KARACHI: The Federal Budget 2016 brings no major policy change in the taxation regime.
Except for certain incentives for industrialization, most of the proposals relate to tax collection measures instead of documentation and broad based income taxation.
There is a dire need to promote corporatization of businesses. In Pakistan, the gross incidence of tax and compliance burdens on corporate sector still remains higher and rigorous than non-corporate sector.
The strategy to promote corporatization is not apparent in the Finance Bill 2016 introduced in the National Assembly.
On the contrary, there are certain proposals such as dilution of group taxation and holding company regime, which are not in line with the internationally acceptable and successful corporate taxation norms. This policy needs to be reconsidered.
There is also a need to prescribe measures for documenting assets held by Pakistanis in and outside Pakistan.
The distinction between ‘filer’ and ‘non-filer’ has been used as revenue generation measure instead of identifying the new taxpayers. This requires a dedicated policy which brings non-filers in the tax system for income based taxation.