KARACHI: Commercial importers and traders, while strongly reacting against the anomalies in the Federal Budget 2018-19, have expressed deep concerns over the changes in Income Tax Ordinance which would compound tax burden on importers of industrial raw materials and other essential items, says a Press release.
They believe that these measures would open up more avenues of corruption by exposing commercial importers to audits and extortion by tax authorities despite the fact that they have been paying high rate of With-holding tax at source.
In an urgent joint meeting of GST & Refunds, Income Tax & FED, and Customs, Valuation, Import & Anti-Smuggling Sub-Committees held at Karachi Chamber of Commerce and Industry, the participants termed changes in tax laws as discriminatory and anti-business and urged KCCI to take up numerous anomalies with the Ministry of Finance and Federal Board of Revenue (FBR) so that the same could immediately be removed before Finance Bill is passed by the Parliament.
Vice Chairmen Businessmen Group & Former Presidents KCCI Haroon Farooki and Anjum Nisar, President KCCI Muffasar Atta Malik, Senior Vice President Abdul Basit Abdul Razzak, Vice President Rehan Hanif, Former Presidents AQ Khalil, Haroon Agar and Iftikhar Vohra, Former SVP Muhammad Ibrahim Kasumbi and Asif Nisar, KCCI Managing Committee members were also present at the meeting which was well attended by large number of Commercial Importers, Traders, Tax Professionals and SMEs.
The meeting participants noted that through an amendment in Section 148 of Income Tax Ordinance through Finance Bill 2018-19, an existing anomaly in Income Tax and Sales Tax structure on Commercial Importers of Raw Materials has been further compounded which will eliminate many importers out of business.
They pointed out that WHT of 4.5 to 6.0% paid on import of raw materials by commercial importers has been redefined as MINIMUM TAX and the importers have been taken out of Fixed Tax Regime (FTR).
They opined that the already high rate of WHT and Sales Tax at import stage create a wide disparity in total incidence of tax at 8 to 9% between Commercial Importers and Manufacturers whereas the amendment will further add to the said disparity.
It is unprecedented to convert the WHT to Minimum Tax at such high rates of 4.5% to 6.0% on Raw Materials which will open up the option to further squeeze the tax-payer through Audits and demands.
They further noted that the margin of profit on sale of Industrial raw material ranges in between 1 to 3 percent and involves market risks as well. There is no justification to impose 4.5 to 6.0 percent minimum tax on a business having very low profit margins, as there is no value addition or change in form or process involved. This in fact is a turnover tax because it is charged on total value, they added.