The Securities and Exchange Commission of Pakistan has taken a right steps in the right direction for the documentation of the national economy as it is going to decrease the amount of fee for the formation of a company and filing of returns under the Sixth Schedule to the Companies Ordinance, 1984. According to a statutory regulatory order, the corporate sector regulator will ensure a 60 percent cut in the first slab of the capital fee with effective from May 31, 2016. In new incorporation cases, the fees is decreased from Rs2,500 to Rs1,000 for online and from Rs5,000 to Rs 2,000 for offline submissions. The commission has also rationalized the fee structure for other slabs and introduced the capital based filing fee for small sized organizations starting from Rs250 for online and Rs500 for offline submissions, replacing the fixed filing fee of Rs600 and Rs1500, respectively under prevailing structure. As an incentive, the commission will also provide a set of certified copies of the required documents without any charges to facilitate the registration process.
As another incentive, the commission will provide certified copies of all statutory returns to the companies to reduce the cost of starting a business and enhance the rate of statutory compliance. Experts believe that it is not easy to encourage the business community to opt for corporatisation in a country where corporate tax is higher and non-registered businesses or association of persons enjoy low tax regime. However, the government will have to discourage non-registered businesses by extending concessions and facilities to the corporate sector. The corporatisation of the economy will not only facilitate audit and tax collection, but will also make a leap towards documentation of the economy. The current taxes on corporate sector hover around 32 percent as compared to 25 percent taxes on small businesses. At least 60,000 companies are registered with the SECP and the number can be multiplied if association of persons are provided with tax relief. It is not denying the fact that a majority of the potential taxpayers are ready to get themselves registered with the taxation authority, but they are not ready to take any risk for their businesses.
If the recent amnesty scheme is not failure, it is also not a success either as the potential taxpayers have no trust in the prevailing system. The business community should also understand that they have to become regular taxpayers one way or the other. The differences of opinion between the tax authorities and potential taxpayers is only on the method and rate of tax collection and not on the tax compliance.
