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The Income Tax Bar Association Karachi Pre budget seminar 2008 Proposals on Tax policy/reforms

The Income Tax Bar Association Karachi Pre budget seminar 2008 Proposals on Tax policy/reforms. SAQIB MASOOD, FCA Partner & Head of Tax KPMG Taseer Hadi & Co Chartered Accountants 24 March 2008. Current Status. Tax revenue collections – Improvements in tax buoyancy 2005-06 713b

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The Income Tax Bar Association Karachi Pre budget seminar 2008 Proposals on Tax policy/reforms

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  1. The Income Tax Bar Association KarachiPre budget seminar 2008Proposals on Tax policy/reforms SAQIB MASOOD, FCA Partner & Head of Tax KPMG Taseer Hadi & Co Chartered Accountants 24 March 2008

  2. Current Status • Tax revenue collections – Improvements in tax buoyancy • 2005-06 713b • 2006-07 846b • 2007-08 1,025b Target • Tax revenue composition 2006-07 • Direct tax – 39% • Sales tax – 37% • Excise – 8% • Customs – 16%

  3. Current Status • Tax return filers • 2006-07- 1.47 million • 2007-08- 1.8 million • Low Tax / GDP ratio • Pakistan – 9% • Low income countries -18% • Middle income countries - 25% • High income countries – 40%

  4. Analysis • Lower per capita income • Pakistan –$ 909 • India - $ 965 • Sri Lanka - $ 1558 • Thailand - $3400 • Tax evasion / under reporting • Lack of education for taxpayers

  5. Analysis • Non-discrimination between taxpayers and non-taxpayers • Manual information system • Inappropriate remuneration level for tax collectors • Role of tax experts / advisors • Multiplicity of taxes

  6. Tax Reforms The current tax administration reform process started around 2001 which has resulted in significant improvements, that include:

  7. Tax Reforms • Simplification of law – Introduction of the Income Tax Ordinance, 2001 • Universal Self Assessment Scheme • Improved automation • Customs administration reforms [CARE] • Pakistan Customs Computerized System [PACCS] • Sales Tax Automated Refund Repository [STARR] • E-filing, improved web-site

  8. Tax Reforms • Improved facilitation • LTUs / MTUs / RTOs • Capacity building measures • Work environment & Infrastructure • Remuneration • Training YET A LOT TO BE DONE

  9. Proposals • Harmonious approach to improve economic / business environment - tax policy not to be considered in isolation • Tax policy an engine for economic growth and equitable in implementation • Manageable administrative burden on businesses – reporting requirements • Reduced budgetary pressures on tax collectors

  10. Proposals • Expansion in tax-base • Capital gains exemption to be rationalized • Long terms gains and new public offerings continue to be exempt • Short term trading gains may be taxed at 10 percent • Real estate taxation • Curtail implied whitening schemes e.g immunity to inward foreign exchange remittances • ALTERNATIVELY limit exemption to revenue generating investments

  11. Proposals • Integration of data base • Incentives for taxpayers vs non-taxpayers • Change in mindset- facilitator vs collector • Improved transparency and fairness • Reduction in number of taxes

  12. Proposals • Capacity building – specially for indirect taxes • Separation of appellate forums from administration

  13. Thank you

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