KARACHI: The Institute of Chartered Accountants of Pakistan (ICAP), in its budget proposals, has given a roadmap for broadening the tax base, facilitating already registered taxpayers, abolishing tax amnesty schemes and improving governance in the FBR.
It has suggested that tax structure should be reformed in order to ensure avoidance of multiple taxation by the provinces or the federal government.
In this connection, a pre-budget seminar was organised by ICAP here, with Federal Board of Revenue’s Large Taxpayers Unit Chief Commissioner (Inland Revenue) Syed Ayaz Mahmood, in the chair.
With reference to direct taxation, Asif Haroon, Member FCA, ICAP Taxation Committee, said that ICAP had recommended that tax policy board should play its role in the formulation of fiscal policy, and to oversee functioning of the FBR.
“In order to broaden the tax base, the industrial consumers of electricity and gas who are un-registered/non-filers must be identified,” he said, adding, “The Withholding Tax on natural gas consumption by industrial and commercial consumers should be introduced.”
He also called for the identification of unregistered wholesaler/retailers, services providers and real estate dealers / developers, in liaison with the provincial governments. He said the government should make a policy that holds tax officers accountable by incorporating coercive measures for the recovery of their ill-gotten wealth.
“Similarly, weak officers should not be posted in CIR-Appeals and ATIR Appellate Tribunal Inland Revenue,” he suggested.
“Likewise, the state should utilise the data of tax withholdings (including ST withholding) of unregistered / non- filers to register them,” he said, adding, “Permanent tax evasion and the amnesty scheme provided under Section 111(4), if cannot be abolished, should be made conditional: for example it should be restricted to remittances by an overseas non-resident Pakistani to a relative with monetary limits and for the purpose of investment in industrial undertaking in Pakistan. Haroon recommended that dual taxation should be avoided.
Talking about indirect taxation Asif S Kasbati, FCA, Member, ICAP Taxation Committee, highlighted five major steps to resolve the matters: avoiding dual taxation like FED and provincial taxes; resolving origination or termination issues; abolishing withholding tax on indirect taxes, and establishing a single directorate of audit with representation from each province and the FBR.
“To avoid double taxation, for simplifications, reduce cost of doing business and industrial growth,” he explained. While talking about standard tax rate reduction, he said, “Lower tax rate will promote registration and documentation.”
In order to promote registration and dealing with the registered sector, he recommended that extra incentives may be offered to the registered persons, if they deal with registered person; this may be in the shape of fixed or variable tax credit at the end of the year, like in IT Law.
