Budget 2020-21: OICCI urges govt to cut GST from 17% to 13%

ISLAMABAD: The Overseas International Chamber of Commerce and Industries (OICCI) have asked the government to reduce the GST rate from 17 to 13% and bring all incomes, including agriculture, into the tax net for the upcoming budget.

The foreign investors also asked for bringing illicit trade in certain sectors into the tax ambit. On the basis of survey conducted by OICCI amongst its members, losses to the government exchequer due to illicit trade (business in products which are either smuggled, counterfeit, under-invoiced imports, sold by unregistered manufacturer/seller etc) is estimated at Rs200 billion (tobacco alone estimated at Rs 63 billion).

According to budget proposals sent by OICCI to the government, it was stated that synchronisation of sales tax rates and policies need to be harmonised across all jurisdictions and sectors and should be closely aligned with the regional benchmark of 12% sales tax rate.

‘Need to revise Afghan trade agreement’

The OICCI in its recommendations asked for controlling the Afghan Transit Trade Agreement (ATTA). There is a need to revise the ATTA based on current reality protecting the revenue base of Pakistan without hurting the real spirit of such agreements, it said.

They requested the government to engage key stakeholders from OICCI and business community in Pakistan in such re-negotiation and recommended to harmonise duty and tax rates to remove the incentive for evasion and fix quantitative limits for imports.

The OCCI asks for introduction of stringent controls for illicit trade such as tighter penalties (eg criminal liability) for illicit trade across categories across the whole value chain – retailers, distributors and manufacturers and a special division/task force to raid retailers and manufacturers to confiscate and destroy illicit stocks.

Government urged to withdraw excise duty

Customs valuation should be done on modern lines through online search and matching international and regional pricing and taking local legal importers of items on board. The OICCI has urged the government to withdraw Federal Excise Duty (FED) on locally-manufactured cars and reduce withholding tax.

The corporate tax rates for the banking sector should be aligned with other sectors and super tax relief, as granted to other industries, should be given to the banking sector as well. They asked that industry specific exemptions be allowed to the fertilizer sector. The words “in retail packing” to be mentioned with tea in order to clarify that sales tax at retail price is only applicable in case of imported finished tea in retail packing.  They recommended for exempting “milk” from withholding tax whether it is purchased directly from the farmer or through a commission agent.

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