ACCA Pakistan has submitted budget proposals 2009-10 to the FBR. The budget proposals were finalized after a consultative process initiated by ACCA Pakistan Budget and Taxation sub-committee and involved all ACCA members.
Under the theme “Supporting Fair Taxation,” ACCA Pakistan recommendations aim at enabling equitable economic growth of Pakistan through supporting enterprise, environment conservation, social equality, encouraging saving and investment.
In order to support manufacturing enterprises, currently threatened by increasing cost of doing business, ACCA Pakistan proposes corporate tax rates for the manufacturing companies are reduced to 30% inclusive of WWF from the present 35%. The marginal tax relief that was made available to salaried individuals should be extended to the AOPs and the non-salaried individuals. Furthermore it is proposed that the tax on commercial imports is increased from the present 2% to 5%. Tax relief on capital equipment purchased to ensure continuity of power supply should be provided to SMEs to enable them to effectively manage the current energy crisis.
The budget proposals recommend that green taxes should be introduced to encourage sustainable business practices. A green tax levied @ PKR10 per plastic bag can contribute to the revenue generation and will discourage the use of plastic bags, thereby mitigating a major environmental hazard. Sales tax and import duties on import of machinery for the water and energy conservation should be abolished.
In order to promote the culture of saving and investment, it is proposed that tax credits should be given on the cost of shares acquired under employment share schemes and fixed deposits held with scheduled banks for more than 365 days.
ACCA Pakistan also recommends that FBR broadens the tax base and increases perceived fairness of taxation system by taxing agricultural income. As agricultural income is highly dependent on cyclical weather conditions, tax can be calculated by averaging agricultural income for two years.
ACCA Pakistan budget proposals also emphasise the need to indemnify the individuals by proposing personal benefits for example national insurance and tax benefits for widows and orphans. Inheritance tax may be imposed on the value of the gift or inheritance that exceeds Rs. five million.
Capital Value Tax (CVT) withdrawal is also suggested.
Keeping with international best practice, the Alternate Dispute Resolution Committee (ADRC) may be empowered to pass an appropriate order after hearing rather than only act in an advisory capacity. ACCA Pakistan also recommends facilitation of tax payers through enhanced efficiency of e-portals.