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‘Tax system must be revamped in line with Chinese model’

Business

May 15, 2019

LAHORE: Pakistan-China Joint Chamber of Commerce and Industry (PCJCCI) President Shah Faisal Afridi said that Pakistan’s tax system should be revamped in line with the Chinese model, which was based upon growth instead of regulatory pressures.

Presiding over a meeting with the executive committee members of PCJCCI, he said administrative reforms were essential in the tax system and attention should be paid to re-designing of tax recovery system. He also briefed on the proposed tax reforms based on the Chinese taxation model.

PCJCCI president said there was need to create an optimal balance between a tax regime and the growth of business to create an investment friendly environment along with an effective mechanism for leveraging enough revenue for public service.

He said China had undergone splendorous community development on the bases of its taxation reforms, and Pakistan should make a paradigm shift to have a business friendly taxation system by following that model.

China made taxation central to the economic development agenda and community development goals, he said, adding that China had employed taxes as the principal means to transfer resources from private to public use.

PCJCCI Senior Vice President Ahmed Hasnain said in Pakistan only 0.3 percent of the population paid income tax, which was one of the lowest ratios in the world. “Around seven million Pakistanis are estimated to be eligible to pay income tax, but practically only less than 0.5 million people pay the tax,” he added.

China, the socialist state has fulfilled the needs of society from cradle to grave. Childcare, education, job placement, housing, subsistence, healthcare and elder care were largely provided and administered through state-owned enterprises.

Particularly, the reform of value-added tax (VAT) had boosted China’s service sector and developed its position as the “world’s factory”, he said.

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