OICCI calls for tax reforms in Punjab.

Byline: Nasir Jamal

LAHORE -- Investors have demanded tax reforms in Punjab to improve the ease of doing business and restore the competitiveness of firms operating in the province.

In its taxation proposals for the provincial budget 2020-21, the Overseas Investors Chamber of Commerce and Industry (OICCI) has suggested implementation of a raft of reforms to improve ease of doing business and broaden the tax net for incentivising new investments in Punjab.

The normal rate of sales tax on services in Punjab is 17 per cent compared to 13pc in Sindh and 15pc in Khyber Pakhtunkhwa and Balochistan to which the chamber proposed that Punjab government align its tax rate with Sindh to ensure level-playing field and gradually slash it to 10pc over next three years to bring it at par with other countries in the region.

'The current rate should be maintained for the unregistered entities to encourage them to register to avail the benefits of input adjustment and will enhance documentation,' it said.

The OICCI, which represents foreign companies operating in Pakistan, also called for merging revenue collection, including all labour levies, under one ministry/body. 'The provincial government can devise a mechanism to allocate a share of the three tax collecting bodies - Punjab Revenue Authority, Excise and Taxation Department and Board of Revenue - to add to the ease of doing business and attract new investments.'

It called for amending provincial Sales Tax Act on services to allow the registered persons to claim input tax related to procured goods/services, insert a separate schedule for zero-rating exports, and exempting all services provided outside Pakistan, which result in inflow of foreign exchange and export of all taxable services.

Additionally, toll manufacturing should be deleted from the list of services as it is taxable as a good under the federal sales tax.

DUPLICATION OF TAXES: Investors insist that multiple, distinct and sometimes conflicting sales/services tax laws...