Introduction Generally speaking, tax reforms are meant to reduce burden of taxes on poor and middle class, to attract investment, to increase burden on non-compliant taxable persons, to minimize discretionary powers of tax authorities, to remove sectoral distortions in domestic taxes, to broaden the tax base and to maximize the size of formal economy. On 21st June 2017, in order …

Achieving tax revenue target remains the top priority of the Federal Board of Revenue (FBR). For this purpose, the FBR employs conventional and unconventional methods. However, historical data indicate that the FBR missed the tax targets for the most of fiscal years (FYs). For example, the FBR could not achieve even the revised tax revenue target of Rs 3.5 trillion …

The tax gap in Pakistan is estimated to be 9.8pc of the GDP as the current tax-GDP ratio is around 12.5pc against a potential of 22.3pc as per a World Bank report. The tax gap is attributed to taxpayers’ non-compliance and limited tax capacity of the federal tax authorities. Withholding taxes to overcome tax evasion The Federal Board of Revenue …

On 30th May 2017, the Companies Act, 2017 (the Act), which replaces the 33-year-old Companies Ordinance, 1984, was assented to by the President of the Islamic Republic of Pakistan. The most significant legal reforms to bring the company law in Pakistan at par with current international standards are set out below: Borrowing Powers: part of memorandum Pursuant to Section 30, …

In its annual ‘Doing Business 2017’ report, the World Bank has concluded that Pakistan is among the 10 ‘most-improved’ economies in areas tracked by the report. The report tracks regulatory changes in 190 countries for businesses throughout their life cycle — from the ease of business startup regulations and getting credit to property rights. The 10 most-improved countries were Kenya, …

The level of taxes has increased considerably in the developed and developing countries since the and of the last century. Such significant increase in taxation raises questions on its effects on economic growth rate. Every government gears its policies for accelerating economic growth and reducing unemployment and inflation. It is empirically established that the structure and level of taxation can …

The economy of Pakistan is largely agro-based. According to Economic Survey of Pakistan 2015-16, this sector alone contributed 19.8% to GDP. About 42.3% of labour force is employed in this sector and the rural population of the country largely depends upon this sector for livelihood. It is also to be remembered that Pakistan, at present, is the sixth most populous …

Taxation policy has been widely used as an instrument to enhance the size of formal economy, considered crucial to allow economy to operate at full employment level, fizzle out underemployment, wipe out poverty, ensure gender equality and stabilize economic growth. Empirical evidence shows that workers in the informal economy face higher risk of poverty than those in the formal economy. …

Value-added Tax (VAT)/General Sales Tax (GST) frauds are rife in developing as well as advanced economies using VAT/GST system for raising indirect tax revenues. Perhaps, susceptibility of VAT/GST to frequent frauds as a weakness has emerged as the most-debated issue in the recent past. In Pakistan, GST fraud is no less than a daunting challenge for the Inland Revenue tax …

 Pakistan’s tax system largely depends on indirect taxation to collect tax revenues for balancing the budgets. Unlike most developed countries, where more than 60% tax receipts are raised through direct taxes viz. income tax, property tax, inheritance tax, wealth tax, etc., more than 60% of Pakistan’s federal tax receipts are collected through indirect taxes including sales tax, customs duty and …