Pakistan Computer Association proposes endeavours to further boost ICT sector

ISLAMABAD, Pakistan: Pakistan Computer Association (PCA) has submitted proposals and a datasheet to the government for incorporating it in upcoming Budget 2016-2017 which are aimed at further promoting Information Technology (IT) sector in the country.

The tax policy proposals focus on withdrawal of some taxes and imposition of fixed duties/taxes on IT products. These measures are to encourage legal imports of IT products, and removal of GST charges, so that the IT industry is provided with a level-playing field.

The PCA has submitted a comprehensive datasheet to supplement its tax proposals, which cover almost all areas of IT products.

This sheet shows proposed fixed charges applied on respective products to give yearly, quarterly and monthly estimate of the cost it will yield in order to discourage smuggling, and promote genuine and documented trade.

The datasheet shows that the fixed duties if applied on each item will net the government a revenue collection of more than Rs. 5 billion as compared to the previously low level.  In addition, the cost of the smuggled IT products as against the documented imports in the market show huge anomaly thereby not only hampering the IT business and losses to IT traders but also depriving the FBR of revenue from the sale of genuine IT products.

Apart from the datasheet, the PCA has also suggested proposals on other important issues hitting the IT industry including the Import Trade Price (ITP), undocumented IT sector, PTA Type proposal, Increase in Limit of GST Registration charges and revision of Valuation of Guidelines for IT Imports.

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With regard to Import Trade Prices on IT Products, the PCA stakeholders believe that there are some lacunas in current import trade prices on IT products and suggests changes in applicable tax regime by fixing ITP on lower side at its import stage which will increase number of legitimate importers and discourage undocumented persons in the market and entice them to join the tax net.

Regarding Documented Computer Sector, the PCA proposed that existing tax structure on computer IT equipment, including laptops and notebooks, particularly at import stage has created distortion between the legal import and informal channels.

The computer sector is paying a wide range of taxes to ensure documented imports along with payment of taxes at domestic stage.

There is a need to tackle the menace of smuggling in the country on priority basis.

Another issue of concern for PCA stakeholders involves the production of PTA Type Approval certificate by customs officials for clearance of the government on every networking product, which is required only for few wireless products working on restricted frequency band.

Consequently, many of the networking products are now coming by illegal means, causing the loss of revenue to the government.

The PCA suggests that PTA’s “Type Approval” should be withdrawn.

Similarly, regarding increase of Limit for GST Registration, the PCA proposed that currently the minimum limit for GST Registration is Rs. 5 million which is too low and is difficult for a vendor to run his business. The profit margins are less than 3 % in the laptop, HDD, Memory, USB & Processor business and not more than 5-6 % on the rest of the products.

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The issue is of implementation of Valuation Guidelines for IT imports, which have higher values for clearance of consignments at Karachi Port and cause delay in clearance of the IT imports as well as loss of precious time and market access.

The proposals would have also encouraged the legal imports of IT products as against the “Kepi Mafia” which is causing huge losses to national exchequer by illegally importing equipment.  Therefore, all IT products should be brought under the full and final import settlement bill as per the submitted datasheet.

Source: APP

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