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June 9, 2017



FPCCI warns anti-government action if demands not accepted

FPCCI warns anti-government action if demands not accepted

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Thursday warned the government of stern action, including shutdown of manufacturing activities, in case their set of demands is not accepted before approval of budget from the parliament.

Zubair Tufail, president, FPCCI at a news conference presented 11-point demands, which were mainly related to amendments introduced through Finance Bill 2017 to taxation laws.

Tufail said the business community of the entire country, including Pakistan Business Council (PBC), Overseas Investors’ Chamber of Commerce and Industry (OICCI), American Business Council (ABC), All Pakistan Textile Mills Association (Aptma), chambers and associations, demanded that anomalies and harsh measures in the Finance Bill 2017 should be removed. They warned of joint action against the government if their demands were not met.

Tufail said after consultation with the entire business community, the FPCCI had sent the set of demands to the prime minister and finance minister, and asked to address the problems faced by the business community before approval of budget from the national assembly, likely on June 14, 2017.

The business community rejected the budget and said it was prepared by the Federal Board of Revenue (FBR) considering only the interest of revenue collection by ignoring the private sector. “The FBR has deliberately proposed such measures to create a gulf between the government and the private sector,” he added.

Highlighting the 11-point demand of the business community, Tufail said the business community urged the finance minister to honour his promise of paying sales tax refunds, and refund payment orders (RPOs) issued till April 30, 2017, should be released before August 14, 2017.

He said exports had fallen sharply during the past years, and would drop further in the outgoing fiscal year. Tufail said liquidity issues of the exporters were the major reasons behind export fall.

FPCCI president said electricity and gas tariff for the export sector were high compared with the regional markets, making local products uncompetitive in the international markets. The FPCCI demanded 25 percent reduction in tariff of electricity and gas with immediate effect.

FPCCI president said one of the harsh measures announced in the budget was increase in turnover tax. He said the rate of turnover tax was 0.5 percent but the government increased it to one percent. The business community strongly reacted to this increase because this tax was paid by those units, which had already posted annual losses.

“The government increased this tax to 1.25 percent instead of reducing the rate of turnover tax,” he added. The FPCCI on behalf of local as well as foreign corporate entities demanded not to incorporate this increase in the final budget documents.

The FPCCI pointed to the continuation of super tax on corporate sector and high net-worth individuals, and said it should not be implemented in tax year 2018.

Tufail said super tax was introduced in tax year 2016 to generate funds for operation Zarb-e-Azb against terrorist activities in the country. However, in the Finance Bill 2017 it was proposed to continue for third consecutive year.

He said foreign companies had planned their investment, but such taxes had demoralised them. He said the FPCCI rejected the continuation of super tax.

FPCCI president said the business community also rejected two percent further tax on sales to unregistered persons. “It is a burden on registered persons as unregistered persons are not paying and registered persons spend billions of rupees on purchase of flying invoices,” he said.

He said the business community demanded that withholding tax on commercial and industrial imports should be implemented as agreed in the finance committee of National Assembly by FBR chairman and stakeholders.

Tufail said commercial importers should be exempted from sales tax and income tax audits, as they were already liable to pay 17 percent sales tax, three percent value-added tax and six percent income tax in advance at port.

FPCCI president urged the government to continue with the fixed tax regime for builders and developers in the next fiscal year, instead of the proposed normal tax regime for this sector in Finance Bill 2017.  He said the finance bill proposed changes in tax on undistributed profits. As per the proposed amendment, 10 percent tax to be imposed on undistributed after tax profits should be withdrawn.

Regarding raids on taxpayers’ premises, he said FBR officers should not raid any taxpayers’ premises, unless 15 days notice was issued for the payment or a reply by the taxpayer was received by the FBR. “If FBR was not satisfied with the reply, action may be taken after informing the trade association or chairman,” the FPCCI president demanded.

SM Muneer, leader of the business community and former chief executive of Trade Development Authority of Pakistan (TDAP) said the country had no priority for exports. Due to several difficulties Faisalabad -the hub of textile industry – has become a graveyard of industries, he added.

He said all the business associations had rejected the budget, and if the government did not accept the demands, then the FPCCI would have no choice other than supporting the stakeholders’ in their anti-government decision.




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