Tax to GDP ratio projected from 15% to 20%
In the recent past, massive changes have been introduced to the taxation regime. To ensure exchange of information in tax matters so as to prevent evasion and avoidance of tax through cross-border trade and financial transactions, Pakistan signed OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MCA) on 14th of September 2016. Pakistan, later, also signed the OECD’s Multilateral Competent Authority Agreement on Automatic Exchange of Financial Accounts Information (MCAA) on 7th of June 2017. Subsequently, Pakistan has made legislative changes in the Income Tax Ordinance, 2001, (ITO, 2001) and the Income Tax Rules, 2002, (ITR, 2002) while it also undertakes administrative measures to implement the Common Reporting Standard (CRS). Effective from September 2018, Pakistan has been collecting and providing information on financial accounts to foreign tax jurisdictions.
As the mechanism of automatic exchange of information exposes hidden offshore assets, investments, income and accounts of the resident Pakistanis to the tax authorities (the Federal Board of Revenue), such resident taxpayers will face potential civil, tax and criminal penalties for non-reporting. To address this situation and to raise additional tax revenue amidst widening fiscal deficits, to promote documentation of economy in time of low tax compliance, to boost foreign exchange reserves when foreign exchange reserves are dwindling and to improve the balance of payments in the wake of large current account deficits, the federal government decided to enact foreign assets and foreign income voluntary disclosure programme.
The Twelfth Five-year Plan (2018-2023) has proposed the following changes in the taxation system to enhance the tax to GDP ratio from 12% to 20%:
- remove bottlenecks in tax system and tax exemptions;
- review and simplify tax laws, rules and regulations;
- create central data bank of businesses, non-taxpayers and taxpayers;
- bring an end to automation of tax system;
- establish transit trade management system;
- segregate functions of tax administration and tax policy; and
- implement ICT-based National Single Window (NSW) system to provide unified platform for trade regulators.
Sorry you have no rights to view this Article/Post!
Please Login or Register to view the complete Article
To get full access EMAIL your username, Subscription Plan and email address at firstname.lastname@example.org for details
SUBSCRIPTION PLANS Rs. 3300 for 1 year.
This post has been seen 67 times.