paying taxes on capital earnings for the last many years, and added it was high time that this sector was asked to share tax responsibility.
The FPCCI recommended that the rate of income tax for corporate/ non-corporate sector be reduced by five percent. In view of high inflation, the FPCCI suggested that threshold of taxable income be raised from Rs 150,000 to Rs 300,000. To generate jobs and attract new investments, the FPCCI proposed that all industrial units, which started production and provided jobs to at least 50 persons, be exempted from income tax for a period of five years from the date of production/ operation till December 31, 2012.
The WWF and WPPF on manufacturing sector should be withdrawn with a view to reducing the cost of production and minimum wage of worker be fixed at Rs 6,000 per month. New taxpayers be exempted from audit for a period of three years, it said, adding that up to five percent taxpayers be selected for audit through random ballot only.
Withholding tax on imports of industrial raw material be reduced to one percent for commercial importers, and on imports of finished goods it should be reduced to five percent instead of the existing rate, the traders body suggested.
Due to crisis in textile sector, withholding tax on export proceeds be suspended for a period of two years. Transaction of property, including plots, bungalows, plazas, etc be taxed at Federal level and current value for registration be raised reasonably, This tax could generate billions of rupees. However, apartments up to 1500-sq ft and plots up to 240 sq. yards be exempted, it said.
The FPCCI suggested the threshold of withholding tax on supply of goods be raised from Rs 25,000 to Rs 100,000 and execution of contract/services from Rs 10,000 to Rs 100,000.
According to FPCCI, about 50 percent demand of tyres in the country is met through smuggling as imports with present duty, sales tax and income tax is very expensive. To curb the smuggling of tyres smuggling, the FPCCI recommended that sales tax be reduced to 10 percent on imports as well as local manufacturing. Withholding tax on tyres at import stage be reduced to one percent instead of five percent.
The FPCCI further proposed that sales tax on locally manufactured tyres be reduced from 15 percent to 10 percent. In view of the growth in economy, increase in prices of raw materials, total sales tax revenue collection would be higher than the current levels, it said.
The FPCCI suggested that the retailers'' sales tax threshold be increased from rupees five million to Rs 10 million for sale tax registration purpose. To promote industrialisation and create new jobs, the FPCCI proposed that tariff on capital goods (plant and machinery), not locally manufactured, be fixed at zero percent duty instead of five percent.
The FPCCI suggested zero percent customs duty on all types of generators, its parts and accessories in view of the acute power shortage and load shedding. At present, the customs duty is five percent. The FPCCI recommended zero percent customs duty on spare parts for textile machinery instead of existing five percent. This will reduce the cost of production of textile sector.