LAHORE: The top services sector companies have formed a new association namely Services Sector Action Group to convey their voice to the government high-ups.
These companies have also expressed their concern over the impact of revised minimum revenue tax on their businesses. It was agreed in the first meeting of the group that the imposition of 8 per cent minimum tax posed a threat to a large number of services companies.
It was also decided that until a relief was provided, a number of companies would discontinue their services and an announcement in this regard would be made soon. The group is also considering resorting to legal options.
In the federal budget for 2015-16, the 8% withholding tax on payments to service providers is to be considered a minimum tax regardless of whether the service provider is a profitable or loss-making entity. In the case of loss-making companies, this tax will be paid from their capital reserves, effectively becoming a capital tax and a loss penalty on those investing in the services sector.
