FPCCI calls FBR provisions disappointing

KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has shown dismay, as the Federal Board of Revenue (FBR) continues with the provisions of the ITO Third Amendment 2021, a statement said.
FPCCI president Mian Nasser Hayat Maggo blasted the FBR over its provisions which seek to compel companies to make payments for their expenses through digital mode instead of cross cheques, which is the prevalent mode for settling sale and purchase transactions in the country.
Maggo stated that he was shocked by news reports revealing serious ‘conflict of interest’ underpinning this provision of coercing companies to make payments digitally.
Adding that it has been learned that this proposal was initiated by a committee of the FBR and not by the FBR itself and that committee includes an owner of a B2B FinTech company that provides software services for digital payments.
He stressed that the aforementioned amendment threatens to disrupt business transactions because almost all sales in the country are made on credit.

FPCCI has taken note of FBR’s contention that “3rd party payments are highly prevalent in the organized and informal sector whereby businesses do not use their own bank accounts when making payment for supplies and tell their own customers and transaction-based informal investors to make direct payments to the principal supplier. This is highly prevalent in supply chains and has become an accepted norm”.
FPCCI considers this as a fallacious argument, as such practice cannot be employed by a company as it has to deduct withholding tax on all payments that it makes and submit returns of tax withheld to the FBR, he added.
President FPCCI explained that a company can only indulge in such practice if it has an ‘undeclared business account’ in a bank. Any such delinquent company can continue to make payments digitally despite the change in the law as the bank account used is ‘undeclared’ anyway.
Maggo pointed out that, nowhere else in the world, bank cheques have been discontinued or businesses coerced to use digital mode of payment instead of bank cheques.
Digital payments are evolving in Pakistan and developed countries are way ahead in employing digital mode of payments, but they too, have not coerced companies or anyone else to limit or discontinue use of cheques, he added.