ACCA seeks single digit tax rates

LAHORE: The Association of Chartered Certified Accountants (ACCA) has asked the government to reduce tax rates to a single digit and ensure broadening of the tax net by adopting data analytics and artificial intelligence via sources such as NADRA.

In the budget proposals, ACCA asked the government to move away from indirect taxes and go for rationalisation, standardisation and automation of tax laws and administration to minimise harassment of taxpayers.

The suggested structural reforms include harmonisation of federal and provincial tax laws, issuance of a single tax return, and reduction in the discretionary powers of tax authorities. It also asked to structure appraisals of Federal Board of Revenue (FBR) functionaries on growth of business sectors under jurisdiction to instil a mindset of using tax as a means for GDP growth, incentivise taxpayers to promote a tax culture, and to establish an independent appellate forum at Commissioner Appeals level.

The association also expressed hope that the government would have a long-term strategy for import substitution, incentivise local industry, and impose heavy duties on non-essential imports and luxury items. Tax benefits to businesses pioneering UN’s SDGs have been recommended.

The negative growth in sectors such as mining and quarrying (down 6.49 percent) and electric generation (down 22.96 percent) was also highlighted for the government to take immediate action.

Agriculture, presently growing at 2.77 percent, has the potential to reach up to 55 percent of the GDP from the current levels of around 24 percent. “For this to happen, there’s a need for large landowners to be taxed at minimal rates, ie 7 percent. The revenue generated through this should be used to subsidise seeds, fertiliser, water, electricity, fuel, etc for the small farmers. The use of latest, sustainable farming technology and easy access to cheap or interest-free loans should be ensured,” it proposed.

Focus on bringing down line losses, improving energy mix with clear plan for transition to renewables, as well as revising the existing costly agreements, could reduce the negative trend in electricity generation.

The document lauded government’s interventions such as Roshan Digital Account and incentives to the construction sector and mega projects such as Ravi Riverfront, and called for their continuation and further enhancements.

The global body was concerned about 11.56 percent unemployment, that was growing among youth aged 20-24, and urged government to make youth employment one of the focus areas with considerable spending in budget 2021-22.

Further, innovations in the Kamyab Jawan programme and introduction of new skills development and entrepreneurship support programmes with focus on emerging technologies should be government’s priority.

Significant increase in education budget with new programmes by provinces to support girls’ education, as well as adequate spending towards health and communications infrastructure, has been termed the “need of the hour” the association said. “Facilitation of high broadband penetration is critical for the future-fitness of our education sector and public services delivery.”

Segmented approach in programmes such as Ehsass to ensure benefits reach the most marginalised across the country should be adopted for an inclusive growth. Close collaboration with the IT/ITeS sector is needed, and the sector should be offered tax rebates to facilitate expansion.

Similar to CPEC, it was believed that there’s a potential for something like China-Pakistan Technology Zone to connect our innovation value chain with economies in the region.

The past outstanding refunds have only been cleared partially. It was important to strengthen the trust of the taxpayer as well as provide liquidity to businesses, especially at a time when businesses were recovering from the effects of the pandemic. The government needs to ensure openness and transparency to foster trust and cultivate a healthy tax culture in the country.