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ICCI slams shipping companies for not implementing govt directions regarding detention & demurrage charges

ICCI slams shipping companies for not implementing govt directions regarding detention & demurrage charges

ISLAMABAD: President of Islamabad Chamber of Commerce and Industry (ICCI) Muhammad Ahmad has said that all detention and demurrage charges imposed by the shipping companies on importers should be waived off till 30th of June.

Talking with Customs Today during an exclusive interview president ICCI said that after clear directions of the federal Government shipping companies should waive off charges he quoted “as many industries /companies material is on port an due to liquidity crises they are not been able to lift their material from ports and shipping companies are asking a lot of rents which will not only affect the cost product of the prices but will also rise inflation due to shortage of material”.

Answering to a question about Afghan-Pakistan trade Ahmad said that edible oil industry exports banaspati ghee and cooking oil to Afghanistan to the tune of Rs1 billion per month, however, due to closure of borders, all exports and imports with Afghanistan are suspended.

It is recommended that exports and imports with Afghanistan may be restored in the interest of economy, he added that to cope with the challenges posed by Covid-19, old fixed ST regime on edible oil sector may be restored in the next budget for at least one year he added.

Highlighting the ICCI proposal for budget 20-21 he said that the rate of tax on services may be one of the main cause of tax evasion, he added that it is proposed to Federal Board of Revenue that the rate of sales tax on all services may be reduced to 5% from existing 16% to promote tax culture in ICT, Currently the rate of sales tax on services in ICT (input tax claim) is 16% while this rate on certain services is reduced to 5% without input tax claim vide SRO 495(1) 2016 dated 4th July 2016 however, in most cases, there is hardly any input for provision of services except few.

All outstanding ST inputs carried forward from June 2019 may be allowed to be taken into inputs as ST adjustment for the current period, he added that Interest on all banks loans may not be accrued for the period of lockdown and interest rate may also be reduced to 5 percent, whereas the requirement of CNIC for sale transactions of Rs.50,000 and above may be deferred till June 2022 to ease the problems of businesses as they have suffered huge losses due to Covid-19.

Replying to another query about GST (general sales tax) he said that the 17% GST is quite high in Pakistan leading to high cost of doing business and high inflation. It is proposed that GST should be brought down to 5% in the next budget that would reduce cost of doing business and facilitate better growth of business activities.

The President said that the ITP (import trade price) value of re-roll able steel scrap is $140 per metric ton extra than the actual value, therefore, it is proposed that ITP value of re-roll able steel scrap may be re-valued at actual import value in the forthcoming budget.

The GST regime on steel sector has proved unsuccessful therefore it is proposed that FBR should revert to old fixed tax regime for steel sector that would improve its revenue collection, he added that an amount of over Rs.4-billion is outstanding against steel sector as it was converted from fixed sales tax regime to ad-valorem regime, the FBR should accept this outstanding amount for inputs immediately, the turnover tax U/S-113 for steel industry may be reduced from 1.5% to 0.25% or zero percent for the next 3 years for manufacturers and downstream retailers/traders.

The Industrial Support Package (ISPA) introduced in 2016 to provide subsidy of Rs.3/unit on off-peak and on-peak electricity supplied from DISCOs and KE may be restored from the next budget as it would reduce construction cost for consumers and for Govt. infrastructure projects.

The custom duty on 7204.4990 remittable scrap may be brought to zero percent to bring it at par with other remetable scrap 7204.3000 & 4100.

Tax on rental income was initially introduced as 5% as final liability that increased revenue manifold. However, gradual increase in tax on rental income up to 35% has increased rents of shops and other properties and promoted tax evasion. It is proposed that a fixed tax of 5-10% as final liability may be introduced for rental incomes.

Corporate tax may be reduced to single digit level to encourage corporatization while Wealth tax is a regressive tax and should not be considered in the next budget 21-22, he added that Tax holiday for 5 years may be introduced for start-ups and new businesses to generate entrepreneurship and employment.

As per schedule to the ICT Ordinance 2001, there is a list of 58 services which are taxable. There are certain services which are mixed up with each other. Even some of the services do not contain PCT codes, therefore there remains confusion in the field with respect to taxability under different serial numbers of the schedule. It is proposed to define each taxable service separately and category-wise to avoid unnecessary litigations and confusions. (Guidance can be taken from Sindh Sales Tax Act on Services 2011 and Punjab Sales Tax on Services Act, 2012).