The Pakistan Business Council (PBC) has proposed that the government take action to end under-invoicing and restore group tax laws to their original form in the upcoming budget for fiscal year 2021-2022.
In its proposals for the upcoming budget, the PBC informed higher authorities that massive under-invoicing, especially by commercial importers, is destroying the domestic industry, because overall, massive under-invoicing and dumping imported products have increased.
Information about the securities at which various custom checkpoints clear imported consignments is not publicly available. This encourages unscrupulous importers to under-report the value of shipments to evade government revenue. The PBC proposed that the values at which imported shipments are cleared through PRAL or CARE should be made public.
The Pakistani government should insist on Electronic Data Interchange (EDI), both for imports under the Free Trade Agreement (FTA) and for non-FTA imports from China and other major trading partners. In the future, the EDI requirement should be made mandatory for imports from FTAs / PTAs and major trading partner countries.
The rate of withholding tax on imports for commercial importers should be at least 2 percent higher than it currently is and the withholding tax should be treated as an adjustable advance tax.
The assessment decision should be issued in consultation with the trademark owners, i.e. who have a valid registration of trademarks under the relevant intellectual property laws.
Likewise, the PBC urged the Federal Board of Revenue (FBR) to restore group taxation laws to the original forms introduced by the 2007 Budget Law and the 2008 Budget Law. The board said that most recently, via Income Tax Laws (Second Amendment) The 2021 Ordinance on the Exemption from Tax on Intercorporate Dividends Between Qualifying Companies under Section 59B of the 2001 Ordinance on income tax (group relief) has been repealed. The PBC proposed that ITO Schedule II Part I, Section 103C, providing an exemption from intercorporate dividends to group companies eligible under ITO Section 59B, be reinstated.
He suggested that the changes made to clause 11B of part IV of the second annex via the 2015 finance law and the 2016 finance law, should be revoked to ensure that the withholding tax exemption is provided on intercorporate dividends exempt under clause 103A and clause 103C of part I of the second schedule of the ITO.