LAHORE: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed grave concern over FBR’s inaction on Section 38-B and withholding tax on bank transactions and urged the prime minister to intervene in the matter.

FPCCI Vice President & Regional Chairman Ch Arfan Yousaf said that challenges to economy would swell if issues of discretionary powers and withholding tax on bank transactions would not be resolved. He expressed these views while talking to a delegation of Pakistan Computers Association (PCA) here at the FPCCI regional office.

“Being a major source of revenue for the government, business community deserves honour while withholding tax should be removed as it is unjustified and double taxation,” he said and added that indirect taxes are being removed gradually throughout the world. However in Pakistan, these are contributing around 60 percent to the revenue despite the fact that expenses on this practice are higher than the collections.

He said that Section 38-B is being misused badly against the business community that is one of the major reasons of low tax-to-GDP ratio. He said exports have been already declined and trade deficit is touching the sky while such issues are adding fuel to the fire.

He said the FBR should stop harassing filers as it discourages businesses to come into the tax net. Registered businesses are required to comply with various departments involving a lot of financial and time resources whereas unregistered businesses are free from all such hassles.

He said there are 3.5 million registered taxpayers out of which only around one million file their tax returns. The government should take all the measures to ensure filing of returns by remaining 2.5 million individuals and businesses. The government claims that it always acts as a facilitator but in this scenario it is entirely otherwise.

Ch Arfan said that attaching bank accounts for recovery of outstanding dues is hampering business growth and tarnishing the soft image of the government. He said bank accounts should not be attached without prior notice to the taxpayer and after seeking approval in writing of Commissioner in the light of reply submitted by the taxpayer. The recovery should be after the decision of the tribunal and not before that.

He said unfortunately if the FBR initiates a recovery case, the taxpayer is not allowed to defend as FBR itself is the complainant and a judge. Instead of focusing on controlling under-invoicing, curbing smuggling and expanding the tax net, the FBR seems to be inclined to pressurize registered taxpayers who are already suffering due to high rate of sales tax, income tax and custom duties by creating fictitious cases for recovery of outstanding dues to meet revenue target.