KARACHI: The business community of the metropolis has urged the provincial government to withdraw 14% service tax on indenters, which was introduced in Sindh budget for fiscal year 2015-16
Karachi Chamber of Commerce and Industry (KCCI) President Iftikhar Ahmed Vohra warned that due to the imposition of the tax the indenting agents will register in other provinces.
In a letter to Sindh Minister for Finance Murad Ali Shah, KCCI pointed out that a number of industries and businesses have already moved out of Sindh due to the security situation and harassment on the part of tax authorities under various pretexts.
“It is also likely that many indenters will retain a major part of their earnings outside Pakistan, which will be a loss of foreign exchange for the country and also a loss in withholding tax (WHT) collection,” he added.
Vohra was of the view that indenters are not liable to pay service tax because they are not providing any local services. Rather, the indenters are engaged in export of service to foreign principals and paying 5% WHT to the federal government on such export earnings.