KARACHI: The Overseas Investors Cha­­mber of Commerce and Industry (OICCI) has urged the government to focus on attracting foreign direct investment with supportive taxation policies.

The investor’s body on Wednesday submitted its budgetary proposals to the Federal Board of Revenue (FBR). The 54-page document contains over 100 wide-ranging recommendations, including proposals to incentivise investors, broaden the tax net through documentation of the economy, simplification of tax system and reorganisation of the FBR.

The OICCI said that long-term investment plans should be suitably protected for at least five-year period for investors to base their plans on policies which are consistent and predictable.

It further suggested incentives include increase of tax credit under section 65A of Income Tax Ordinance, rebate for entities issuing electronic invoices to curb “flying invoices,” extension of tax credit under Section 65B till June 30, 2018, credit under section 65C @15 per cent to be given for three tax years from year of listing.

Similarly, credit under Section 65D to be extended to industrial undertaking setup till June 30, 2018 and credit under Section 65E to be extended to installation of plant and machinery still June 30, 2018.

To attract new FDI, upfront levy of withholding income and sales tax at import stage on plant and machinery should be exempted for new foreign investment, the OICCI suggested.

The chamber proposed that there should be only two tax regimes for companies assessed under Large Taxpayers Unit (LTU) or those registered under Sales Tax Act i.e. the normal tax regime based on taxable income or under the Alternate Corporate Tax (ACT) mechanism.

It further said that taxpayers should be given the option to opt for one of the two regimes and the option selected must be made binding for a minimum period of five years.

The chamber suggested that Minimum Tax Regime (MTR) should be withdrawn on oil marketing companies (OMCs), refineries, LNG terminal operators where the application of MTR is resulting in an effective tax rate of over 50pc.

To avoid delays in processing income tax and sales tax refunds OICCI proposed that time frame for scrutiny of these refunds should be legally reduced to 30 days.

All current refunds should be released against a bank guarantee before June 30, 2015, followed by an audit of those refunds.

The OICCI also gave detailed proposals for broadening the tax base and identifying new potential taxpayers.

Published in Dawn, April 2nd, 2015

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