PBC suggests restoring tax credit on sales to registered person

KARACHI: Pakistan Business Council (PBC) has urged the Federal Board of Revenue (FBR) to revive tax credit on sales to registered persons for documenting the economy and providing a level playing field for domestic manufacturing.
In its proposals for budget 2018/2019, the PBC said that Section 65 of Income Tax Ordinance, 2001, which allowed a tax credit of 3 percent for companies which made 90 percent of their sales to registered person has been withdrawn through the Finance Act, 2017.
The PBC suggested that tax credit under Section 65A should be restored and an additional section should be added to Section 65A to allow manufacturers who buy from registered sellers / suppliers a tax credit.
It further advised that in order to encourage transactions with registered sellers / suppliers as well as buyers, a progressive tax credit starting from 0.5 percent in case 50 percent of sales to registered persons eventually going up to 3 percent in case of 90 percent if sales are to registered persons. Similarly, a 0.5 percent income tax credit should be allowed if 50 percent of purchases / supplies are from registered persons going up to 3 percent when 90 percent sales are to a registered person.

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