Unilever Pakistan Limited has proposed to the ministry of finance to implement electronic invoicing mechanism in budget (2015-16) and a rebate of five percent given to companies as incentive to issue invoices electronically. According to the budget proposals of the company for 2015-16, to curb the menace of flying invoices and inadmissible claims of input tax, electronic invoicing should be encouraged and a rebate of five percent should be given to companies as incentive to issue invoices electronically. This will create transparency.
Unilever has been operating in Pakistan since 1948 and this makes it one of the Longest serving MNCs here. It regularly features amongst the largest contributors to the national exchequer through direct and indirect taxes. With four factories, seven 3P manufacturing facilities, 2,000 people on payroll, 8,000 as distributor and value chain partners' employment and 30 brands in Home Care, Personal Care, Foods and Refreshments, we are committed to Pakistan's economic development and to raising the standard of living of millions of Pakistanis.
To promote greater transparency, level playing field for the formal and the informal sectors to curb misuse of provisions and boost tax revenues for the upcoming Finance Bill we propose the following:
Afghan Transit Treaty: Misuse of the Afghanistan and Pakistan Transit Trade Agreement (APTTA) is a major concern for the organised sector. Non-duty paid goods are brought into the country in the garb of APTTA. Since long, the organised sector has been proposing solutions to overcome this menace. Our tea business is particularly impacted; as a result of the misuse, one-third to half the tea consumed in Pakistan evades duty and GST. We suggest that either black tea (which Afghanis do not drink-they prefer green tea) should be placed on the negative list or like some other land locked countries, a three tier model to minimise the misuse of APTTA be agreed with Afghanistan. This would involve (1) agreeing quantitative limits based on genuine Afghan needs and size of its population; (2) harmonising duty and tax rates to remove the incentive to evade and (3) establishing a basis of collecting such duties and taxes at the point of entry into Pakistan for the account of the Afghanistan Government. It is relevant to note that most of the evaders are traders in Pakistan, based in markets such as Jodia Bazar in Karachi.
Pilot of GST in non-VAT mode: The basic rate of GST is 17 percent; nevertheless the net revenue collection of FBR is still below 4 percent. Further, there exist distortions in the form of exemptions, zero rating and retail tax regime. These create hardships not only for the regulatory authorities in collection but also for the taxpayers in obtaining timely refunds. Hence, to simplify the process and curb false refunds, we suggest sales tax be levied in a non-VAT mode wherein the rate should be 4% max without any adjustment of input tax. As this may be too radical to be applied across the board, we suggest it be piloted in a few sectors like Tea. Another benefit of this would be reduction in consumer price of what is an essential everyday item of consumption of the masses, it added.