KARACHI, May 6: The Member Sales Tax, Central Board of Revenue, Shahid Ahmed, while identifying the major challenges confronting the economy, has stressed the need for steps to bring the cost of doing business down in the country.

Addressing a pre-budget seminar on “strengthening Pakistan’s position as an emerging economic power”, organised by the Association of Chartered Certified Accountants (ACCA), he said that the government was considering various taxation measures to remove the irritants hampering investment.

He informed the participants that most of the proposals forwarded by the speakers had already been under consideration. The CBR had been in contact with the stakeholders and relevant trade and professional bodies for incorporating their suggestions in the upcoming budget.

Mr Shahid said the central theme of the taxation policy had been to promote voluntary compliance to bring more and more potential taxpayers under the tax net. “Reducing the cost of compliance of tax laws has been the prime objective of the CBR,” he added.

He hinted at the federal excise duty on services sector as the share of this sector in revenue generation was around three per cent as against its over 50 per cent contribution to the total gross domestic product (GDP).

He welcomed the proposal to provide insurance cover to the taxpayers to attract the potential taxpayers.

He said that more than 60 per cent of the total revenue was contributed by the manufacturing sector whereas the agriculture sector that accounts for 20 per cent of the GDP is out of the tax net.

Mirza Ikhtiar Baig, former chairman Site Association of Industry and a leading textile exporter, in his presentation proposed that the import duty on spare parts for maintenance purpose and raw materials, which were not manufactured locally, should be brought down to five per cent.

He said that Pakistan’s regional competitors— India, China and Bangladesh— had allowed import of raw materials at zero-rate of duty and were also offering other incentives to facilitate their industry to remain competitive in the world market.

He said that during the last five years the local textile sector had spent over $5.5bn on balancing, modernisation and replacing (BMR) and a low maintenance cost would keep these plants and machinery in working condition, otherwise the capacity expansion would go waste as rising cost of power, gas and water had already curtailed the profit margins.

Other speakers at the seminar proposed common tax identification number (CTIN) replacing the NTNs, permanent sales tax return, improving audit selection criteria and incentives to increase operating income to encourage savings which would ultimately result in expanding production creating more employment opportunities.

Arif Masuf Mirza of ACCA also spoke on the occasion.