Pakistan to Launch New Tax Initiatives

October 28, 2011 Taxation in Pakistan

Tax changes in PakistanKARACHI – Pakistan is looking to narrow its extensive budget deficit, and the government is taking steps to implement new measure to improve tax collections and tax compliance across the country.

While talking to the media on October 27th the Chairman of the Federal Board of Revenue (FBR) of Pakistan Salman Saddique said that Pakistan needs to overhaul its tax system and take proactive steps to cut down the occurrence of tax evasion across the country.
Pakistan is currently examining the tax systems of other countries around the world in order to draw ideas of how to improve national tax collections. According to the Chairman, plans are already being finalized to broaden the national tax system by introducing a comprehensive and wide reaching value added tax (VAT) to the country. He said that that 136 countries currently utilize a VAT system, and “…we [Pakistan] have to follow the world to keep pace with the comity of nations”.

Pakistan is also looking to launching a “tax lottery” system to encourage businesses and taxpayers to report and file their transactions. Under the lottery scheme, receipts issued by businesses could contain a serial number which would be entered into a national draw. Serial numbers would be drawn out monthly, and be eligible for monetary prizes from the FBR. The initiative is aimed at reducing the size of the underground economy by encouraging taxpayers to demand tax receipts for purchases.

When the FBR implements changes to the tax system, efforts will also be made to ensure that the new regulations are simplified in order to ensure that all taxpayers across the country are able to follow and comply with the new rules.

The FBR will also implement programs to draw a greater number of people into the government’s tax net. There are currently 2.3 million individuals in Pakistan who have been found to lead lavish lifestyles, without being registered as taxpayers.

Photo by rchughtai — “not very active”