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PR-/101
Shabaan 23, 1441 A.H.
April 17, 2020

KCCI PRESENTS BUDGET PROPOSALS IN MEETING WITH FBR

KARACHI: A meeting was held on 16 April’2020 between the Karachi Chamber of Commerce and Industry and the Federal Board of Revenue to discuss the proposals of KCCI for the Federal Budget 2020-21. Siraj Kassam Teli, Chairman-Businessmen Group and Former President KCCI led the KCCI team which included Agha Shahab Ahmed Khan, President-KCCI and Ibrahim Kasumbi, Former SVP and Convener-Budget Standing Committee. The FBR team was headed by Nausheen Javaid Amjad, Chairperson-FBR and participated by Dr. Hamid Ateeq Sarwar Member-IR Policy, Muhammad Javed Ghani, Member-Customs-Policy & Operations, Mohiyuddin Alwi, Chief Secretary, Sales Tax Policy, Mohd. Ali Khan, Secretary-Sales Tax Policy. At the outset Siraj Kassam Teli presented his felicitations to Nausheen Javaid Amjad for assuming the charge as Chairperson-FBR in these difficult times and wished her success in the discharge of her new responsibilities. In his address, Siraj Teli stated that entire global community including Pakistan are going through a major economic crisis and recession due to the widespread Covid-19 pandemic. He added that the world around us has changed forever and we are living under a new world order with massive challenges. In these extra-ordinary times, government has to take extra ordinary measures to support trade and industry to ensure their survival so that they can stand on their feet again. Today the primary concern should be survival of economy and not just the revenues.He said that the impact of this crisis is particularly severe for economies like Pakistan which are already burdened with debt. Trade and Industry in Pakistan is unable to cope with the financial impact of lockdowns to control the pandemic and many businesses are facing bankruptcies. Therefore, the government should focus on extending support to the trade and industry to ensure their survival. Siraj Teli proposed four immediate measures that government should take which include

1) Basic Policy rates should be brought down by SBP from current 11.25% to 4% across the board.

2) Rates of Utilities including Gas, Electricity and Water should be reduced by 50 percent.

3) Rates of Petroleum Products may be reduced by 50 percent and

4) Rates of Sales Tax, Income Tax/WHT and FED be brought down to half of current rates.

He added that these measures may be implemented for at least six months and may be reviewed when the current crisis and pandemic come to an end. Siraj Teli apprised the Member-IR Policy that there are still snags in the refund process and these should be expedited so that the liquidity problems faced by the industry may be alleviated. Dr. Hamid Ateeq Sarwar assured that the process of refund is being streamlined and cheques of duty drawbacks will be directly delivered to the exporters, and where possible refunds will also be credited directly to their accounts. He requested the Member IR-Policy to direct the customs officials to expedite clearance of import cargoes as the cabinet has already approved the waiver of demurrage on these consignments which are lying at the port and not cleared due to accrued demurrage charges which have now been waived for 15 days from the date of landing. Responding to the views expressed by Siraj Teli, Nausheen Javid Amjad, Chairperson-FBR, welcomed the KCCI team in the online meeting led by Siraj Kassam Teli. She expressed her gratitude to the Chairman-BMG for his felicitations and appreciated the KCCI and business community of Karachi for their contribution to the national exchequer. She agreed to the views expressed by Chairman-BMG and assured him of her support for resolution of outstanding issues related to taxation and anomalies. She agreed that in the current changed economic scenario impacted by Covid-19, the taxation policies and upcoming Federal Budget will have to be formulated to help the trade and industry to deal with new challenges. In his remarks, Agha Shahab Ahmed Khan, President-KCCI thanked the Chairperson-FBR Nausheen Javaid Amjad and the FBR team for taking out the time to have a meeting with KCCI team to discuss the budget proposals. President KCCI said that the dynamics of business will change drastically in the near future due to the changed global scenario and adverse effects of Covid-19. It is no more feasible to operate within the established policy framework and out-of-box thinking and solutions are required. Initiating the discussion on KCCI’s budget proposals Ibrahim Kasumbi, took up the issues related to Sales Tax, Income Tax, Customs and FED, besides the major anomalies and discretionary powers that exist in the tax regime. Dr. Hamid Ateeq Sarwar, Member-IR Policy gave his comments and apprised of the actions to be taken by FBR with regard to each proposal, which are stated here:

- KCCI proposed to withdraw 3% Further Tax on local sales to unregistered buyers, which initially was 1% imposed through Finance Act’2013. Member-FBR IR Policy stated that proposal is under consideration to reduce the rate to 1% instead of 3% in the FY 2020-21 and zero percent in the next fiscal year. Moreover, KCCI had proposed that where the CNIC number is provided by supplier for sales to unregistered persons, 3% Further Tax should not be charged. Member-IR Policy endorsed the proposal and said that the rate of 3% Further Tax will be reduced to 1% in FY 2020-21 and will be phased out next year.

-He said that subject to provision of detailed data regarding Paper Converter Industry, the FBR will consider to reduce the Value Addition Tax from 10% to 5% of the basic Sales Tax.

-While the KCCI had proposed reduction in Sales Tax from 17% to Single digit. Member IR-Policy agreed that FBR will review the rate and recommend to rationalize the same in the budget 2020-21. He further added that other relief measures in Sales Tax and other levies are under consideration during the prevailing crisis situation due to Covid-19, which are outside the scope of Federal Budget 2020-21. These relief measures will be revisited in January’2021 again and decisions will be made in accordance with the situation at that time. He said that the proposals forwarded to the Prime Minister by Siraj Kassam Teli, Chairman BMG are also being taken into consideration while working on the relief packages.

-Member IR-Policy apprised the KCCI team that the system is being automated and rules are being amended to allow the registered persons to revise the Sales Tax Return online and rectify clerical errors under Rule. 14a without the need to get prior approval from Commissioner-Inland Revenue, in response to the proposal submitted by KCCI.