Federal Board of Revenue (FBR) has put forth a proposal which will see firms and individuals pay 25% more in ‘minimum tax.’
The proposal also suggests that due to the upcoming budget, the tax rates might be increased to 1.25% from current 1%.
The above mentioned details of the proposal contradict the guidelines provided by the Tax Reforms Commission (TRC), which suggested to lower the current tax rates by 50% instead.
Why was Minimum Tax Introduced?
The purpose behind introducing the ‘minimum tax’ was to ensure that taxpayers pay their dues. If a corporate concern had a turnover of over Rs. 10 million, it was bound by law to pay 1% of its overall sales in taxes.
Irrespective of whether a company was earning profit or not, it still had to pay the taxes.
Current Situation
There are around 24,000 companies which are paying taxes as addressed by the law but 30% of them are showing losses whereas 39% show neither loss nor profit.
The FBR’s proposal is expected to affect nearly 7,000 companies, if the proposal passes through the preliminary stages.
Over the course of the last four budgets, the new taxation measures grew revenues by Rs. 1.2 trillion thus far. Furthermore, total tax collection has also increased from Rs. 1.956 trillion in June 2013 to Rs. 3.114 trillion by June 2016.
Future Hopes
FBR has set a target of collecting Rs. 3.887 trillion in taxes in the upcoming fiscal year. However, the International Monetary Fund says that the target should be Rs. 4.06 trillion.
Sources claim that since FBR has failed to improve its efficiency, it will have to rely on this new and proposed method to enhance its revenues and meet their set targets.
FBR also states that the filers of income tax returns is below 1.1 million and that the organization will be looking to improve on those statistics as well.
FBR should be raised taxes on Lawn, Banquet, Hotels, Real States Marketing, Etc.
Sub k Sub Under invoidcing kar rahy hai : Or Tax Ka Sara Bojh AWAM Pe Ja Raha Hai :
Jis tarha WEBOC Ko Ap Logo ne Clearing Ek Page Pe Kar Diya hai
At least services dene walo ka bhi software banao or total income pe tax lagao na k under invoicing main
People of Pakistan should not pay tax, Until they are not able to track where their money goes… Trillions collected and spend where no one knows, Why we cannot have computerized access portal, where we can see where money is being spent…. On which project, Who was awarded project what was minimum bid,… How much spent on |B Nazir income support, who are beneficiries… So this will mitigate corruption up-to greater extent.
Government is budget main aik new tax introduce karwanay jarahi hai “Gullu Tax”.
The target of 4.06 trillions can be easily met if they get rid of FBR and their officials, who pocket more than this amount.
FBR should consider judges as well. They have exempted themselves from paying taxes. 1.1 million figure would look small once they are made to pay taxes as well.
Kindly update, currently minimum corporate tax is 2% not 1%
Ù–FBR may consider abolishing income tax and instead enforcing VAT at a nominal rate. After some adjustments along the way, FBR may end up collecting more revenue than at present. The manpower and resources wasted in trying to collect income tax should be used to collect VAT vigorously.
this is not tax this is actually Noon Welfare Fund for the poor and miserable, so please give generously even zakat and sadaqah is acceptable by them.
outrageous how IMF is micromanaging Pakistan economy and FBR seems to IMF department.