ISLAMABAD: The Foreign Direct Investment (FDI) is not decreasing but has been fluctuating over the years. In financial year 2015-16, the FDI increased by 106 percent to $ 1,901.2 million from $ 922.9 million in 2014-15.
Sources told Customs Today that increased FDI also casts positive impact on revenue collection besides making working of the FBR field officers easy.
The FBR collected Rs 2,589.9 billion taxes up to June 30, 2015 whereas net amount collected in single month of July this year was Rs 151.9 billion.
The sources said that soft approach has been taken on the issue of over and under invoicing due to increased FDI. The cases of fake refund claims are also decreasing.
The outstanding income tax refund claims for the fiscal year 2014-15 remained Rs 3.59 billion; Rs 141 million from corporate sector and Rs 34.56 million from non-corporate sector. The total amount of pending sales tax refund claims was Rs 6.75 billion on June 30, 2015.
To a question about link between the FDI and corporate tax, the sources said that the corporate tax could affect other countries in different ways. If a country’s domestic tax burden is high relatively than the other countries, the tax base may shift to countries with a less burden tax regime.
“Therefore, taxes may also play a major role in firms’ decisions about where to declare profits. In fact, anecdotal evidence suggests that multinationals spend considerable resources on transfer pricing and other tax-planning techniques involving cross-border transactions to minimize tax liabilities” the sources added.
During the sample period (1988-97), the sources said that countries in the low-tax group experienced much lower net FDI outflows as compared to the high-tax group.
