FBR suggested reducing the corporate tax rate for listed companies

0

KARACHI: The Pakistan Business Council (PBC) has suggested to the Federal Board of Revenue (FBR) to reduce corporate tax rates, especially for listed companies.

The PBC, in its proposals for the 2022/2023 budget, recommended a reduction in the corporate tax rate to 20%.

READ MORE: Suggested tax reduction on dividends paid by exempt entities

The council, in its proposals to reduce the cost of doing business in Pakistan, said that all companies except banking companies and companies defined in Section 2 of the Income Tax Ordinance 2001 income, are subject to a tax of 29% on taxable income.

He recommended that the corporate income tax rate be gradually reduced to 20% to bring it into line with the tax rate of other countries in the region.

READ MORE: PBC suggests further tax cuts to stop flying bills

Listed companies should benefit in priority from lower tax rates than other companies in order to further encourage transparency and documentation.

The PBC said that under Section 113C of the Income Tax Ordinance, an Alternative Corporations Tax (ACT) 2001 was imposed on businesses at the rate of 17% on book profits .

READ MORE: Commercial importers abuse tax registration

He recommended that Section 113C be abolished as there is already a minimum goods and services tax

Counsel further stated that currently, under section 154(3B) of the Ordinance, every direct exporter and export house registered under the Remission of Duties and Taxes Rules 2001 Exporters under Chapter XII Sub-Chapter 7 of the Customs Rules 2001 must, at the time of payment of a firm contract to an indirect exporter, deduct 1 per cent tax from the payment made.

READ MORE: FBR urged to massively cut tax rates for filers

“This 1% tax deduction is considered a definitive tax on the income of the indirect exporter. This clause should be extended to all exporters under various programs such as EFS, EOU, etc. to remove differential treatment under various export programs,” he recommended.

The commissioner has been given the power to vary the withholding tax recapture order, so companies would be required to keep records and details for an indefinite period. Failure to provide these documents could be used as a tool by tax authorities to create improper tax demands in order to achieve their revenue goals.

READ MORE: FBR urged to make Google pin location must-have for retailers

Subsection (3) of Section 161 should be omitted to avoid retention of records for an unlimited period. The limitation of the period provided by law for initiating and concluding the control of withholding tax procedures, such as those for non-control procedures, which is also important for harmonization.

Section 15A(1)(h) of the Income Tax Order 2001. In accordance with the 2020 finance law, the deductibility of administrative recovery costs has been limited to 4% of revenue, compared to 6% previously.

Rental of property is also a commercial activity and involves various administrative and collection costs which normally exceed even the 6 per cent threshold.

The allowable threshold should be allowed on an actual basis, as is the case for other sources of income, or at the very least be restored to 6% of gross rental income.

Share.

Comments are closed.