Staff ReporterSunday, February 24, 2013 - Lahore—Lahore Chamber of Commerce and Industry (LCCI) has urged the Federal Board of Revenue (FBR) to withdraw SRO 98(I) 2013 as it would affect the businesses adversely.
LCCI President Farooq Iftikhar has said that the SRO 98(I) 2013 would not only increase the financial cost of the businesses but it would also be hitting their cash flows hard. The SRO 98(I) 2013 says that all companies as defined in Income Tax Ordinance 2001 as are registered for sales tax, FED or Income Tax, shall be subjected to Withholding Tax at one-fifth (l/5th) of the applicable rate of sales tax on all purchases.
Furthermore, persons registered as exporters are also now to be subjected to withholding tax of one-fifth (l/5th) of the applicable rate of sales tax on all purchases from registered persons.
The LCCI chief said the said SRO would also come in the way of documentation of the economy because either the manufacturers or importers would start making supplies to unregistered persons or to such registered persons who are not withholding agents. On the other hand, he said, the withholding agents would also be facing great difficulties in getting raw material from registered persons. And theses withholding agents would, therefore, change their status from companies to AOPs or to Sole Proprietorship.
He said the SRO would be a blow to the economic activities that were facing an inertia-like situation because of unavailability of gas, electricity and law and order situation in parts of the country.
“We need business-friendly policies to boost our businesses but it is unfortunate the authorities on the helm of affairs are creating more irritants to retard the economy.”
He said those changes would not add revenue to the government exchequer rather they would create hardship for smooth running of businesses that were already suffering from liquidity crunch. He said FBR should concentrate on expansion of tax base by bringing the undocumented sectors into the tax net rather than squeezing the sectors which were already documented.
He said it was very unfortunate that the SRO was issued without any prior notice or consultation with business community. The role of the FBR should not be only to collect taxes but to ensure enabling business environment in the country.