ISLAMABAD – The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) on Monday said the corporate tax is discouraging investment and industrial expansion; therefore, it should be reduced to match the global average.
Corporate tax in Vietnam is 22 percent, 25 percent in Bangladesh, 17 percent in Singapore, 15 percent in Sri Lanka while the same is 38 percent in Pakistan, it said. The corporate tax should be slashed to the global average of 22 percent to improve competitiveness and boost exports, said FPCCI Regional Committee on Industries Chairman Atif Ikram Sheikh. He said that corporate tax continues to discourage investment while the shareholders have to pay 47 to 55 percent tax which dismays them. Sheikh said that the cost of energy and labour in Pakistan is more than the competing nations while political instability, law and order and the image of the country is also a problem. Moreover, he said, dozens of departments are always after industrial sector, which results in disappointment and frustration among the investors.
The business leader said that manufacturing is 13.50 percent of the GDP, but is paying 50 percent of the taxes while agriculture sector is 22 percent of the GDP which hardly pays one percent of the tax. He said that more than 81,493 companies are registered with SECP but only 30,875 filed tax returns and only 19.4 percent of them paid income tax which should be taken seriously by the authorities.
Tax authorities should follow the 65,734 companies which are not tax compliant and allow the companies paying taxes honestly to breathe, he demanded. He said that deduction in the exchange rate as demanded by many exporters will not improve exports, therefore, the rupee should not be depreciated.