SOHAIL SARFRAZ & ZAHEER ABBASI

ISLAMABAD: Finance Minister Ishaq Dar has said that another round of dialogue between government and traders would be held today (Tuesday) on the issue of withholding tax on banking transactions.

Finance Minister said he himself would chair the meeting between the FBR and the business community representatives with a view to resolving their genuine reservations.

On the conclusion of meeting between FBR and traders, Finance Minister Ishaq Dar reached FBR House and got input on a day-long meeting between the FBR and business and trade community. Finance Minister announced another meeting for Tuesday (July 28) which would include representatives of business and trade who are not part of the already constituted 19-member committee.

However, representatives of traders said that their day-long talks with the government on the issue of tax on banking transactions remained inconclusive and they have decided to go on a countrywide strike as protest against the tax from August 1, 2015. Trade associations, including All Pakistan Anjumani Tajran of Ajmal Baloch, Lahore Traders Alliance; Muhammad Afzal Anjumani Tajran KPK; Anjumani Tajran Punjab; Sindh Tajir Ithad Chairman Shekih Habib; Haji Sheikh Muahmmad Shafiq Anjumani Tarjran Okara and All Karachi Tajir Ithad Chairman Muhammad Atiq Mir Monday announced a shutter-down strike on August 1 against the levy of withholding tax on banking instruments of non-filers. The representatives of the chambers including Islamabad and Rawalpindi, which were present in the meeting, did not announce that they too would go on a shutter-down strike.

The FBR had called a meeting of a 19-member committee to have deliberations on the issues, but a large number of traders across the country reached FBR and became part of the discussions with the FBR team of tax managers as well as Adviser to the Prime Minister on Finance Haroon Akhtar. The FBR Auditorium was full with representatives of business and trade who were not part of the committee.

Talking to media persons, Finance Minister said that the government has invited traders to the second round of dialogue today (Tuesday) to address their concerns on the issue of tax on banking transactions. He said some of the traders’ concerns are genuine and added that tax evasion has to be stopped.

“We want to facilitate business community and at the same time we also want to expand our tax net for the socio-economic prosperity of the country”, the finance minister remarked.

Dar said that the current fiscal year would be a difficult one for the government as it would need Rs 100 billion for rehabilitation of temporary displaced persons (TDP). Moreover, he added that funds would also be required for the people affected by the devastation caused by the ongoing floods across the country.

The Finance Minister was upbeat about the amicable settlement of a dispute between government and business community. The government has already halved (from 0.6 per cent to 0.3 per cent) withholding tax on banking transactions for a period of three months (till September 30) after a two round of negotiations with traders in Ramazan. Traders said that they want complete withdrawal of tax on banking transactions.

Parliamentary Secretary on Finance Rana Afzal hinted at constitution of a committee to consider sectoral impact of tax before taking any decision. He was also talking to media outside the Federal Board of Revenue (FBR) where the two sides have held dialogue on the issue.

FBR Chairman Tariq Bajwa said the FBR is ready to include more members in the 19-member committee constituted to have deliberations on the agreement between business community and FBR dated July 9, 2015. The numbers of members could be expanded from 19 to 24. There is no issue of filers of income tax returns, but only non-filers are facing the issue of withholding tax deductions on banking transactions.

Responding to a query of business community, FBR Chairman said that filers are not liable to pay withholding tax on banking instruments. “If any bank has deducted withholding tax from filers of returns, I as FBR Chairman took full responsibility to ensure refund of the deposited amount,” Tariq Bajwa said.

Adviser to the Prime Minister on Finance Haroon Akhtar told media that the people are ready to come into the tax net and file their income tax returns to avoid payment of withholding tax on non-filers of returns. However, the government is committed to removing irritants of the business and trade. We have heard the problems of the traders and would resolve their issues highlighted during the meeting.

During an interaction with the FBR, MNA Mian Abdul Manan who is a member of the committee asked the government to expand the scope of the committee and include more representations from all provinces. We all are filers and filing due tax returns. We should not fight the war of the non-filers who are required to pay the withholding tax on banking instruments. The main issue of traders filing returns under the self assessment scheme is to deal with the issue of turnover tax on declarations of higher sales/turnover.

“Despite the fact that I am member of the tax advisory committee, there is no harm in accepting the fact that the lower staff of the FBR’s field formations is corrupt,” Manan said.

He said that a summary of recommendations of the trade bodies would be prepared for Finance Minister Ishaq Dar incorporating viewpoints of the businessmen present in the meeting. A list of participants would be made; and their recommendations would be forwarded to the Finance Minister.

Naeem Ahmad Mir, General Secretary All Pakistan Anjuman-e-Tajran, said that it was a memorandum of understanding (MoU) signed between the FBR and business community, which was not an agreement. The business community can whiten their money without payment of additional tax/penalty. He suggested that a three-year national tax reform program (2015-17) be introduced under which tax rationalization be done. He suggested that the scope of the committee be expanded, including representatives of small cities and far-flung areas. The income tax slab system to be replaced with the simple turnover tax regime. Out of total audit of the FBR, 50 percent audit of the filers and 50 percent audit of non-filers should be conducted. He suggested that business community should commit with the FBR to help in registration of 25 lakh new businessmen under the proposed national tax reform program.

One of the traders’ representatives from KP asked the FBR to start a survey of the markets for expanding the tax base. Last survey was done many years back and it should be launched across the country.

The representatives of traders, who rejected the levy of withholding tax, included Ashraf Nasir Faisalabad; Amir Butt Sheikhupura Chamber of Commerce; Haji Ghulam Rasool from Khushab; Haji Shakoor; Malik Zafar Iqbal Chairman traders association Chakwal and Sheikh Baber Gujranwala.