Haroon Akhtar, Special Advisor for Revenue to the Prime Minister, expressed appreciation on the detailed Overseas Investor Chamber of Commerce and Industry (OICCI) taxation proposals for the 2016-17 Federal Budget, which are supported by research, giving pertinent comparative regional practices and are focused on promoting FDI in the country.
In an over two hours interactive session with leading foreign investors in Pakistan, Haroon Akhter, during his visit to the OCCI on Friday, accompanied by FBR Member Tax Policy Rehmatullah Wazeer, CC LTU Karachi Syed Ayaz Mahmood and CC Customs Shaikh Rasheed to discuss the OICCI Taxation Proposals, highlighted the key achievements of the government since 2013 and mentioned that the good policies of the government has resulted in "improvement in the country's overall security environment, especially in Karachi and Baluchistan, reduction in the level of power and gas load shedding, lowering of inflation, reduction in bank borrowing rates, reduced fiscal deficit, GDP growth going up from 2-3 percent to beyond 4.5 percent for the first time in many years, comfortable foreign exchange reserves, robust performance of PSE index besides improvement in international economic ratings of the country".
Haroon Akhter was confident that the vastly improved macro-economic parameters provide a launching pad for growth oriented economic policies in the upcoming budget. OICCI President Shahab Rizvi highlighted salient features of the OICCI Taxation Proposals which are focused on boosting economic and employment growth opportunities and recommend that the a) tax policies need to facilitate rapid economic growth of about 7 percent annually, and help attract large investment especially FDI, b) measures to broaden the tax base, increase in revenue collection and improvement in the taxation structure to realise the true economic potential of Pakistan, c) at least 10 years protection of tax policies, impacting investors, as investors base their plans on policies which are consistent and predictable over a reasonable timeframe, and that d) there is need to facilitate and make it easy to be a tax payer-thereby improving Pakistan's rating in the World Bank's Ease of Doing Business rating.
Shahab Rizvi strongly emphasised on the need to improve policy implementation especially in taxation matters with the focus on predictability, consistency and transparency in government actions so as to attract new investment in the country.
Presenting the details of OICCI taxation proposals, Abdul Aleem, Secretary General OICCI, referred to some of the specific recommendation including the need to reduce Corporate income tax and Sales Tax rates and to bring them in line with regional practices, settlement of all pending tax refunds within a reasonable time of one to two months, revamping and rationalisation of the minimum tax regime (MTR) and Withholding Tax Regime and emphasised that more importantly the government should substantially improve the incentives on new investment given under section 65 of the IT Ordinance with longer timelines to make the investment returns attractive.
He also mentioned that lack of effective co-ordination between Federal and Provincial revenue and other regulatory authorities has negatively impacted foreign investors. FBR Member Tax Policy Rehmatullah Wazeer appreciated the OICCI taxation proposals and promised that all the recommendations will be evaluated and some of the key FDI related measures like extending the timelines of some of the incentive schemes under section 65 of the IT ordinance and giving additional credits for electronic invoicing will be given priority.
Haroon Akhtar, commenting on the major points of the OICCI Taxation Proposals informed that the government was aggressively pursuing initiatives to broaden the tax base and warned the tax evaders that the FBR is now very well equipped with data and skill to catch tax evasion.
He was confident that it is only a matter of time that the tax evaders, including those not paying duty on cigarette and other products, will be caught and punished severely. He also referred to the recent Voluntary Tax Compliance Scheme (VTCS) and mentioned that it was part of the tax broadening process. He informed that last year concessions worth Rs 221 billion given through SROs were withdrawn and another Rs 120 billion will be withdrawn in the 2016-17 Budget.
Special Assistant to PM mentioned that FBR IT infrastructure is undergoing substantial improvement which will not only connect various available data bases to identify new tax payers but also address operational issues of taxpayers. Haroon Akhter found the Tax Reform Commission report to be of high quality and informed that he is chairing a committee to monitor its implementation on a priority basis.
Haroon Akhter further informed the participants that the entire government machinery, including the Prime Minister of Pakistan are focused on increasing the level of FDI into the country as per Pakistan's economic potential and said that the CPEC project investment of US $46 billion, out of which US $36 billion relates to energy projects, will be a game changer for the Pakistan economy and the people of Pakistan. OICCI President Shahab Rizvi profoundly thanked the Special Advisor for considering all the key points of the OICCI Taxation Proposals and his promise to review all the recommendations.-PR