SIALKOT    -    Sialkot Chamber of Commerce and Industry (SCCI), in its proposals for federal budget 2019-20, suggested that current mark-up rate on Export Refinance schemes not to be enhanced. The government should take steps to reduce the interest rate since it has made borrowing expensive for private sector and discouraged investment. Especially, mark-up rate under Export Refinance Schemes should not be enhanced to maintain the competitiveness of the export business, says a press release issued by SCCI.

The exemption from the payment of Sales Tax on imported plant and machinery for Greenfield projects should also be granted to brownfield projects and BMRE. Special tax facilitation is needed for sick units, for which rules should be framed.

The provincial governments should re-zone areas in and around urban centers, both for industrial and commercial use to help entrepreneurs invest in business. The government should urgently establish Special Economic Zones and Pakistani business entrepreneurs should be provided with the same incentives as offered to the foreign investors.

Land provided to foreign investors should be leased out for initial period of 20 years, which should be extendable up to 30 years. For Pakistani investors, option should be available for freehold and leasehold properties. Foreign investment should only be allowed as a Joint Venture with Pakistani investors or as a public listed company so that local investors could also be benefited.

All existing industrial units should be regularized/commercialized at minimum property valuation rates as existing DC rates were exorbitantly high. Separate SECP’s Offices for registration and regulation of companies should be established. Registering a company should be separated from regulating a company. Regulation should start once the company starts its operations.

There should be One Tax Collection Agency for the collection of both Federal and Provincial Taxes.

It is also proposed that samples up to the value of USD 500 should be totally exempted from any sort of duty, taxes and levies to facilitate the export sector of Pakistan. Moreover, the Manufacturers cum Exporters have to import certain parts of production machinery on emergent basis as a result oaf malfunction or breakdown, which entail high percentage of duties. It is therefore proposed that the duties, taxes and levies on spare parts for such machinery should be waived. Previously, it was allowed to exporters to retain 7 percent of their total export earnings in foreign currency accounts in Pakistan. This facility has been withdrawn and now exporters are only allowed to pay commission up to 7 percent of the export  proceeds in foreign currency. It is proposed that the facility of retention of 7 percent of the export proceeds in foreign currency accounts might be restored to facilitate export sector of Pakistan.

The following taxes should be completely abolished for the export industry and social security protection of the workforce should be met out of other taxes collected by the Government. Labour related taxes e.g. EOBI, PESSI, WPPF, WWF (Social protection of the workforce is prime responsibility of the State), Federal and Provincial Sales Tax. (Export Sector is Sales Tax zero-rated sector), Professional and Property Tax (No rationale for charge of taxes on export business) and Education Cess (Levy of Education Cess not pertinent to export business).

The SCCI suggested that all Raw Materials must attract zero or low custom duties. Government must eliminate Regulatory Duty (RD) and Additional Custom Duty (AD) on Raw materials, so that local industry is able to compete with smuggling and mitigate the effect with low tariff FTAs, Rate of Duties of raw materials used as an  input for the industry must be the same for the Manufacturers and the Traders, so that SMEs who would procure inputs from Traders could have a level playing field to offer competitive rates, Custom Duties (CD) on intermediary products be reduced so that our industry is able to import quality materials, components and machinery from abroad at the same duty rate at which it could be imported through different Free Trade Agreements (FTAs), Nonpayment of Duty Drawback claims is creating liquidity problems for the exporters.

Payment through promissory notes should be extended to all sectors including five zero rated export sectors. It is further proposed that a limit of Rs 1,000,000 (One Million) should be prescribed for issuance of promissory notes and refunds of the  value less than One Million should be issued through crossed cheques.