Lahore Chamber of Commerce and Industry urges Federal Board of Revenue to concentrate on issues which are hampering trade and economic activities

Lahore, May 12, 2015 (PPI-OT): The Lahore Chamber of Commerce and Industry Tuesday urged the Federal Board of Revenue (FBR) to concentrate on the issues which are hampering the trade and economic activities.

While addressing a meeting, the LCCI President Ijaz A. Mumtaz said that government agencies like Federal Board of Revenue should act as facilitator for the business community.

He said that Federal Board of Revenue was using all tactics for revenue generation but not broadening the tax net that is the only solution of shortfall in revenue target.

Ijaz A. Mumtaz said that reportedly, 855,429 tax payers have filed income tax return for the year ended 30 June, 2014. He said that 322438 paid zero tax, 260888 paid less than Rs.20,000, 240072 paid from Rs.20,000 to Rs.999,999, 17477 paid from Rs. 1 million to Rs. 2.5 million, 7237 paid from Rs.2.5 billion to Rs.5 million, 3817 paid from Rs.5 million to Rs. 10 million while 3500 paid from 10 million and above.

He said that these stats show a really dismal state of affairs of FBR which has not been able to add any taxpayer notwithstanding the fact that FBR claims to have complete data of Rs. 3 million plus persons having taxable income.

He said that the net annual collection of FBR from textile sector (total paid less refund) is a maximum of Rs. 10 billion. The current rate of sales tax on textile goods varies from 2%, 3% and 5%. With these rates the stuck up refund cases of textile sector is stated to be over Rs. 100 billion. He said that if FBR increases the sales tax rate, the stuck up refunds shall multiply which shall further choke the working capital of textile sector.

The LCCI President said that FBR is totally ignoring the under invoicing factor that is one of the biggest threats for the economy. He said that the government of China’s official export figures to Pakistan are US$ 11 billion where Pakistan government’s official import figures from China are merely US $ 6.5 billion, giving an under-invoicing of US$ 4.5 billion which works out to Rs.455 billion @ US$ 1. He said that if evaded customs duty is taken at 10% and sales tax at 15%, the total revenue which the FBR do not collect is close to Rs.112 billion.

Ijaz A. Mumtaz said that ironically, the FBR has made under invoicing easy for the unscrupulous importers by reducing the fine from Rs. 35000 to Rs. 5000 for not putting copy of invoice and packing list by Chinese exporters in the container. He said that FBR do not bother to collect Rs. 112 billion but plans to go for small local sectors yielding Rs.0.50 to Rs.2 billion per annum.

He said that with reduction of concession of custom duty and sales tax, FBR estimates that it shall yield a total revenue of Rs.55.651 billion. “We fail to understand why FBR instead of charging additional sales tax and custom duty on hundreds of items and collecting merely Rs.55 billion, does not take any measures whatsoever to stop under invoicing from China which shall yield Rs. 112 billion”, Ijaz A. Mumtaz said.

The LCCI President said that the Lahore Chamber of Commerce and Industry rejects all the increases in custom duty and sales tax and urged the government to recognize the FBR which seems to be a major hurdle in tax collection instead of being a facilitator.

He urged the FBR to keep away from taking anti-industries and anti investment measures in the larger interest of the economy.

For more information, contact:
Shahid Khalil
Information Department
Lahore Chamber of Commerce and Industry (LCCI)
11-Shahrah-e-Aiwan-e-Tijarat,
Lahore -54000, Pakistan
Tel: +92-42-111-222-499
Fax: +92-42-6368854