Regulatory Duties
15 November 2017

Foreign investors on Tuesday urged the tax authorities to revisit the regulatory duty regime in order to promote investment and manufacturing in Pakistan.

Overseas Investors’ Chamber of Commerce and Industry (OICCI), which represents foreign and multinational companies in the country, said its members are unaware about the rationale behind the latest regulatory duties.

Federal Board of Revenue (FBR) imposed regulatory duties on 730 items through statutory regulatory order (SRO) 1035(I)/2017, dated October 16. OICCI said the foreign investors are aligned with the FBR objectives to broaden the tax base and increase tax to GDP ratio in equitable manner.

“But the foreign investors have concerns over the manner in which the regulatory duty regime is implemented,” an office bearer of OICCI said. The member said the chamber said the policy measures, including on taxation, should be predictable, consistent and transparent in order to lure foreign investment.

The member said the government slapped regulatory duties on new items as well as revised up duties on the products which already bear duties.  Foreign investors also shared their concerns with FBR.

“The changes have been done without engaging in any sort of dialogue with the business community, which could have given the authors of the SRO more information on how the changes in the regulatory duty would impact cost of doing business,” OICCI said.

The office bearer said the SRO affected raw materials, giving another crippling blow to the very small manufacturing base in the country.  “Some of these OICCI members have complained that the duty on their raw materials has been increased by as much as 30 percent and in some cases the cost of material will increase by over a billion rupees annually,
which may result in their product being priced out and encourage smuggling in the country,” the OICCI member said.

Pakistan ranked 147 out of 190 countries in the latest World Bank’s ease of doing business report, whereas India jumped to 100 from 130 last year. For 2018, Pakistan scored 172 in terms of tax payment as against 156 in the last year’s report.

OICCI said the present state of ease in doing business reflected the state of affairs in Pakistan, which would further damage foreign investments. The chamber urged FBR to immediately review and revise the contents in SRO 1035 in the light of an interactive and meaningful engagement with the key stakeholders like OICCI and other major business organisations.

OICCI also expressed interest to hold an interactive session between FBR officials and OICCI members within the next few days to resolve concerns of the foreign investors and local manufacturers.

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