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Business

May 18, 2018

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‘Pakistan must begin relying on direct taxes’

‘Pakistan must begin relying on direct taxes’

LAHORE: Pakistan needs to align itself with the taxation system in other parts of the world, and primarily rely on direct taxes instead of indirect taxes. Currently, direct taxes account for 37 percent and indirect taxes account for 67 percent of the total tax revenue collection.

This was highlighted at a discussion on “The Budget 2018–19: Challenges and Opportunities for Economic Reforms” organised by the Association of Chartered Certified Accountants (ACCA) Pakistan to keep professionals up-to-date with changes being made to the Finance Act.

The discussion deliberated upon the recent federal budget, the opportunities created and challenges posed by it for the ongoing economic reforms in Pakistan. The forum raised its voice to share their feedback with the Federal Board of Revenue (FBR) and other tax regulators.

The panellists analysed the budget in light of the global standards of fair taxation, its impact on broadening tax base, ease of doing business and global competitiveness indices, and China-Pakistan Economic Corridor (CPEC).

ICAP Council Member and EY partner Muhammad Awais Muhammad Awais gave the keynote speech. He said that in the budget some proposed changes in reference to the indirect taxation system under the sales tax law or the custom law have now been implemented through notification with immediate effect.

“However, the rest of the budget announcements will be implemented with effect from July 1, 2018,” he added.

The filer tax regime promoted the indirect taxation system, and until its elimination, the burden from indirect taxation cannot be shifted to direct tax and income based taxation system, he said.

Kamal Mian of Lahore Chamber of Commerce and Industry said the most difficult thing to do in Pakistan was manufacturing. He endorsed the vision of ACCA for ease of doing business and emphasised upon simplicity for ease of doing business.

ICMA Pakistan Executive Director Aamir Ijaz Khan said the key problem behind ease of doing business was red-tape. He emphasised that a regularised framework was needed to deal with this issue.

ACCA Pakistan Head Sajjeed Aslam said the purpose of this session was to achieve the milestones of emerging Pakistan, which had been identified by ACCA as seven percent plus GDP growth rate in the next five years, ranking in top 50 for ease of doing business, and ranking in top 50 for global competitiveness indices.

He conveyed that ACCA pledged to create such capacity, competency and talent within the society that would not only provide support for the economic growth of the country, but also assist in upholding the trust level of the society.

Aslam identified this to be the primary / key role for any accountancy body including ACCA, ICAP, ICMAP and ICAEW.

He said that the CPEC was not only about the opportunities, but its allied challenges as well. He elaborated on the 12 tenets of fair taxation in detail which were identified by ACCA through its global research base and represented to the rest of the world through ACCA’s global tax forum.

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