President KCCI rejects Section 108AB of Finance Bill

  1. FBR requested to revisit provisions as businesses to choke upon implementation

KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Junaid Esmail Makda, while referring to Section 108AB of the Finance Bill 2019-20 titled Transactions under the dealership arrangements, rejected the provisions which were totally unacceptable as these would result in further choking the businesses.

In a statement issued, Junaid Makda pointed out that under Section 108AB, a person supplying products listed in the Third Schedule to the Sales Tax Act, 1990 or any other products as prescribed by the Board, under a dealership arrangement with the dealers who are not registered under the Sales Tax Act 1990 and are not appearing in the active taxpayers’ list under this Ordinance, an amount equal to seventy-five percent of the dealer’s margin shall be added to the income of the person making such supplies.

Moreover, it has also been notified that for the purposes of operation of this section, ten percent of the sale price of the manufacturer shall be treated as dealers margin which was a sheer injustice to registered persons and filers who have been regularly fulfilling their national obligation.

Junaid Makda emphasized, “Likewise, this and other such legislations are not acceptable as they will result in raising the cost of doing business and would prove to be a barrier in Ease of Doing Business.”

“On one hand, we are already called withholding agents and collectors whereas now on the other, it seems that the policy makers want us to become enforcers of tax provisions as well which is purely the job of Federal Board of Revenue”, he said, adding that this and many other anomalies are an eye-opener for the parliamentarians who must thoroughly review all such irregularities before passing the Finance Bill.

He said that this was contrary to the understanding with FBR that businesses would be facilitated in the manner of withholding and deposit of tax. This continues to create difficulties for businesses who have to do the job of the tax authorities, bear costs of additional book keeping and then subsequently face the harassment of the tax officials. “It would have been better if these taxes and duties were either done away with or some compensations were extended to the businesses for performing this additional service on behalf of the tax authorities”, he added.

He urged the FBR to revisit and withdraw the provisions under 108AB of the Finance Bill 2019-20 that has triggered severe anxiety amongst the business and industrial community.

Junaid Makda stated that the Karachi Chamber was currently reviewing the entire Finance Bill, taking inputs from all stakeholders and identifying several anomalies which will soon be submitted at the FBR with a request to rectify the same on top priority basis as the implementation of such anti-business measures would put the survival of many industries at stake
Shawal 9, 1440 A.H.

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