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Business

May 13, 2017

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TRC proposes new codes for simplification of tax laws

TRC proposes new codes for simplification of tax laws

KARACHI: The Tax Reform Commission (TRC) has recommended new tax codes for simplification of laws, as the existing ones are complex, cumbersome and difficult to comply, a member of TRC Implementation Committee said on Friday.

2The member, on the condition of anonymity, said it has been recommended that the tax provisions should be structured, drafted and presented in ways that make the law easy to read, understand and implement. “Further, the law should have a logical and coherent structure,” he said.

The simplification of tax laws is the need of the hour because the erosion of taxpayers’ confidence in the FBR is an even more serious issue than erosion of taxpayer services, the member said, adding, by deploying sufficient resources (money and man) the quality of taxpayer services can quickly be reversed to an upward trajectory.

At present, an ordinary taxpayer views the current tax administration with fear and the lack of trust and confidence. “At the same time, the tax evaders seem to have no fear of the tax administration and the low number of tax filers is a testament to this,” the member added.

The TRC recommended simplification of tax laws as a short-term measure and may be a fresh tax code as mid-term / long-term measure.

The TRC was constituted in September 2014 by Finance Minister Ishaq Dar in order to bring reforms in the existing tax administration and collection. The commission presented its recommendations in May 2015. For the implementation on the TRC recommendations, another high-powered committed was constituted on January 15, 2016 under the chairmanship of Haroon Akhtar, special assistant to prime minister on revenue.

Most of the new recommendations made by the TRC are related to changes in amount of penalties in order to eliminate the fear in the minds of the taxpayers and improve compliance level. In the income tax ordinance, the TRC recommended reduction in amount of penalty of 50 percent to 10 percent on a person, who failed to comply with the filing of annual income tax return and wealth statement.

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