The Lahore Chamber of Commerce and Industry (LCCI) on Wednesday urged the government to put off the implementation of Value-Added Tax (VAT) until and unless a consensus is developed among all the stakeholders, including all the chambers and trade bodies in the country.
The LCCI President Zafar Iqbal Chaudhry, Senior Vice President Faisal Iqbal Sheikh in a joint statement issued here on Wednesday said that there were number of points in the proposed VAT law that need to be amended and in the existing shape it is bound to open floodgates of corruption, besides discouraging any new investment.
They said that abolition of zero-rating facility available to five export-oriented sectors and reverting back to refund regime is beyond the understanding of the business community as it will open the way of corrupt practices to obtain flying invoices and seriously impede cash flow of the companies.
The definition of tax fraud has been extended to cover tax evasion. The provision would be massively abused by tax officials. Similarly, vast powers are proposed to be given to tax officials to determine open market value of goods at their whims, they added.
The LCCI office-bearers said that the section 87 of proposed VAT law was against all norms of justice as it denies a taxpayer of his basic right of justice. The LCCI would not accept the proposed VAT law in its present shape as it has been designed to promote the culture of flying invoices and other prevalent malpractices due to which the law abiding tax payers are suffering a lot and are even paying the taxes of those buyers/sellers who are not paying due taxes and making money, they maintained.
The methodology to introduce an integrated VAT may have serious implications during implementation of a broad-based VAT from next fiscal year, as the government has not taken into confidence the stakeholders. They suggested that each and every trade body including LCCI should be consulted and their views be obtained whether this new proposed draft of the VAT is in conformity with the law of the land or whether it would suit the stakeholders or not.
They requested the authorities concerned that unless and until all the trade bodies and stakeholders agree on the enforcement of VAT Act 2010 it should not be implemented.
The LCCI office-bearers recommended to restore exemption from audit on payment of advance value-added tax at import stage; reduction in record keeping period from six years to three years, curtailing discretionary unlimited powers given to the officials for recovery of amount, adjustment of input tax; retention of carry forward facility, streamlining the process of cancellation and suspension of registration; right to go in legal court of law against the tax official decision. They said that any haste in the enforcement of VAT Act would prove to be counter productive to the trade and industry due to its harsh and irritant measures. -PR