Federal Minister for Finance and Revenue, Mr. Shaukat Tarin, held a meeting (combination of virtual/in person at the Finance Division) with OICCI and PBC on April 30, 2021, to discuss Taxation Proposals submitted by the two chambers for the Federal Budget 2021/22. Adviser to the Prime Minister on Commerce Abdul Razak Dawood, Special Assistant to the PM on Finance and Revenue Dr. Waqar Masood and Chairman FBR Asim Ahmad also participated in the meeting. OICCI was represented by the President Irfan Siddiqui, VP Ghias Khan, MC members and a few Taxation Subcommittee members. VP Ghias Khan and MC member Aamir Ibrahim and OICCI member Ali Jamil attended the meeting in person. The meeting was reported in the print media on Saturday May 1, 2021

The Finance Minister stated that Government is firmly committed to providing incentives to business community which are targeted and sustainable in the long run, with the aim to achieve an all-inclusive sustainable economic growth which leads to industrialization, employment generation, export-led growth and import substitution. Other key comments he made were i. it is important to make full efforts to move the economic wheel to collect taxes, ii. making money is good as it leads to prosperity, iii there should be a strong collaboration and partnership between business and government for fast economic growth, iv. No new taxes without consultation with the business community, v. the government believes in building a strong partnership with businessmen, traders and exporters for evolving a roadmap through consultative process for a sustained and robust export-led growth.

PBC taxation proposals were discussed first which largely were common to OICCI proposals. OICCI taxation proposals were earlier discussed in detail with FBR leadership on April 9^th. During the meeting with FM on April 30th, OICCI emphasized on:

• Tax Regime be Predictable, Transparent and Consistent. No surprises.
• Review of Minimum Tax (MT) / Abolishment of Alternative Corporate Tax (ACT)
• • • The general rate of MTR under section 113 of ITO 2001 should be 0.5% only.
    • MTR be further reduced to 0.2% for businesses dealing in sectors with high turnover and low margins, like oil companies, distributors etc.
    • ACT under section 113C of ITO 2001 should be abolished.
    • MTR should not be applicable on SEZ companies.
• Revamping of Withholding Tax Regime (WHT)
• • • WHT regime to be reduced from 45 to 5 rates for filers.
• Ease of Doing Business / Promotion of Investment
• • • Tax refunds be cleared within 45 days.
    • Frequency of payments and return filings should be reduced.
    • Check on frequent harassment of tax payers for flimsy reasons.
    • Corporate tax rate to be aligned with the region at 25% by 2023 as promised by GOP.
    • One Corporate tax rate only, for all sectors including the banking sector.
    • Incentivize digitization of the economy.
• Illicit trade – Cigarettes/ Afghan Transit
• • • Illicit Cigarette Trade 37% of market. Estimated annual loss to Government 70 billion. Only two companies take excise led price increases, but 30+ manufacturers operating in illicit cigarette trade do not take price increases.
    • Strong check on abuse of Afghan Transit Trade facility/ availability of duty not paid products.
• Promotion of Shariah Compliance
• • • FBR laws be made practical and aligned with SECP Shariah regulations.
• Section 8B in STA 1990 should be abolished for registered taxpayers
• • • Input adjustment to sales tax currently restricted to 90% only, should be allowed 100% for registered taxpayers.

In his concluding comments the Finance Minister affirmed full support and cooperation to OICCI and PBC Taxation proposals.