Karachi, August 06, 2015 (PPI-OT): Chairman of Sindh Revenue Board (SRB), Tashfeen Khalid Niaz, while responding to the concerns raised over the imposition of 14 percent Sales Tax on services of indenters, advised the Karachi Chamber of Commerce and Industry (KCCI) to form a committee to review the imposition of Services Sales Tax on indenters and analyze whether it was rational or not. Keeping in view the multiplicity and seriousness of the issue, KCCI should form a committee to further discuss the imposition of Sales Tax on services of indenters and seek solution in the next meeting to be held at SRB Office, he added while exchanging views during visit to the Karachi Chamber.
Advisor Tax Policy SRB Syed Mushtaq Kazimi, Vice Chairman Businessmen Group and Former President KCCI, Anjum Nisar, President KCCI Iftikhar Ahmed Vohra, Senior Vice President KCCI Muhammad Ibrahim Kasumbi, Former Presidents KCCI AQ Khalil, Khalid Firoz and Shamim Ahmed Shamsi, Chairman Provincial Taxes Sub-Committee KCCI Nasir Maqbool along with KCCI Managing Committee members and many indenters were present at the meeting.
On the occasion, President KCCI Iftikhar Ahmed Vohra immediately announced to form a three-member committee to be led by either by President KCCI or by Senior Vice President KCCI Muhammad Ibrahim Kasumbi which will also comprise of Vice Chairman BMG Anjum Nisar and Former President KCCI Khalid Firoz. Tashfeen Khalid stated that although they can discuss the issue of sales tax on services of indenters and accordingly give suggestions to Sindh government but the final decision, in this regard, can only be taken by Chief Minister Sindh.
Commenting on concerns expressed by the meeting participants over the issuance of SRB notices to indenters, SRB Chairman said that any suitable reply be sent in response to these notices whereas the SRB Officials will be asked not to act against any indenter until the next meeting between the KCCI committee and SRB thoroughly discuss this matter and come up with a solution.
SRB Tax Policy Advisor, Syed Mushtaq Kazimi, while underscoring the need to ensure stakeholders’ participation in the decision-making process, informed that it has always been SRB’s intention to development better understanding and coordination with the representatives of business and industrial community. Keeping this in mind, SRB recommended to incorporate a representative of Karachi Chamber in the SRB Advisory Council which has been duly approved by the Chief Minister Sindh and the relevant notification of the same will be issued soon.
He informed that a revenue collection target of Rs61 billion has been set by SRB for fiscal year 2015-16 against Rs49 billion achieved 2014-15. He said that SRB was not the only authority which has imposed Sales Tax on services of indenters as similar sales tax on services of indenters was imposed last year in Punjab and it has also been imposed on the indenters of Islamabad Capital Territory. “14 percent Sales tax on services of indenters in Sindh province is the lowest whereas in Punjab and Islamabad, it stood at 16 percent”, he added.
Vice Chairman Businessmen Group and Former President KCCI Anjum Nisar, while appreciating the role being played by SRB toward enhancing the revenue collection of Sindh, advised Chairman SRB to take all stakeholders on board in the policymaking process and consult with KCCI representatives prior to imposing such taxes. Speaking on the occasion, President KCCI Iftikhar Ahmed Vohra urged the SRB to immediately withdraw this unjust sales tax on services of indenters who were already facing stiff competition and finding it very hard to stay afloat.
He was of the view that it was not a wise move to impose an additional 14 percent Sales Tax on services of indenters who were already paying 5 percent withholding tax to federal government and playing an important role in earning foreign exchange for the country. Commenting on the issue of 0.3 percent withholding tax on bank transactions, he said that representatives of Karachi Chamber have been regularly attending various meetings from time to time in Islamabad in order to give their suggestions and look for feasible solution to this issue.
He was of the view that the government should have taken the business and industrial community onboard prior to imposing such a decision, which resulted in sheer waste of time, created a conflicting situation and was likely to affect the economy. Senior Vice President KCCI Muhammad Ibrahim Kasumbi, on the occasion, stated that although Karachi city has been contributing more than 65 percent revenue to the national exchequer but unfortunately, it continues to face many issues due dilapidated infrastructure.
“Not just Karachi but the entire Sindh province needs to be developed for the progress and prosperity of the entire country”, he added. He was of the view that the business and industrial community of Karachi, besides facing infrastructure issue, were also suffering badly due to many other civic issues, exorbitant taxes, gas, electricity and water shortages along with rising cost of doing business which were hindering industrialization in this region as no new industry was being established due to these serious issues.
Instead of overburdening and squeezing the existing taxpayers, the government should focus on enhancing the overall tax base of Pakistan which was less than one percent whereas it stood at 6 percent in India, Ibrahim Kasumbi said, adding that taxes should be imposed in a fair and rational manner. Former President KCCI AQ Khalil, on the occasion, pointed that the indenting business was not as lucrative as it was in the past due to stiff competition and changing dynamics because of the advanced use of web services and IT based technologies.
Many indenters are finding it very hard to survive due to shrinking income and the imposition of sales tax on services of indenters will leave no other option for them but to either shut down or shift their businesses to any other province or country, he added. He further requested the SRB Chairman to put SRB notices issued to indenters on hold until they come up with a feasible and mutually acceptable solution to this issue. Former President KCCI Khalid Firoz, while highlighting the numerous problems, stated that the services of indenters were being rendered outside Pakistan so they were not taxable.
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