ISLAMABAD, Aug 9: Central Board of Revenue Chairman Abdullah Yousuf on Tuesday warned businessmen of withdrawing tax incentives announced in the budget if they continued misusing it.
Speaking at a seminar on “Business community’s role towards a prosperous Pakistan,” organized jointly by Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the CBR, Mr Abdullah urged the businessmen to positively response to the incentives for generating economic activities. “Those who are flouting the system will be dealt with iron hand under the laws,” he warned.
Representatives of FPCCI mentioned in their speeches that genuine businessmen were facing problems in getting their due refunds. They said that some unscrupulous elements were involved in the business of issuing fake and flying invoices for getting unfair refund through automated refund system.
They also demanded withdrawal of 0.1 per cent withholding tax on cash withdrawals from banks and amendments in certain notifications.
Responding to their queries, the chairman asked the businessmen that all issues would be discussed at length for making the tax system more user-friendly. However, he categorically stated that the levy on cash withdrawals would not be withdrawn.
Earlier, in his presentation to the seminar, the CBR chairman said that the tax-to-GDP ratio had reached to 9 per cent following the realization of the target of Rs590 billion during last fiscal year. He said the ratio would reach to only 9.1 per cent when the revenue target of Rs690 billion for the current fiscal would be realized.
He said that this was the lowest ratio in the region and needed to be increased by enhancing the tax base. Member Fiscal Research and Statistics Dr Ather Maqsood Ahmed gave a detailed presentation on the performance of all federal taxes and future strategies.
He elaborated the reasons for low tax-to-GDP ratio. The share of agriculture sector in the GDP was 21.5 per cent and in taxes only 1.2 per cent; manufacturing sector’s GDP share stood at 15.9 per cent and in taxes 61 per cent; and services sector contribution to the GDP was over 50 per cent and in taxes 25.5 per cent.
He said the low contribution of agriculture and services sectors highlighted the need to diversify the untapped areas/sectors for broadening of tax base. FPCCI President Ch Mohammad Saeed proposed that similar seminars should be held in other major cities to interact with business community to identify their problems for redressal.
He suggested some taxation measures for discouraging the rising prices of real estates in the residential and industrial areas.