LAHORE: TUV AUSTRIA Bureau of Inspection and Certifications Limited Chief Executive Rashid Mehr has termed the eight per cent tax on revenue as a draconian law, which is severely damaging the sector that contributes over 53% to gross domestic product (GDP).
In a statement, the business leader said that in contrast, all industries have been facilitated by giving reduction in corporate tax to 32%. He said that the government has ignored the fact that by implementing such a law, it is discouraging new start-ups and future investments in the sector, adding, “It is a principle that new businesses are not taxed during their infancy all over the world.”
He said all service sectors including information technology, certifications and inspections, public relations, advertising, marketing, event management, telecom and freight forwarding and clearing, facilitate economy at large will collapse in six to eight months.
Mehr said the taxation rule of thumb says deductions are to be made on profits only. As per the previous practice, all payments received by any service provider were subject to deduction of five percent tax which was later increased to six percent and subsequently to a minimum eight percent on receipts of payment.
However, all service providers could adjust the withheld tax against their actual tax liability. It is shocking that the new amendment to the law requires all service providers to pay minimum eight percent tax on revenue, he maintained. Mehr said the service sector is already paying 32% corporate tax and was recently slapped 16% and 14% GST in Punjab and Sindh, respectively.
