KARACHI: The Institute of Chartered Accountants of Pakistan (ICAP) has submitted its pre-budget recommendations with regard to textiles, oil and gas, hotel, pharmaceutical, automobile, leather and sugar industries.
ICAP had already submitted its recommendations with regard direct taxation and Sales Tax separately.
Taxation and Economic Policies Committee, headed by Saqib Masood, has submitted the new set of pre-budget recommendations.
With regard textile industry it suggested that all textile units, particularly and generally export-oriented units, which prefer Balancing, Moderanisation and Replacement (BMR) of their units, should be allowed “tax credits”.
Tax credit should also be allowed on marketing costs and other expenses directly related to export sales.
For amicably resolution of issues relating to anti-dumping, an independent unit be established at Export Promotion Bureau.
ICAP said oil and gas sector has been neglected but it is one of the most lucrative sectors in recent times.
ICAP said, instead of providing tax holiday for 10-15 years, exemption may be restricted on a percentage basis related to extraction, gradually reducing it from year one up to the minimum useful life of the oil well.
Tax credit also be made available on development works at the oil rig.
For hotel industry the institute said the industry has been declared as industry and Central Board of Revenue (CBR) also recognised it as industry but “considering the foreign exchange generated by hotel industry, it should be given Status A as against prevailing Export Status C in conformity with other exporters.
Foreigners visiting Pakistan should be required to pay their hotel bills in foreign currency. This had been announced in the budget in the year 1999 but has so far not been implemented.
ICAP said it is proposed that payments should be required to be made in foreign currency so that it would become a great source of foreign exchange earnings.
For pharmaceutical industry, ICAP presented following suggestions:
1. Tax credit or incentives be provided on the establishment of Research and Development Institutes by foreign pharmaceutical companies or foreign partners of pharmaceutical companies R and D activities carried out in Pakistan on their behalf.
2. For automobile industry the institute has recommended introduction of tariff based incentive system instead of deletion programme.
3. For leather industry the ICAP has suggested that tax incentive in the form of tax credit to exporters, attaining a certain volume or amount of export sales, should be allowed.
4. For sugar industry the ICAP said Molasses should be utilised in the production of ethanol rather than exporting the same. It should be made mandatory to use a five per cent volume of fuel grade ethanol, which is ozone friendly in petroleum products used in motor vehicles. This would result in saving huge foreign exchange.