OICCI Calls for GST Abolishment on Branded Milk and Tea Whitener

The Overseas Investors Chambers of Commerce and Industry (OICCI) has presented a comprehensive 10-point demand charter to the Finance Minister, advocating for the removal of General Sales Tax (GST) on branded milk and tea whitener in the upcoming budget for 2024-25.

In their communication addressed to Finance Minister Mohammad Aurangzeb, the OICCI expressed appreciation for certain bold measures proposed in the Finance Bill 2024-25 on June 12. They pledged full support towards achieving the ambitious revenue target of Rs12.9 trillion, aiming to elevate the tax-to-GDP ratio to over 13% in the coming years.

However, the OICCI highlighted several concerns regarding the budget proposals, noting that efforts to bring retail and wholesale trade into the tax net were inadequate. They criticized the exclusion of agriculture income, which constitutes a significant portion of the GDP, from income tax obligations yet again this year.

The chamber emphasized that some proposed tax amendments could be counterproductive to retaining or attracting foreign investment. Specific grievances included the reinstatement of commissioner’s powers to reject advance tax estimates, which they argued could lead to undue harassment of advance taxpayers. They also criticized the proposed disallowance of 25% of total expenditure on sales promotion and advertisements as arbitrary and subjective.

Furthermore, the OICCI expressed apprehension over the withdrawal of commissioner’s powers to issue withholding exemption certificates, warning that this could exacerbate the issue of pending tax refunds and adversely affect cash flows for taxpayers.

A significant concern raised by the OICCI was the potential removal of branded milk and tea whiteners from the zero-rated sales tax regime. They argued that such a move would not only contribute to inflation but also threaten the sustainability and growth of the packaged milk industry, which plays a crucial role in ensuring the availability of safe milk.

Additionally, the OICCI objected to the proposed increase in advance tax rates for distributors, wholesalers, and retailers, viewing it as shifting the burden of non-compliance rather than addressing the root causes. They suggested that measures should focus on bringing these entities into the tax net instead.

Regarding amendments related to income tax deductions on export proceeds and changes in tax treatments for certain industries like hybrid electric vehicles and petroleum products, the OICCI warned that such measures could diminish competitiveness and undermine investor confidence in Pakistan’s economic policies.

In conclusion, the OICCI urged the government to reconsider, modify, or delete these proposed tax amendments to ensure alignment with broader goals of fair taxation and sustainable economic progress. They underscored the importance of engaging with key stakeholders, including foreign investors, in the budget finalization process to foster a conducive business environment in Pakistan.

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