Positive government policies and efforts help increase revenue collections/tax net
The persistent efforts supported by facilitating policies of the government enabled the tax collecting agencies to achieve and surpass the revenue targets as a result more than 20% increase in financial year 2016-17.
According to official figures the provisional collection figures, FBR has made a net collection of Rs 3112 billion for the year ended 30th June 2016 as against Rs 2,589 billion collected in the year ending on 30th June 2015 thereby registering a 20% increase over the last year.
The Federal Board of Revenue collected Rs 1,217 billion as Income Tax showing a growth of 18% over the last year, the collection of Sales Tax in this period was Rs 1,357 billion with a growth of 19%, Rs 401 billion were collected under the head of Customs duty thereby giving an increase of over 30% as compared with the last year and Federal Excise Duty to the tune of Rs 192 was collected thus reflecting an increase of 11% over the collection for the last year.
After deducting the cash refund of Rs 54 billion disbursed during the period the net collection of Rs 3,112 billion against the assigned target of Rs 31,104 billion was recorded.
The above figures clearly show that FBR achieved its assigned revenue targets through its own efforts and from streamlining the collection of taxes and duties that fall in the purview of FBR and no non-tax revenues were accounted for by the FBR to improve its revenue figures.
TAXATION PROPOSALS FOR SINDH BUDGET
The private sector and the overseas investors have also suggested some valid points for further improvement in revenue collections. In this respect the Overseas Investors Chamber of Commerce and Industry (OICCI) submitted comprehensive “Taxation Proposals” for the upcoming 2017-18 Sindh Budget as these proposals are focused on accelerating economic growth and FDI inflow in the province and the country.
According to OICCI President Khalid Mansoor OICCI Members highly appreciate the action of the Sindh Government for reducing the rate of Sales Tax on services, from 15 percent to 13 percent, in the last two years. He added that “OICCI Members have noted that despite the reduction, the Sindh Government through Sindh Revenue Board was able to increase its Tax collection on services by 21 percent in the first six months of the fiscal year 2016-17 as compared to the corresponding period in 2015-16, highlighting the fact that lower tax rates lead to higher collections”.
He recommended that in the forthcoming Sindh Budget the agricultural income should be taxed on actual, and not notional income, including rent income of absentee landlords. (ii) Sales tax rate on services in Sindh should be further reduced from 13 percent to 10 percent over the next three years for registered entities. (iii) Telephone usage sales tax rate of 18 percent, should be made equivalent to GST rate on services.
Services of pharmaceutical industry and exports by registered persons should be zero rated. Stamp Duty on Purchase Orders should be eliminated as it is a tax on ‘instrument’ and not on a transaction.
The OICCI Taxation Proposals for Sindh also include recommendations for a better co-ordination between all Sales Tax authorities in Sindh, Punjab, KPK and Balochistan and with FBR, a uniform definition of taxation of services and jurisdiction be agreed to facilitate the tax payers and both life insurance and health insurance, which do not fall within the scope of definition of service, should be permanently included in the list of exempted services as is the case in Punjab province.
PUNJAB BUDGET 2017-18
The Overseas Investors under the flagship of OICCI have submitted comprehensive “Taxation Proposals” for the upcoming 2017-18 Punjab Budget representing the collective recommendations of foreign investors.
OICCI President Khalid Mansoor appreciating the efforts and facilitation to the tax payers by the Punjab government and said “OICCI Members commend the initiative being taken by the Punjab Government and Punjab Revenue Authority in broadening the reach of its coverage to 45,000 registered taxpayers already and its active engagement in building a conducive private public partnership among the key stakeholders”. It is desirable, President OICCI further said “that Punjab Government give a serious consideration to our taxation proposals which eventually will be a win-win for the province, the country and the tax payers”.
The OICCI’s specific recommendations for inclusion in 2017-18 Punjab Budget include, Punjab sales tax rates which is 16% on services should be reduced in 2017 budget at parity with Sindh sales tax rate of 13% and gradually reduced to 10% over the next three years, Agricultural Income should be taxed on actual, and not notional income, including rent income of absentee landlords. This has also been OICCI recommendation for other provinces in Pakistan as well. Telephone usage sales tax rate of 19.5% percent, should be made equivalent to GST rate on services, Input Adjustment on Franchise Fee should be allowed to manufacturers, and this is also allowed in other provinces, Input tax paid by pharmaceutical industry and export of services by registered persons should be zero rated.
The OICCI Taxation Proposals for Punjab also include recommendations for a better co-ordination between all Sales Tax authorities in Punjab, Sindh, KPK and Balochistan and with FBR, a uniform definition of taxation of services and jurisdiction be agreed to facilitate the tax payers, and input of sales tax should be allowed as whole and not for the assets exclusively used in a province. Furthermore Federal and Provincial Governments should urgently address the issue of jurisdiction of WWF/WPPF and provide clarity to tax payers.
The Overseas Investors Chamber of Commerce and Industry (OICCI), is the collective voice of nearly 200 members, representing nearly all the largest foreign investors in Pakistan, who contribute, annually, over one third of the revenue collections in the country by the federal and provincial revenue authorities and invest over US$ 1.5 billion annually in new capital expenditure. OICCI is the largest chamber in terms of economic contribution and CSR initiatives by its members, which benefits over 20 million underprivileged sections of society.