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Industry players urge govt to revoke super tax in budget

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1 year ago

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  • OICCI recommends capping the corporate tax rate at 29%.
  • It says general rate for minimum tax should be reduced to 0.25%.
  • Body says annual income of up to Rs1.2 million be tax-free.

ISLAMABAD: Overseas Investors Chambers of Commerce and Industries (OICCI) has asked the government to abolish super tax and bring trade, services, real estate and agriculture sectors into the tax net in line with their share in the economy. 

The OICCI presented its taxation proposals for the 2023-24 budget to the Minister of Finance Ishaq Dar. 

The body recommended the abolishment of super tax for all sectors and capping the corporate tax rate at 29%. It suggested that no further increase in the effective tax rate should be made as it is already greater than the regional competitive rates. 

The general rate for minimum tax should be reduced to 0.25% and carry forward of minimum tax credit be allowed for at least five years prior to 2022, recommended by the OICCI. 

The overseas chamber also recommended the simplification of the withholding tax regime, with existing 200 different tax rates for 24 withholding tax sections, to make it more convenient and business-friendly. 

Given the very high inflation impact on the low-income group, the OICCI has also recommended that the annual income of up to Rs1.2 million be tax-free as compared to the current Rs0.6 million annually.

“The economy is currently under stress and the gross domestic product (GDP) growth forecast including for large-scale industries for the immediate near term is negative to marginally positive, which along with super high inflation and interest rates and fast weakening currency, has the potential to substantially dent the profitability of tax paying sectors next year,” said OICCI President Amir Paracha. 

The body stressed the urgency for broadening the tax base to boost revenue collection according to the proportionate share of each sector of the economy, especially trade, services, real estate and agriculture. 

It has been estimated that with dedicated efforts to collect revenue from all segments of the economy, the tax-to-GDP ratio can be increased to 16% from less than 10% current rate.

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Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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Business

SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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