Finance Minister Dr Abdul Hafeez Shaikh assured foreign investors that no new taxes would be imposed in the next budget. Dr Shaikh made the statement on his visit to Overseas Investors Chamber of Industry (OICCI). Dr Shaikh was accompanied by Ministry of Finance Secretary Abdul Wajid Rana, Federal Board of Revenue Chairman Mumtaz Haider Rizvi, Member Inland Revenue Shahid Hussain Asad and other senior FBR officials.
Talking to OICCI members, Hafeez Shaikh highlighted that after the NFC award, there had been a significant reduction in the federal government's revenue share without a corresponding reduction in debt servicing or other necessary expenditure on defence, security and ongoing projects, adding that he now expected provinces to take a lead on new development projects.
Shaikh pointed out that despite the global meltdown and challenging business environment, Pakistan's 3.7 percent GDP growth during fiscal year 2011-12 was comparable to growth rates across the region, excluding those in China and India. Further, he pointed out that FBR had also been successful in generating 17 percent additional federal revenues in 2010-11 that were expected to scale up further to 25 percent in the current fiscal. In his briefing to the Minister, OICCI President Humayun Bashir outlined the contribution of its membership in spurring economic growth by enhancing employment opportunities and taxes. "Some 45 percent of OICCI members invested about one billion dollars in 2011 and plan to invest more than three billion dollars over the next two to five years," he added.
Bashir underscored that those numbers could be increased considerably if the government addressed key concerns such as security, energy shortage and ensure effective policy implementation. OICCI members raised important issues concerning the taxation structure in light of the upcoming budget, including loss of revenue accruing from the tax exempt sector and evasion in the form of rampant smuggling of consumer goods, especially under the garb of Afghan Transit Trade.
Other taxation proposals forwarded to the government by OICCI focused on broadening of tax net through linkages of FBR databases with banks and other business centres, doing away with minimum tax and fixed tax regimes for companies, introducing a uniform tax rate of 30 percent for all businesses irrespective of their legal status, giving a one-time tax incentive for attracting Foreign Direct Investment, simplifying procedures for sales tax refund, allowing adjustments of sales tax on pharmaceutical inputs and reduction and consolidation of different levies such as stamp duty. Dr Shaikh appreciat ed the suggestions which, he said, would be given due consideration in the run-up to the budget.
The oldest trade body in the country, OICCI represents 187 foreign companies operating in Pakistan, many of which began operations over 60 years ago. Of these, 100 companies collectively contributed over Rs 300 billion to the national exchequer in 2010. OICCI also has a representative and advocacy role and liaises with government, regulatory bodies and policy makers.-PR