KARACHI: The Competition Commission of Pakistan (CCP) has advised Sindh Revenue Board (SRB) and Punjab Revenue Authority (PRA) to withdraw the exemptions granted to the informal, non-corporate transporters of goods, from sales tax on inter-city carriage of goods by rail or road.
CCP took notice of the Circulars issued by the Punjab Revenue Authority and the Sindh Revenue Board on September 01, 2015 and July 24, 2015, respectively granting exemptions to the informal transporters of goods from sales tax.
CCP observed in a policy note that the exemptions granted to the non-corporate entities had placed the corporate sector at a competitive disadvantage.
The policy note states that preferential tax treatment of different undertakings is a competition concern as it creates an arbitrary distinction between services providers, with some entities liable to pay sales tax while other providers of exactly the same services in the same market are excluded.
Such discrimination has the effect of lowering the costs of one group, which is not based on more efficient management or other economic factors, and relies instead on the government-created advantage.
Apart from creating the anti-competitive environment, the exemption also has the implicit effect of promoting the undocumented sector at the cost of the documented sector, which needs to remain a separate policy consideration.
CCP recommends that the Punjab Revenue Authority and the Sindh Revenue Board withdraw the exemptions granted through their Circulars, in order to ensure a level playing field for all market players.