KARACHI: The government’s focus should be on undertaking meaningful reforms to increase revenue and increased tax collections should be made from those who have, so far, kept themselves out of the tax net, said the American Business Council (ABC).
“The government needs to widen the tax net and ensure that all sectors of the economy are taxed appropriately. Pakistan has the lowest tax-to-GDP ratio in the world, it is imperative for the government to identify new sources of revenue,” said the ABC President Nadeem Elahi.
These suggestions were part of the budget proposals the ABC had submitted to the Federal Board of Revenue (FBR) for the upcoming fiscal year 2016-17 (FY16-17)
The detailed document prepared by the ABC Finance and Taxation subcommittee, included proposals for the elimination of 8% minimum tax on services and calls for the applicability of a standard income tax across all businesses.
The proposals also called for sales tax to fall under the value-added tax (VAT) mode, thereby allowing full adjustment of inputs and urged the government to review the taxation structure for salaried individuals as unjustified increases in the tax rate were contributing to an outflow of talent.
The chamber, in order to promote foreign direct investment (FDI), proposed the qualifying period for tax credits under section 65 (D&E) to remain in place without any binding of time, as companies evaluating investment plans in Pakistan would include the incentives in their feasibility plan.
“We believe the legitimate sectors of the economy are disproportionately targeted in the application of tax laws,” said the council, adding that the problem was further magnified by companies that are openly selling illicit goods and not paying taxes.
Published in The Express Tribune, April 21st, 2016.
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