A joint delegation of Pakistan Business Council (PBC) and Overseas Investors Chamber of Commerce & Industry (OICCI) called on the Federal Finance Minister Mohammad Ishaq Dar on June 3, 2023, at FBR Headquarters in Islamabad.

The finance minister was accompanied by Dr. Aisha Ghaus Pasha, Minister of State for Finance, Mr. Tariq Bajwa, Special Assistant to the Prime Minister on Finance, Mr. Tariq Mehmood Pasha, Special Assistant to the Prime Minister on Revenue, Mr. Ashfaq Tola Chairman Reforms and Resource Mobilization Commission (RRMC), Mr. Asim Ahmad Chairman Federal Board of Revenue and other senior officers from the Finance Ministry and Revenue Division. Governor State Bank Mr. Jameel Ahmad also attended the meeting. The participants included OICCI President Amir Paracha, MC members, and Chairman & CEO PBC and other members of the three Council.

The joint delegation highlighted the importance of investment in the country’s economy and called for promoting investment culture in Pakistan backed by investment friendly policies. They said that the business community has always worked for the interest of Pakistan and has brought investment from overseas to the country. The joint delegation also gave proposals for incorporation in the upcoming budget and suggested different measures which can help improve the investors’ confidence.

OICCI President, Amir Paracha appreciated the engagement by the Govt with leading tax contributor in the country. He expressed apprehension that the economy is currently under stress and GDP growth forecast including for large scale industries for the immediate near term is negative to marginally positive, which along with super high inflation and interest rates and fast weakening currency, has the potential to substantially dent the profitability of tax paying sectors next year. He on behalf of OICCI members recommended to remove Super tax and no new taxes or surprises be announced in the upcoming budget, as it will further dampen the formal business sector.

OICCI stressed the urgency for broadening the tax base to boost its revenue collection according to proportionate share of each sector of the economy especially trade, services, real estate and agriculture. OICCI stressed that sufficient data is available in the system to significantly broaden the tax base and arrest the revenue leakage due to the GOP. MOF appreciated OICCI offer of assistance and asked FBR team to work closely with technology companies, who are also members of OICCI, to help identify through latest technology tools, including Artificial Intelligence, in highlighting potential new taxable entities. OICCI has estimated that with dedicated efforts to collect revenue from all segments of the economy, the Tax-to-GDP ratio can be increased in few years to 16%, from current less than 10%. OICCI further recommended that a significant portion of current FBR resources, at least 30 percent, be assigned for BTB (Broadening of Tax) unit.

OICCI recommendation for elimination/reduction of minimum tax specially for listed companies and companies in the regulated sectors was also appreciated by the participants. The general rate for minimum tax should be reduced to 0.25% and carry forward of minimum tax credit be allowed for at least 5 years as prior to 2022. the simplification of withholding tax regime, with existing 200 different tax rates for 24 WHT sections, was recommended to make it more convenient and business friendly.

Recognizing the very high inflation impact on the low-income group, OICCI has recommended that annual income upto Rs 1.2 million be tax free compared the current Rs 0.6 million annually. Apart from other proposals, OICCI separately submitted the sector specific proposals which includes Pending sales tax refunds under FASTER Pharma System to be processed within 72 hours of the submission and restoration of zero-rated regime for Pharma Industry as prior to 2022.

The Finance Minister took great interest in OICCI proposals which were forward looking and intended to boost the economic activity going forward. He also assured the joint delegation that the Government will support businesses and provide congenial environment for investment. He said that the Government values the contributions of business community and investors towards the economy of Pakistan. He assured that their valuable suggestions will be incorporated in the upcoming budget.