KARACHI: The Institute of Chartered Accountants of Pakistan (ICAP) has announced their budget proposals.
These proposals are for the Federal Board of Revenue (FBR) and the Government of Pakistan for their consideration while formulating the Budget and the Finance Bill for the year 2010-11.
Major recommendations of the 55-page proposals are as follows: The rate of corporate tax for public and private companies in Pakistan should be gradually reduced to bring it at par with other competitive economies and to provide an incentive for the formation of an organised and documented sector.
The concept of tax credit for reinvestment of retained earnings for the purpose of balancing, modernisation, replacement and expansion should be re-introduced to reduce the effective corporate tax rate.
The huge gap in the maximum tax rate should be narrowed by expanding the non-salaried tax bands so that the maximum tax rate of 25 per cent starts at least from income above Rs5,000,000.
Keeping in view the prevailing inflationary trends the ‘zero’ tax rate thresholds should be increased up to Rs 300,000 both for salaried and non- salaried taxpayers. Exemption of capital gains on shares of listed company should be withdrawn.
Income from property of the corporate sector should be excluded from the presumptive/ final/fixed tax regimes. Withholding agents should be allowed to retain 10 per cent of the amount of tax collected as service charges on the principle of natural justice. The rate of withholding tax on cash withdrawal should be increased from current 0.3 per cent to 0.5 per cent.