Imposition of WHT to destroy furniture, hospitality industry: FPCCI

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Tuesday criticised increased dependence of the tax authorities on Withholding Tax (WHT) terming it detrimental for the economic activities.

Withholding tax has become the prime source of collection due to stress-free mode of collection and the failure of authorities to tap increasing undocumented segment of the economy, said Muhammad Ali, Vice President FPCCI.

Talking to President of Pakistan Furniture Manufacturers Association Ali Ansar Ghumman and representatives of Hotels Association, he said that imposition of 4 per cent WHT on furniture industry and banquet functions will lay waste to both the sectors.

It will result in massive closures, reduced revenues and unemployment of tens of thousands, he added.  He said that those dealing in furniture business have been asked to collect 4 per cent WHT from unregistered customers while the rate for registered businessmen has been fixed at 3.5 pc.

This amounts to changing businessmen and shopkeepers into tax collectors which is unfortunate, he said.  

Muhammad Ali said that hotel owners were already paying 17 per cent Sales tax. Now they have been directed to deduct 10 per cent WHT on all functions and gatherings along with the NIC number of the organiser.

The decision has deterred many from organising weddings, seminars, workshops, exhibitions, concerts, and parties taking toll on the business.

Muhammad Ali said that the decision proves that FBR continue to show dismal performance as far as the collection of indirect taxes is concerned.

Poor direct tax collection has helped WHT emerge as the leading tax collection mechanism for the FBR and now it is shifting blame on the business community which is unfortunate, he observed.

Expanding WHT regime overburdens the business community but tax department is still promoting it because it is not willing to perform duties and pass on the responsibility conveniently to the businesses.

He said that energy, inflation and falling rupee has already made life difficult for the business community therefore government should focus on reviving economy, especially non-traditional sectors.