KARACHI: The Finance Bill 2014 has proposed to insert a new taxation scheme of a higher corporate tax by company in order to charge 17 percent from accounting income having with certain conditions and to discourage the continuous declaration of losses by corporate tax. According to budget 2014/2015 brief issued by KPMG Taseer Hadi & Co, Chartered Accountants, the salient features of the scheme are: alternative corporate tax has been defined to mean tax at the rate of 17 percent of a sum equal to accounting income excluding the following: (i) exempt income (ii) income subject to tax under sections 37A (capital gain on specified securities), 148(7) (income from imports), 150 (dividend), 153(3) (supply of goods and execution of contracts) 154(4) (exports and indenting commission), 156 (prizes and winnings) and 233(3) (brokerage and commission); (iii) Income subject to tax credit under section 65D for newly established industrial undertakings and 65E for existing industrial undertakings. The Finance Bill 2014 said that income means the accounting profit before tax as disclosed in the financial statements or as adjusted by the apportionment of expenses between the amount to be excluded from the accounting income and the amount to be treated as taxable income. For the corporate tax means total tax payable by a company including tax payable on account of minimum tax and final tax under the provisions of the Ordinance but not including dividend income, royalty and technical fee in the hands of non-resident person and income from shipping and air transport in the hands of a non-resident person and any amount charged or paid on account of default surcharge or penalty and tax payable under this section. Apparently, the exclusion of tax and default surcharge etc. under section 161 and 162 appears to be misplaced. It said that the accounting income as explained in the foregoing paragraph shall be treated as taxable income for the purpose of this section. The Finance Bill said that excess alternative corporate tax paid over the corporate tax payable for the year shall be carried forward and adjusted against tax payable for immediately succeeding ten years. The aforesaid carry forward shall not dis-entitle the taxpayer carry forward and adjustment of minimum tax under section 113. In conjunction with new scheme any adjustment to the corporate tax or ACT as a result of an order under the Ordinance shall be reduced or enhanced accordingly. The provisions of this section shall not apply to the insurance companies, oil and gas or minerals exploration and production companies and banking companies. It said that tax credit in respect of extension, expansion, balancing, modernization and replacement of the plant and machinery admissible under section 65B shall be allowed against ACT. In the proposal of new scheme the commissioner is empowered to compute accounting income as per historical accounting pattern and make necessary adjustments after providing an opportunity of being heard.