Govt to Revise Taxes for Multinational Companies to Stop Them From Leaving Pakistan

The federal government has agreed in principle to revise tax policy for the Multinational Corporations (MNCs) to end the multiplicity of indirect taxes on big corporate entities and to stop exit of MNCs from Pakistan.

The decision is part of the government policy to draft a new investment and business protection policy for the MNCs.

The primary objective must be to change the high import tariff protection policy to an export-oriented strategy for the MNCs.

The FBR will also change the policy of special concessions under the SROs and high tariff protection. The MNCs must be facilitated with the export-oriented strategy to rewards efficiency, innovation, and global competitiveness.

Under the plan, the government is considering Federal Excise Duty as an unfriendly tax for the multinational companies operating in Pakistan. The multiplicity of indirect taxes would be ended for the highest taxpaying and compliant MNCs to provide a level playing field”, a senior government official said.

The threat of mini-budgets on multinational companies with increase in rates of indirect taxes like withholding taxes, federal excise duty and sudden changes in tax policy are disaster for the MNCs. These big companies are working in a constant fear and uncertain environment of multiplicity of taxes which needs to be checked through a constant and stable tax policy.

The field formations of the FBR are also involved in seeking advances from the MNCs to meet the assigned ambitious revenue collection targets.

The FED was imposed primarily to reduce the consumption of sugar, the structured beverage sector uses very nominal percentage of the total sugar produced in the country and print the caloric value on its products. Major consumption of sugar is by untaxed sector like confectionary, biscuits, local sweet shops but there is no FED on this sector.

Few years back, the government revenue increased after reduction of the FED on some sector. The same tax policy would give relief to multinational companies for increasing revenue collection of the FBR.

The Overseas Investors Chamber of Commerce & Industry (OICCI) has recommended the government that the establishment of one federal authority will have a high impact on ease of doing business. The scope of revenue collection, the level of compliance and authority of enforcement, needs to be settled between the different revenue jurisdictions, and should not result in complexity for the MNCs. The OICCI also recommended phased reduction of the Corporate Tax Rate to 25 percent, gradual abolition of Super Tax, and reduction of turnover tax for regulated industries.

The Pakistan Business Council (PBC) has recommended taxing income instead of declared overseas assets, reducing withholding tax (WHT) on exporters and recyclables, separating tax policy from the Federal Board of Revenue (FBR) and gradually lowering the GST rate to 15 percent.

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The federal government has agreed in principle to revise tax policy for the Multinational Corporations (MNCs) to end the multiplicity… Read More

The post Govt to Revise Taxes for Multinational Companies to Stop Them From Leaving Pakistan appeared first on ProPakistani.