Lahore Chamber of Commerce and Industry (LCCI) has urged the government to avoid imposing new taxes in the federal budget and resolve the issue of withholding tax for the economic uplift of the country. LCCI President Sheikh Muhammad Arshad while talking to a delegation of various markets, led by Khalid Pervez on Tuesday asked the government to simplify the taxation system and resolve the issue of double taxation.
He also asked for taking notice of the undue interference of government departments in business activities. He said that ongoing projects under CPEC have direct relation with the economic development and urged the government to ensure that concerned Chinese investors and companies engaged in CPEC must consider the indigenously produced inputs from Pakistan except those goods which are not produced locally.
Pakistan lacks culture of tax compliance due to unfair taxation system. The business community has been demanding of the elimination of harmful taxation that hinders business and trade. "We want broad based reforms in taxation system with the consultation of private sector. Withholding tax regime needs to be reviewed and withholding agents should be given certain incentives," he added.
Sheikh Arshad said that business community has serious concerns upon the selection criteria of cases for tax audits. The selection of audit should be made on the basis of parameters by FBR through random balloting rather than allowing the concerned commissioners to use their discretionary powers, he said.
"We have serious reservations with regard to current performance of the FBR for disbursing refund cases sales tax and income tax," he added. The exporters are suffering shortage of working capital therefore all the backlog of refunds should be cleared within two months upon the filing of return. Similarly banking bonds may be issued for large amount of refunds withheld since years, he maintained.
"The withholding tax is advance tax but FBR treats the same as its collection. The annual budget of field formations should be on the gross collection basis rather net collection. The federal and provincial sales tax authorities should agree on constitution of fully empowered National Tax Commission to bring in harmony in the sales tax laws dealing with services. There must be harmonisation in federal and provincial tax regime to counter double taxation and harassment by the provincial tax authorities," he said. Speaking on the occasion, Khalid Pervez demanded of the government to withdraw withholding tax on banking transactions immediately as it is not only forced the business community to avoid banking transactions but also causing huge damage to the banking sector.