Karachi, In a stark warning issued to the Federal Board of Revenue, Iftikhar Ahmed Sheikh, President of the Karachi Chamber of Commerce and Industry (KCCI), expressed serious concerns over the recent amendments in the Sales Tax Rules 2006 through SRO.350(I)/2024. Sheikh highlighted that these changes would negatively affect compliant businesses by imposing arbitrary restrictions across various sectors without proper stakeholder consultation, potentially leading to significant complications and undermining the ease of doing business.

According to Karachi Chamber of Commerce and Industry, Sheikh's remarks came in a letter addressed to Malik Amjed Zubair Tiwana, Chairman of the Federal Board of Revenue, urging the FBR to reconsider the amendments. Particularly contentious is Rule 5, Sub-Rule (2), which mandates registered entities to submit detailed financial disclosures, a requirement deemed redundant by Sheikh given existing compliance documents. Moreover, the newly introduced biometric verification process for business owners, aimed at combating fraudulent activities, was criticized for creating unnecessary barriers for those already compliant with tax regulations.

Further amplifying concerns, Sheikh pointed out the practical challenges posed by amendments such as the cap on sales volume to a maximum of five times the business capital of an entity. He argued that such measures fail to account for the nuanced realities of business operations, especially in sectors reliant on extended credit terms. This restriction, he warned, could inadvertently hamper business growth and stifle economic activity.

The KCCI President also called attention to the adverse effects of the current Further Tax rate on sales to unregistered persons, suggesting a reduction to mitigate incentives for tax evasion and encourage broader compliance. Sheikh's recommendations extended to proposing adjustments in sales tax and withholding tax rates for wholesalers and retailers, aiming to foster a more inclusive and fraud-resistant tax environment.

The criticism and suggestions put forth by the Karachi Chamber of Commerce and Industry reflect broader concerns within the business community regarding regulatory changes that may inadvertently penalize compliant entities and stifle economic growth, urging a reevaluation to ensure a balanced and growth-oriented tax policy.