KARACHI, May 6: Foreigners visiting Pakistan should be required to pay their hotel bills in foreign currency, the Institute of Chartered Accountants of Pakistan (ICAP) makes this interesting suggestion in its pre-budget proposals for different industries.

The institute observes that the proposal of requiring foreigners visiting Pakistan to pay their hotel bills in foreign currency was announced in the budget for 1999 but it had not been implemented. The ICAP said the payments made in foreign currency could become a great source of foreign exchange earnings for the country.

It mentions that the hotel industry has been declared an industry and the Central Board of Revenue has also recognized it as an industry, but considering the foreign exchange generated by the hotel industry, it should be given Status ‘A’ as against the prevailing Export Status ‘C’ in conformity with other exporters.

Down the line, the institute presents budget proposals for various other industries, including textiles, oil and gas, hotel, pharmaceutical, automobile, leather and sugar.

For the pharmaceutical sector, the ICAP recommended that tax credit or incentives be provided for the establishment of research and development institutes by foreign pharmaceutical companies or foreign partners of pharmaceutical companies’ research and development activities carried out in Pakistan on their behalf.

With regard to the textile industry sector, it suggests that all textile units, particularly and generally export-oriented units, which prefer balancing, modernisation and replacement (BMR) of their units, should be allowed tax credits.

Tax credits should also be allowed on marketing costs and other expenses directly related to export sales. For amicable resolution of issues relating to anti-dumping, an independent unit be established at the Export Promotion Bureau.

The ICAP said the oil and gas sector had been neglected but it was one of the most lucrative sectors in recent times. The institute noted that instead of providing tax-holiday for 10-15 years, exemption might be restricted on a percentage basis related to extraction, gradually reducing it from year one up to minimum useful life of the oil well. “Tax credit should also be made available on development works at the oil rig.”

For the automobile industry, recommendations have been made for the introduction of tariff-based incentive system instead of deletion programme.

For the leather industry, the ICAP has suggested that tax incentive in the form of tax credit to exporters, attaining a certain volume or amount of export sales, should be allowed.

For the sugar industry, the institute said that molasses should be utilized in the production of ethanol rather than exporting the same.