KARACHI: Trade and industry has taken the mini-budget unveiled by Finance Minister Asad Umar on Wednesday with cautious optimism.
Many industry leaders believe that the proposed measures and concessions will help in capital formation, industrialisation and attracting fresh investment. However, they all contained much of their reactions until more details are made available.
Speaking to Dawn, Overseas Investors Chamber of Commerce and Industry Secretary General Mohammed Abdul Aleem said the removal of super tax and tax on inter-corporate dividend will help in capital formation while getting away with withholding tax on banking transactions will support the ease of doing business reforms. Allowing non-filers to purchase locally manufactured vehicles (up to 1,300cc), albeit at higher taxes, was also taken positively.
Pakistan Business Council CEO Ehsan Mailk said the removal of 4 per cent super tax on banking is a welcome move as the sector currently pays 35pc corporate tax along with 4pc super tax.
Similarly, reduction in the tax rate on interest income on additional loans to small and medium enterprises (SMEs), agriculture and low cost housing to 20pc from 39pc will also push up lending to these less preferred sectors.
However, Malik was critical of the measure to reintroduce presumptive tax regime at 6pc to commercial importers, who are mostly engaged in under-invoicing. Citing a PBC study based on a survey with 8-10 trading partners of Pakistan, local importers record under-invoicing of up to $6 billion, he claimed.
He regretted that this will also undermine PTI’s own slogan of accountability because after paying 6pc as full and final tax, commercial importers will not even have to file income tax returns.
SITE Association of Trade and Industry Chairman Saleem Parekh appreciated the move allowing filing of withholding tax statements twice a year instead of every month will help in ease of doing business.
He also lauded the proposal of five-year tax holiday to special economic zones (SEZs) as this will pace up country’s industrialisation.
Karachi Chamber of Commerce and Industry President Junaid Makda said that putting back commercial importers under final tax regime will go a long way in ease of doing business as it will save traders from a lot of hassle.
He also welcomed the proposal to give tax exemption to plant and machinery for greenfield industrial setups as it will give a much-needed boost to industrialisation and generate jobs.
On the proposal to issue promissory note for payment of sales tax refunds through banks, the chairman said it may be a good step but held his final comments until the availability of details.