ICAP calls for structural reforms in tax system


ISLAMABAD, May 13 (APP): The Institute of Chartered Accountants of Pakistan (ICAP) has called for structural reforms to broaden tax base and simplify system of determining tax liability.
Speaking at a seminar on budget proposals 2017-2018, the tax experts belonging to ICAP said at present various alternative modes of determining the effective tax liability of a taxpayer were in place.
They said the corporate sector, which was the most documented segment of the economy, had been neglected due to extreme tax collection measures in order to meet annual budget targets.
Tax expert Ejaz Hussain Rathore said although tax evasion needed to be tackled with strong measures, however tax compliant taxpayers should be extended supportive interface by the tax department.
He suggested the tax should be reduced to bring it at par with other competitive economies and to provide incentive for strengthening of organized and documented sector.
He added in order to promote corporatization, small companies should be brought at par with association of persons and individuals by providing threshold turnover of Rs 50 million for the purposes of withholding agent under Section 153.
Another tax expert Asif Kasbati proposed that in order to promote, encourage and incentivise export of services, the income from export of all types of services should be exempted in line with IT enabled services.
Alternatively, export of services be subject to reduced rate of tax as in case of export of goods, he added.
The experts said tax payer should be allowed a compensation for disputed tax demand recovered but later deleted in appeals.
This would bring fairness in the process of collection and payment of tax system, and also enforce accountability for FBR field force.
The decision of Alternative Dispute Resolution Committee (ADRC) should be made binding on FBR, and only in case of serious reservations, Federal Board of Revenue (FBR) may be allowed to appoint another committee for review of the decision of the ADRC, they added.
They said Islamic modes of financing should be treated at par with the financing obtained from conventional financial institutions for the purpose of computation of income tax liability in order to provide tax neutrality treatment to customers of Islamic Financial Institutions.