ISLAMABAD: The government has dropped a major taxation proposal of imposing an advance tax on companies’ reserves proposed by the Reform and Revenue Mobilisation Commission (RRMC) in the coming budget 2023-24.
It is reliably learnt that the proposal has been dropped by the government, keeping in view serious reservations of the corporate sector. The government has assured that no such proposal to tax reserves of companies would be incorporated in the Finance Bill 2023, sources added.
The RRMC has proposed an advance tax on the undistributed reserves of both listed and unlisted companies.
During the meeting of the Pakistan Business Council (PBC) with Finance Minister Ishaq Dar on Saturday, the PBC also advised against tax on retained reserves due to liquidity and cost of funding working capital and of any change for the present in the Final Tax Regime (FTR) on exports due to the declining trend in much-needed exports.
The PBC assured the government support to stabilise the economy, pointed to disproportionate burden of taxes on industry, underinvestment in socioeconomic development and scope to raise Rs2 trillion additional taxes from under-taxed sectors.
Reminding the finance minister of challenges facing business, the PBC offered suggestions to broaden the tax base, stem leakages, suggested reshaping the FBR targets to focus on new taxpayers, mining data available, the CNICs, EDI on imports, and visibility on valuations prior to clearance.
