AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
KARACHI: Pakistan Chemicals and Dyes Merchants Association (PCDMA) has put forward a set of budget recommendations to the Federal Board of Revenue (FBR) aimed at alleviating the compliance burden on taxpayers and fostering trust between the business sector and tax authorities.
PCDMA Chairman Salim Valimuhammad, in the 2025 budget proposals, addressed the growing compliance demands on taxpayers, emphasizing that excessive documentation and frequent audits are deterring engagement in the formal economy. The proposal committee was led by Umair Tariq.
The association’s leader noted that while many taxpayers intend to comply, they face challenges due to limited technical expertise and the stern approach of tax officials. PCDMA urged FBR to adopt a more supportive and educational strategy to encourage voluntary compliance.
Concerns were raised over audits under Section 165 related to withholding tax returns. As withholding agents are already tasked with tax collection, additional audits add undue stress. The association suggested ending these audits to alleviate business pressures.
Another key issue was the challenge families encounter when continuing businesses after the death of a sole proprietor. Current laws necessitate restarting the registration process. PCDMA proposed allowing a family member to be added as a representative in the deceased’s IRIS profile to maintain business continuity.
The revival of the Final Tax Regime (FTR) for commercial importers was also advocated. PCDMA highlighted that, although commercial importers still face the Additional Sales Tax, the audit exemption previously provided has been rescinded without explanation. The association called for either the reinstatement of audit immunity or the removal of the additional tax.
Further relief was sought under Section 8B, with a call to restore past benefits for commercial importers. If not feasible immediately, PCDMA suggested that at least 95% of output tax should be adjustable, with only 5% payable to address liquidity concerns.
The association proposed reducing the rate of Further Tax from 4% to 1% to combat fake invoices, easing compliance for genuine businesses. A phased reduction in the general sales tax (GST) rate, starting with a decrease to 16% and aiming for single-digit rates, was also recommended.
For local supplies, PCDMA suggested lowering the withholding tax rate on raw materials to 2% for companies and 2.5% for individuals. This measure is believed to encourage more businesses to integrate into the formal economy and enhance documentation.
The discontinuation of the Export Facilitation Scheme (EFS) was strongly advocated, as it is seen as benefiting unscrupulous individuals who exploit the system for tax evasion. PCDMA argued that the scheme is unsuitable for Pakistan’s current economic conditions, given weak enforcement and widespread pilferage.
PCDMA also addressed the unequal treatment between commercial and industrial importers under Section 148 of the Income Tax Ordinance. The existing higher tax rates for commercial importers were deemed unwarranted, particularly as some manufacturers misuse their status to import goods for local sale. The association called for an end to this disparity or the reinstatement of the FTR if higher rates persist.
A streamlining of customs duties under PCT 32.04 was proposed, suggesting a flat rate of 5% to curb under-invoicing and revenue leakages. PCDMA also demanded the removal of the Rs. 500 WeBOC token fee, noting that importers already pay an equivalent PSW fee and should not face double charges.
The association recommended capping customs duties on raw materials such as chemicals and dyes at 5%, arguing that current rates of up to 20%, along with additional customs duties, harm businesses and should be abolished.
These proposals reflect the business community’s call for a more equitable and efficient tax system, underscoring the need for reforms to rebuild confidence and bolster economic growth.