enters into benami transaction should be liable to tax at the rate of 25 percent of the fair market value of the property held in benami.
The federal government, in coordination with provincial governments, should design the valuation mechanism for properties in various categories. The value needs to be revised at a level every year through independent valuer’s. The value so determined should be at minimum 75% of the current market value.
The special provision aligned with OECD guidelines in respect of transfer pricing needs to be introduced which will empower the officer of inland revenue to properly probe the transactions with associates. Immunity on account of probing against unexplained inward remittances needs to be restricted.
Harmonisation of tax rates in respect of the salaried individual and other than salaried individual and AOP. The existing slabs needs to be revisited and the maximum rate of tax should be brought down to 25 percent.
All the person generating income in all categories should get themselves registered and obtain their NTN with tax authorities. The FBR should ensure that all the NTN holders should file their tax returns along with the wealth statement. Bonus shares shall be excluded from the definition of income or not than the rate of taxation should be 1 percent.
The definition of prize needs to be inserted in Section 156 of the Income Tax Ordinance 2001. The minimum threshold for the income to be taxable under Income Tax Ordinance 2001 should be Rs500,000 for the tax year. Issuance of Prize Bond of Rs25,000 or Rs40,000 needs to be discontinued. Prize bonds of these denominations can be deposited in Bank Accounts till 31 Dec 2015. Tax so deducted on the Prize Bonds should be made adjustable that will suffice the purpose of documentation.
The report asks the government to devise measures to enhance the Tax Payers’ cost of evasion, reform the entire tax collection system preventing the tax dodgers from going underground and strengthen the tax administration to increase potential of discovering non-compliant tax payers by field survey, better data-mining and analytics. It also recommends the government to increase penalties for underground economy.
All income, irrespective of source, has to be tapped and taxed. Need for declaration of assets including bank accounts held by resident pakistanis out of Pakistan and undisclosed income outside Pakistan under a special law and regularise declared assets by payment of tax at specified rate [The Undisclosed Foreign Income and Assets Act],
In case of non-declaration of assets outside Pakistan, the assets of equivalent value in Pakistan should be forfeited under the provisions of the law along with other severe penalties:
-Informal economy has to be the main target.
- Discourage cash and all bearer instruments.
- Promote use of banks.
- Encourage Documentation.
A high level Commission/Committee has to be set up to develop a specific action plan defining KPIs and time frame to reduce the level of informal economy
The FBR should put in place effective law to the property investments and speculations. Rules for sections 113 A and 113 B of Income Tax Ordinance 2001 should be announced in the Finance Bill 2015.