FEBR welcomes tax exemptions in budget amidst post-corona slowdown
The Friends of Business and Economic Reforms has welcomed the reduction of customs duties on 40 raw materials of various industries, besides lowering the duty on 90 tariff lines from 11 percent to 3 percent in the federal budget 2020-21.
He, however, called for immediate rectification of anomalies in the federal budget in due consultation with the real stakeholders including all major trade bodies. He observed that the FEBR was expecting withdrawal of discretionary powers of FBR officials which have been the major hurdles in tax net improvement. By enhancing discretionary powers of the tax officials another flood gate of corruption has been opened besides creating troubles towards documentation of economy, he added.
In a statement issued in Lahore on Saturday, he noted that the government has reduced federal excise duty on cement from Rs2 per kg to Rs1.75 per kg, which will reduce the price of cement and boost construction activities. He also appreciated the government decision to not impose any additional taxes in the budget.
He said that income tax relief measures and deletion of Withholding Taxes will augment efforts towards simplification of the withholding tax regime. This measure would reduce the cost of the compliance of taxpayers, besides promoting ease of doing business.
“Enhancement of threshold for becoming prescribed person for Withholding of Tax on Supplies, Services and Contracts from fifty to hundred million rupees and a similar threshold of hundred million rupees was prescribed for a sales tax registered person to become a withholding agent.
He said that reduction in Holding Period and Tax Rates for Capital Gain on Immoveable Property to incentivize and propel economic activity in the real estate sector, the bifurcation of plots and constructed property for determining holding period of capital gains was done away with. In addition, rates were also reduced on capital gains emanating from disposal of immoveable property.
“We welcome that no new tax has been imposed, but the revenue target in the budget has been set at Rs4,963 billion. This is impractical and does not reflect the ground realities. We demand that the government must review its revenue targets, he maintained. He said that the whole business community unanimously had proposed to reduce the sales tax from 17pc to 5pc, which was not reflected in the budget. He said that the exemption of customs’ duties on the import of raw materials and machinery are laudable measures taken by the government.
FEBR understands that Pakistan’s Economy is going through a challenging phase due to the outbreak of global COVID-19 pandemic. The trade and industry are facing huge financial losses due to the current emergency situation as no business activity is going on in the country. However, the government took extraordinary decisions to appease this crisis.
He said the agriculture sector is targeted to grow by 2.8 percent and there is dire need to enhance this growth to its maximum size as Pakistan cannot progress without a developed agricultural sector.
Kashif Anwar also appreciated the government’s decision to allocate Rs 200 billion as subsidy to the Power Sector. However, he said that the exorbitant rise in energy rates has increased the cost of business for industry, which should be reduced to 7.5 cents/kwh through elimination of taxes, in line with the recent decline in global oil prices.