World Bank recommends comprehensive review of Pakistan tax policy based on fairness, transparency

World Bank recommends comprehensive review of Pakistan tax policy based on fairness, transparency

KARACHI: World Bank has recommended a comprehensive review of tax policy in Pakistan that should be based on fairness and transparency.

In its bi-annual Pakistan Development Update-2017, the World Bank said that the country had posted significant increase in revenue collection by taking several measures.
“To achieve these, a comprehensive review of tax policy is required, assessing it against the key principles of neutrality, fairness, and transparency,” it said.
In addition, a fully automated and able tax administration is imperative to take advantage of modern IT infrastructure that uses the available data to reduce th chances of tax evasion, it added.
Finally, post-18 Constitutional Amendment, the lack of coordination among different tax authorities has increased the compliance cost of taxpayers.
There is a need to establish a coordination mechanism to resolve taxation issues between the federal government and the provinces, and among the provinces.
The World Bank said that in recent years, Pakistan’s tax revenues have grown significantly (from 9.5 percent of GDP in FY11 to 12.4 percent in FY16) owing to federal and provincial efforts. The Federal Board of Revenue (FBR) has removed discriminatory exemptions provided through SROs, resulting in a significant reduction in tax expenditures.
The provinces’ contribution to total tax revenue reached 0.9 percent of GDP. Nonetheless, to sustain these gains, the next level of reforms needs to be implemented. The objectives of such reforms should include the broadening of the tax base, increased tax compliance, and reduced administrative and taxpayer compliance costs.

Source: pkrevenue

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