Government urged to consider recommendations of industry bodies

The Overseas Investors Chamber of Commerce and Industry (OICCI) and the Pakistan Business Council (PBC) have jointly appealed to the government, urging them to eliminate the super tax imposed on large-scale industries and take steps to expand the tax base in order to enhance revenue collection.

In its budget proposals for the fiscal year 2023-24, the OICCI emphasized the need to abolish the super tax, citing its adverse effects on business profitability. Additionally, the OICCI proposed capping the corporate tax rate at 29% and reducing the minimum tax rate to 0.25%.

Similarly, the PBC, in its budget recommendations, emphasized the importance of broadening the tax base by bringing more individuals and businesses into the tax net. The council also stressed the need for simplifying tax laws to facilitate businesses in complying with tax regulations.

Both industry bodies contend that implementing these measures would not only bolster revenue collection and reduce the budget deficit but also promote fair competition among businesses and foster economic growth.

Background Information:

In the fiscal year 2022-23, the Pakistani government imposed a 10% super tax on large-scale industries as a means to generate revenue for its spending plans.

Criticism against the super tax has been voiced by businesses and industry bodies, asserting that it adversely affects business profitability and deters investment.

The government has defended the imposition of the super tax, stating its necessity for financing its spending plans, while assuring that it is a temporary measure that will be removed once the economy recovers.

Impact of the Super Tax:

The super tax has had a detrimental impact on business profitability. According to a survey conducted by the OICCI, it has resulted in an average reduction of 15% in business profitability.

Moreover, the super tax has discouraged investment. A survey by the PBC revealed that 60% of businesses expressed decreased inclination to invest in Pakistan due to the existence of the super tax.

Recommendations of Industry Bodies:

The OICCI and the PBC have put forth recommendations urging the government to eliminate the super tax and expand the tax base. Additionally, they have suggested simplifying tax laws to facilitate compliance for businesses.

The government has expressed its willingness to consider the recommendations presented by these industry bodies.