Pakistan Business Council Expresses Concerns Over Misuse of Super Tax
Pakistan Business Council Expresses Concerns Over Misuse of Super Tax. Pakistan Business Council (PBC) regrets it is regrettable that Super Tax has penalized successful big businesses, and signaled the advantages from remaining small and unnoticed which has led to fragmentation.
In accordance with the recommendations made by the PBC on tax reforms as well as restructuring the FBR major modifications are needed in the structure, personnel as well as the technology used by the Federal Board of Revenue (FBR) and fiscal policy in order to make taxation fair, broad-based and efficient in increasing the country’s tax-to-GDP ratio. The key reforms are that every income above an amount that is a minimum, regardless of where it comes from should be taxed. Fiscal policymaking must be separate from tax collection.
An audit that operates independently from the FBR and is usually comprised of the most reputable firms of accountants . to increase the confidence of taxpayers.
Other reforms include a complete overhaul of FBR’s human resources FBR and the training and use of technology to be placed at the forefront of.
The FBR will be granted temporary relief to prevent the FBR to stop it from trying to meet unreasonable tax collection targets until reforms are completed. The unpredictable and inconsistent fiscal policy is susceptible to quick changes and tax taxed taxed already in order to reach revenue goals. However, using SROs is to give relief or exemption to specific sectors or taxpayers, PBC stated.
Unrealistic and front-loaded tax collection goals for an under-funded FBR along with provincial revenue agencies force them into chasing existing taxpayers and use the tactics of harassment instead of objective assessments as a method to achieve these. In the meantime, until the FBR and province revenue agencies are drastically transformed and their ability to expand the tax base by the utilization of technology isn’t taken into consideration, the possibilities of expanding the tax base is restricted. Pakistan Business Council Expresses Concerns Over Misuse of Super Tax. The tax collection targets must be set for both who are in and out of the tax base, so that their achievement of expanding the latter is more apparent”, PBC recommended.
The FBR should gradually reduce tax rates on corporate and income and eliminate the gap between taxation of profit distributions by corporations and the withdrawal of profits from the business of sole traders as well as an Association of Persons.
Pakistan is one of the most complicated tax structures , with multiple tax and regulatory authorities for companies to manage. Separation between the federation as well as provinces has not been helpful. Taxes need to be unification with returns streamlined and the possibilities for personal interactions be curtailed; encourage the retention of capital groups, group formation, and the investment in machinery and plant.
A tax of 17% seems a high rate for an economy that is not well documented and gives an incentive to dodge taxation, which creates unjust advantages for those in the informal sector. The Sales Tax system must be operated in the VAT-like mode, and the input tax either at reduced or full rates should be passed through for companies. Advance and withholding tax burdens the flow of cash for businesses and need to be reduced slowly. The cross-adjusting of refunds made between Income Tax, Sales Tax and Excise Duty ought to be allowed to allow refunds, if they exist, are able to be adjusted in relation to tax dues, thereby decreasing the pressure on cashflows. Advance and withholding taxes on consumption of the poor though theoretically adjustable, are not fair due to the fact that they earn less than the threshold for taxable income and the inability to get refunds. This increases the cost of cell phone services, thereby limiting an industry that could contribute to economic formalization.
It also pointed out that the transit agreement with Afghanistan is being misused due to the diversion of goods into Pakistan. The treaty is overdue, Pakistan can renegotiate in the more favorable regional conditions, place limitations on the quantity and quality of the goods that can be transported and insist on the use of letters of credit to and charge tax and GST on imports, which will be reimbursed back to the Afghan government at the time of exit. monitor and track containers, increase inspection of empty containers coming back and strengthen physical security at the border more secure.
Fiscal policy is designed to discourage the growth of companies and consolidation, as well as diversification of investments, and greater shareholding by taxing intercompany dividends in multiple stages. Super-tax penalizes businesses that have a high success rate and indicates the advantages of remaining small and unnoticed and encourages fragmentation instead of efficiency and scale, PBC added.