Karachi Chamber of Commerce and Industry (KCCI) President Mohammad Saeed Shafiq has urged the government to set up industrial zones for manufacturing and cottage industries to encourage new businesses. In a communication to the government, Shafiq said that the soaring prices of land, increasing cost of utilities, higher taxes and high cost of raw materials have resulted in the flight of capital to other countries offering attractive incentives for investment.
He suggested that to overcome these issues, taxes other than GST and Income Tax, be phased out. The KCCI President recommended that a single national tariff authority should be formed to regulate the tariffs of shipping companies/freight forwarders, KPT and private terminal operators and the tariffs should be uniform like other regional countries.
He noted that exemption from taxes and duties creates distortion, discrimination and promotes SRO culture. He proposed that the concept of tax credit, in place of exemption, be introduced in tax policy and SRO culture be abolished. The KCCI President pointed out that a person being a manufacturer importing raw materials, was exempted from withholding tax u/s 148(4a) if the commissioner is satisfied that no tax is payable on account of brought forward losses, which had now been withdrawn under Finance Act, 2008.
He said a manufacturer who is not obliged to pay any tax on the basis of taxable loss or brought forward losses, he has to bear extra financial cost for tax u/s 148 @ 5 percent and then has to face cumbersome and complex process for getting refunds. He suggested that refund be allowed to tax paid u/s 148 on import stage by those who are not liable to pay any tax due to their brought forward taxable losses and unabsorbed depreciation.
For this purpose, he recommended that the tax payers must be allowed to file application of refund on a quarterly basis as they file advance tax statements or own estimate of income u/s 147 and their application must be processed and finalised within a month. He said that benefits to investors would facilitate and motivate the manufacturing industry, which was badly affected by economic recession.