KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has identified a number of anomalies in customs and regulatory duties, income tax, and sales tax in the budget FY23.

FPCCI acting president Shabbir Mansha, while describing the budget as anomaly-ridden, noted that the turnover tax of 1.25 per cent for traders, distributors, and dealers is unbearable as profit margins are barely 2pc in market sales. The turnover tax would continue to discourage SMEs from being registered for sales tax.

In a statement, he pointed out that there is no way that a business can absorb a 4.5pc withholding tax on local sales and continue to operate viably at a time when margins range between 2pc and 3pc.

Mr Mansha maintained that an input tax adjustment in excess of 90pc of the output tax is not permitted under Section 8(b) of the Sales Tax Act of 1990. This condition should be withdrawn as the same has already been extended to companies operating in various sectors.

Furthermore, he added that withholding tax on the import of raw materials should be the same for industrial and commercial importers.

He proposed that at the stage of deregistering from the sales tax system, the condition of prior audit should be withdrawn to facilitate exit after three years; provided a company, individual, or association of persons (AOP) had been filing a nil return for the past five years due to the discontinuation of their businesses.

Published in Dawn, June 23rd, 2022