Lahore: The Chairman PAAPAM (Pakistan Association of Auto Parts & Accessories Manufacturers), Mr Usman Malik, lauded the Finance Minister for his efforts to tax the non-filers at higher rates. However, unfortunately, levy of alternative minimum tax is against the norms of justice and must be withdrawn immediately.
Our Association urges that the honourable Minister and the parliament should seriously consider appropriate amendments in the Finance Bill in the interest of improving the investment climate and encouraging the business and corporate sector to plough back their earnings into their current businesses rather than putting them in bank deposit schemes. This will ensure higher profits for the business, and generate increase in revenues for the government.
The following amendments should therefore be made in the Finance Bill: -parliament should withdraw the extremely untenable proposal of another kind of minimum tax, in addition to 1% minimum tax on turnover. Through this measure, it is proposed that the documented corporate sector will be forced to pay 17% minimum income-tax on accounting profit (instead of current 33% tax on taxable income).
The excess tax so paid will be refundable over a long period of 10 years, thereby tying up the business liquidity desperately required for running the business. This is unjust and unacceptable. It will tantamount to disallowance of legitimate adjustable tax losses or legally admissible tax depreciation (allowed under the laws of the land). But the most unfortunate part is that this 17% income-tax on accounting profit is applicable retrospectively, with effect from tax year 2014 (financial year ending on 30th June 2014).
In the light of the above, it is obvious that this minimum tax proposal is mala-fide and totally against the canons of justice and fair-play. It reminds us of the fate of Income Support Levy (ISL), which was also imposed retrospectively in the last budget. It is humbly proposed that this kind of minimum tax should not be levied at any cost because it is bound to be contested in the courts of law and would meet the same fate as ISL. -parliament should revisit and reduce all with-holding tax rates for documented sectors and tax filers.
This will ensure that cash funds of the industry, which is the life blood for running business, are not tied up over the longer term and do not reduce their ability to grow and make healthy contributions to future government revenues Needless to mention, for broadening the tax base, the FBR should place its entire emphasis on shortening the list of withholding taxes, reducing the rates of withholding taxes for the tax filers, and removing all such dis-incentives in order to attract new tax payers.
Therefore, this association appeals to the Honourable Finance Minister to withdraw all the above measures, i.e. 17% tax on accounting profit and as well as excessive presumptive & withholding taxes (the cost of which is borne by none other than the ultimate common consumer). Instead, FBR should increase direct scrutiny and induce new taxpayers, rather than providing opportunities to the non-filers and undocumented sectors to completely circumvent the system and continue to evade taxes.