Karachi: ACCA Pakistan organised a Pre budget discussion on 29 April 2011 in Karachi, with an aim to contribute its research and insight towards healthy fiscal measures in the country. The discussion was led by Mr Komail Abbas Badami, Member Fair taxation subcommittee, Mr Khawaja Tanweer, Commissioner Revenue, Division FBR, Mr. Ahmed Chinoy, President Memon Federation and Chief of CPLC Karachi and Mr. Muzammil Aslam EVP, Chief Economist and Head of Business Development JS Group.
ACCA Pakistan advocates a taxation system that is fair and stable and has a minimal compliance burden. This year, ACCA also draws policy maker’s attention to the agenda – ‘Encouraging Enterprise – The Growth of Business’
In order to promote private sector investment in Pakistan , the panel proposed that the corporate tax rate should be gradually reduced to 34% and tax of listed companies to 33%. Further, the withholding tax on dividends should be reduced from 10% to 7.5% to encourage investment.
On the front of indirect taxation, the panel concluded that general rate of Sales Tax should be reduced to a maximum of 15%, which would increase consumption, resulting in demand-led growth. The panel also propounded that government reconsiders implication of Sales Tax on the import of machinery and raw materials and were apprehensive that the move can potentially damage economic development. ACCA Pakistan is of the view that the Federal Excise Duty has caused an increase in the indirect tax burden on the manufacturing sector and therefore the same should be abolished for that sector.
Broadening the tax base is deemed critical and it was proposed that the provincial laws relating to the taxation of agricultural income should be implemented in letter and spirit and a mechanism be devised by which the FBR collects such taxes, which can then be passed on to the provinces.
ACCA Pakistan further proposed that immediate steps should be taken by the FBR to reduce the difference between the number of persons holding national tax numbers and the number filing the yearly Income Tax return.
Measures for promotion of tax culture were highly recommended; documentation of the economy, creating an integrated data warehouse for sharing of information about transactions were suggested.
ACCA Pakistan is of the view that a comprehensive review of all applicable tax laws should be carried out through consultation with all the stakeholders, to make the necessary legislative amendments to simplify and facilitate tax compliance. The panel concluded that it is critical to promote business activity by attracting and retaining investment, and suggested interventions like establishment of new tax-free zones, tax holidays, and provision of equity allowances.