Pakistan has complex system with 70-plus taxes

South Asian Association for Regional Cooperation (Saarc) Chamber of Commerce and Industry’s former president Iftikhar Ali Malik has said that the reform of Pakistan’s tax system to make it simpler, more efficient and taxpayer-friendly would have several benefits.

Talking to a delegation of businesspersons, Malik said Pakistan had the most complex system with 70-plus unique taxes administered by more than 37 agencies.

“We are operating under the toughest, complex and cumbersome tax system, which needs a complete overhaul and revamp to reduce the number of taxes, interactions, frequency of payments and set affordable rates of taxes,” he said.

He highlighted the importance of making the tax system friendly and incentive-based instead of being coercive.

The ex-Saarc Chamber chief stressed that consolidation of taxes would ease administrative burden and reduce the number of agencies involved in tax collection, which could lead to more coordinated and efficient tax administration.

He called for promoting and expanding the digital tax filing and payment system to make it easier for taxpayers to comply and reduce the potential for malpractices. “Educate taxpayers about their obligations and the benefits of compliance. Public awareness campaigns can help build a culture of tax payment,” he added.

The shift from a punitive approach is also necessary to incentivise taxpayer compliance. In this regard, tax credits can be offered and timely deductions can result in accurate filings.

There is also a need to simplify tax laws to make them more understandable for the average taxpayer and avoid the requirement for extensive professional assistance.