LAHORE: A services sector firm has termed the eight per cent unadjustable withholding tax on revenue of services companies from July 1, 2015 a draconian tax law and said that it will hurt the sector.

Rashid Mehr, CEO, TUV Austria Bureau of Inspection and Certification, in a statement on Monday said the imposition of 8pc tax on revenue has put the sustainability of services sector at stake where cost of doing business is already very high, while the trade and industry has been facilitated by reducing the corporate tax to 32pc.

He said the move will discourage startups and future investments in the sector. All services companies in information technology, certifications and inspections, public relations, advertising, marketing, event management, telecom and freight forwarding and clearing would be come under serious stress.

“It is noteworthy that banks, insurance and private transport companies had been exempted from this tax,” he added.

The law also ignores another very important aspect i.e. the difference between a company that had low profit margins with high revenue and a company with high profit margins with low revenue, he said.

He demanded to strike down the provision as it would push most services companies towards closure.

Published in Dawn, July 28th, 2015

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