ISLAMABAD: The government has dismissed an IT assiduity’s demand for waiving a ‘negligible’ duty on its services to support the sector’s faltering exports but agreed to give maximum facilitation, including impunity from inspection by the duty authorities.
Presiding over a meeting of the IT sector on Sunday, Finance Minister Ishaq Dar observed that the effective duty rate on the sector was about0.25 per cent, which was “peanuts”. He said people should develop the habit of paying levies on their inflows rather of seeking immunity. A duty of Rs2.5 on exports of Rs 1,000 is “nothing”, Mr Dar said.
He, still, promised that IT professionals exporting their services would not be transferred duty notices by the Federal Board of profit(FBR) and their duty returns would not be subordinated to inspection to minimise their profit cost.
Also, he also directed the FBR to set up a unit where devoted officers act as a one- window installation and handle refund and duty credit cases of the IT sector to reduce hassle.
Finance Minister Dar is the president of the Prime Minister’s Task Force on Information Technology and Telecom. The meeting of the task force was also attended by IT Minister Syed Aminul Haque, Special Assistant to Prime Minister( SAPM) on Youth Affairs Shaza Fatima Khawaja, SAPM on Finance Tariq Bajwa, State Bank Governor Jameel Ahmed, Finance Secretary Hamid Yaqoob Shaikh, IT Secretary Mohsin Mushtaq, and speakers of the FBR and the Pakistan Telecommunication Authority.
Informed sources said the IT ministry had taken up with the task force a host of challenges crippling the software import sector.
It was explained that on the expiry of the duty vacation to the IT sector, the PML- N government under former high minister Shahid Khaqan Abbasi had replaced the duty vacation with0.25 pc of full and final duty. This couldn’t be enforced owing to traditional challenges with the duty authorities and duty notices started to flow out to top- ranking companies like S&P Global.
On top of that, the government in the 2021- 22 budget reduced the advance income duty for the sector from 12pc to 10pc with a pledge that it would be reduced to 8pc in the coming financial time. As fresh diapason deals and other expansion, the FBR was suitable, through the December 2021mini-budget, to rather increase the advance income duty to 15pc on the premise that the International Monetary Fund wanted this duty to go over rather of a promised sliding scale.
The IT sector and the ministry had been agitating that this had paralysed the sector, leading to a fall in exports by a many million bones in the first many months of this financial time compared to the time- ago period.
Again, the IT ministry supported that an import price scheme should be offered to software and IT services exports at the rate of at least 5pc because they were professionals of nominal worth but would be encouraged to declare their income proceeds for price.
The ministry told the task force that not only the IT professionals were unhappy with FBR’s tactics, the perpetration of a policy that imaged authorization to use 35pc of import proceeds for marketing purposes hadn’t come into force.
It explained that, unlike manufacturing goods that can be tracked because of their physical exports, IT exports proceeds could be fluently situated abroad through outlets established in Singapore, Dubai and other Middle Eastern destinations. In such a situation, the government may also face challenges in rolling out 5G telecom diapason licences.