FBR urged to withdraw alternative corporate tax

F.P. Report

KARACHI: Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has urged the Federal Board of Revenue (FBR) to rescind Alternative Corporate Tax (ACT) being applied on companies under section 113(c) of Income Tax Ordinance 2001 @ 17% of their accounting profit if their normal tax liability or minimum tax payable under section 113 of the Ordinance is lesser than the ACT amount. The suggestion is, inter-alia, also included in the comprehensive FPCCI Budgetary Proposals being prepared under the Chairmanship of Syed Mazhar Ali Nasir, Sr. Vice President, FPCCI.

The proposal apprehended that the Commissioner Inland Revenue has been authorized to re-compute the tax which would lead to tax disputes that would be developed due to difference of opinions between the assesses and the CIR in computation of tax liability and would run counter-productive to the government efforts to minimize direct contact between a taxpayer and a tax collector as it results in tax evasion and corruption.

“It appears that the FBR intends to collect extra money from the existing taxpayers instead of broadening of tax net”, it added.

It argued that withdrawal of ACT would provide correct taxation of the companies and give cash flow relief to those companies having available tax losses for adjustment against the current year’s income as ACT has made all types of allowances, concessions, tax credits adjustment of brought forward losses available under the Ordinance redundant.