ISLAMABAD: The resources mobilisation commission wants an advance tax on future dividends, a minimum tax on all movable and immovable assets, and a fair exporter tax on the rich.
The commission suggested tax law changes to broaden a narrow tax base, reduce leakages, and improve enforcement. Section 111 of the Income Tax Ordinance promotes a parallel and black economy, so it sought changes.
The Reforms and Resource Mobilisation Commission (RRMC) released its interim report Saturday despite the FBR’s refusal to provide data and records.
Pakistan Revenue Automation Limited gave the commission incomplete data. Ishaq Dar received the interim report from RRMC Chairman Ashfaq Tola.
Moreover, The commission proposed 5% advance income tax on listed company dividends and 7.5% on non-listed companies. Distributable reserves taxed. In the first 10 months of the current fiscal year, tax collection dropped Rs400 billion, resulting in one of the world’s lowest tax-to-GDP ratios.
Finance ministry praised RRMC
After the meeting, the finance ministry praised RRMC for identifying taxation system issues and proposing revenue policy reforms for resource mobilisation, ease of doing business, and taxpayer facilitation to sustain economic growth.
Moreover, After consulting stakeholders, the meeting approved business-friendly tax reforms. Sources said the commission proposed a minimum asset tax on Pakistan’s moveable and immovable assets’ fair market value. The commission suggested penalising sole proprietors and non-corporate exporters for corporatisation. Sole proprietors taxed 10% more. While, The commission suggested taxing non-corporate exporters 1%–8%. Moreover, The commission’s final budget proposal increased exporters’ dividend tax.
The commission suggested taxing exporters who kept proceeds abroad longer than required. To tax exporters, the commission suggested a minimum tax regime.
The commission suggested simplifying wholesale, distributor, and retailer tax rates. Active businesses should pay 1%. Other businesses need 4%. The commission suggested raising commercial importers’ withholding tax to 8% and rationalising minimum service taxes. Commission recommended limiting property gains tax exemption to those who declared the property in their wealth statement in the year of acquisition and subsequent years until it is sold.
While, The commission suggested amending Section 111 of the Income Tax Ordinance to tax all undocumented Benami assets in the year of discovery. The amendment addresses FBR time-barred cases. Unexplained income and assets abuse Section 111. E-assessment eliminates taxpayer-taxman contact.
