ISLAMABAD: President Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Mian Nasir Hayat Magoon, has stated that pre-budget withdrawal of exemption will badly hit the ease of doing business in the country.
He was referring to the Tax Laws (Second Amendment) Ordinance, 2021 of March 24, 2021. He showed his concern on amendments before budget and said that FPCCI has already suggested that the amendment should be made only with prior consultations with, to be affected stakeholders with sufficient time space to prepare the future plan of the left out period up to June-2021. The outcome of consultations of both public and private sector may have otherwise trimmed the contents of the ordinance in the business economy interest, equally important for government in terms of goodwill and believe in consultations with private sector.
He further said that the business sector is already facing tight restrictions as per IMF programme conditionality, much being agreed amongst stakeholders as originating implementation directions concurred by public sector without any reference to the negotiations with private sector. The amendments were introduced through the Tax Laws Amendment Ordinance, 2021 issued through presidential Ordinance to amend 76 corporate income tax exemptions and allow tax credit facility from March 24, 2021. The tax credit facility has been extended to industrial undertakings; charitable organisations and IT export services. Under the Ordinance, 100 percent tax credit would be allowed to the IT services or IT-enabled services after fulfilment of certain conditions including the filing of returns/withholding tax statements.
President FPCCI further stated that withdrawal of exemptions in lieu of extending credit facilities is a measure which gauges the poor performance of FBR up till now and hence the collection targets are finding the only priority and it appears that FBR is running on a bad doctrine that more tax collection will improve the growth of economy, to which we disagree in absolute terms.
“We are not following the successful tax models which are based on reducing the tax rates and extending the facilities to be affecting the increase in tax collections, rightly agreed by the apex body that Laffer curve will result in maximum tax revenue for government by cutting taxes in certain circumstances that would allow governments to cut the taxes and simultaneously increase revenue and economic growth,” he added.
According to President FPCCI, under the prevalent difficult condition of Covid-19, the pre-budget withdrawal of number of exemptions will affect trade and industry negatively, which is based on planning of fiscal based promised position for year up to June-2021. Such non predictability is against the sustainable growth of business economy and encroaches upon ease of doing business.
Copyright Business Recorder, 2021