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									                                                                             Pakistan Law Associates- Tax proposals   2009

Sensible taxation for prosperous Pakistan   PAKISTAN LAW ASSOCIATES




                                                              TAX PROPOSALS
                                                                                      FOR

                                                           FEDERAL BUDGET
                                                                                 2009-10

                                                                            By

                                                                   Muhammad Arshad

                                                                  Advocate High Court,
                                                     FCCA, LL.B, M.Sc. Hons., M.A. English, M.A. Econ.




                                              Suite No. 34 First Floor, Sadiq Plaza,
                       1
                                                        The Mall, Lahore.
                                                                0300-8439447
                                                    taxopinion@accamail.com

                                                     WWW.KNOWYOURTAX.COM
                                          Pakistan Law Associates- Tax proposals       2009




                                       Contents

Executive Summary                                                                  3

Foreword                                                                           4

Promotion of tax culture                                                           5

Making Parliament stronger                                                         6

Proposed amendments in

Income Tax Ordinance, 2001                                                         7

Capital Value Tax                                                                  13

Sales Tax Act, 1990 and FE Act, 2005                                               14

Customs Act, 1969                                                                  15

Pricing of Petroleum products                                                      16




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                                                         Pakistan Law Associates- Tax proposals   2009




           Executive Summary



    We at Pakistan Law Associates support fair taxation for prosperous Pakistan. Proposals have
    been made to promote tax culture by encouraging honest taxpayers. Proposed ‘ Ways and
    Means Committee’ of the Parliament can play a very positive role for fair taxation and
    control over expenditure of the Government.

    Different proposals are aimed at reducing taxes of overburdened manufacturing Sector and
    easing out payment of tax. Tax Free Saving Accounts have been proposed to promote savings
    by the public. Fairness demands that emphasis should be shifted from Presumptive taxation
    to taxation by applying general principles of taxation, commonly known as normal law
    taxation. A number of procedural amendments to facilitate taxpayers are also part of these
    proposals.

    In respect of indirect taxes, rate of sales tax is proposed to be reduced and a number of
    provisions inflicting undue penalties and other tax burden are recommended to be
    altered/deleted.

    Transparency in the system is need of the hour. Pricing of petroleum products lacks
    transparency and the same has been touched upon in the proposals to restore confidence of
    the people, in fiscal matters, in their own government.




Foreword

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                                                          Pakistan Law Associates- Tax proposals    2009




At present Pakistan is in the grip of instability. The causative factors are numerous and being mutually
supportive aggravate the situation on different fronts. Economic instability leads to unrest and unrest causes
economic instability. It is imperative that steps are taken to revive the economy and restore confidence of the
people in Pakistan’s potential to emerge as a stable, successful and prosperous country. For this all organs of
the state will have to work with full zeal and responsibility. The people of Pakistan expect that their
Parliament will play its role to bring Pakistan out of existing morass. One such annual opportunity is through
passing a Finance Act which helps in (a) mitigation of economic disparities; (b) development of infrastructure
for businesses; (c) promoting employment; and (d) raising revenue for development and non-development
expenditure of the government in a just, fair, and equitable manner. Since tax revenue generation is mainly
at the federal level, it is important to frame and amend Federal Tax Laws to promote tax culture where all
persons having taxpaying capacity pay it without undue hassle and business environment of Pakistan is
competitive among the nations. At present tax system, despite some reforms mainly focused on Human
resource management and use of Information Technology (IT), is prone to corrupt practices, leakages, hurting
economic development by excessive indirect taxation making manufacturing uncompetitive in Pakistan. It
favours the tax evaders and is harsh on existing taxpayers.

We, at Pakistan Law Associates, feel that the ‘Begging Bowl’ can be broken once for all, if leakages through
corruption and other wastes are plugged both on expenditure and revenue sides. The state assets state should
be used productively and not doled out at throw away prices to any person having any affiliation. The
Parliament should have comprehensive discussion on each tax and expenditure proposal before voting ‘ayes
and nays’.

This document contains proposals for direct and indirect taxes which will be helpful to boost revenue
generation while smothering their harmful impacts. We have also proposed that the Parliament should form a
‘Ways & Means’ committee to have real control of the Parliament on tax generation and revenue spending
and not merely ‘rubber stamping’ proposals put forward by FBR.

These proposals can also be accessed at www.knowyourtax.com

Wishing and endeavoring for a sovereign Parliament and prosperous Pakistan,

                                                                         Muhammad Arshad
                                        Promotion of tax culture


“A problem properly stated is half-solved.” John Dewey

Before discussing proposals specific to each tax, let us focus on promotion of tax culture in the country and
the role Parliament has to play in controlling finances of the Federation.



           Promotion of Tax Culture                               It will have to be considerate and ignore minor
 Unfortunately, at present we are in a state of confusion. It
                                                                  and bona fide errors of the existing taxpayers
 can safely be said that every person in Pakistan is either a
                                                                  and focus on those potential taxpayers who are
 taxpayer or a tax collector. Tax collectors include those
                                                                  not paying taxes. Non-filing of return should
 paid by the Government of Pakistan and those who have
                                                                  not remain unpunished and filing of return
 been assigned this task by coercing them to collect taxes
                                                                  should not be a bobby trap for extortion of
4for FBR due to FBR’s inability/lack of capacity to collect it.
                                                                  money by unlawful and illegal means on
 Growing number of withholding taxes is an indication
                                                                  frivolous technicalities. Without making this
 that FBR is becoming more incapacitated with every
                                                                  principle as the underlying theme of all tax
 passing year instead of becoming effective.
                                                                  laws, development of a healthy tax culture will
 Tax culture cannot be promoted unless one feels benefits         remain a mirage.
 of being in the taxpaying community. At present one feels
                                                        Pakistan Law Associates- Tax proposals     2009




 the following criteria should also be honoured by an           The awards should be distributed by a
 award of ‘Hon’ble Taxpayer’:                                   dignitary like the Finance Minister,
                                                                Governor or Prime Minister so that the
 i.       Tax paid in each of the last 5 years         is       Hon’ble taxpayers really feel the honour to
 Rs. 5.0 Million or more.                                       be envied by others.

 ii.      No penalty has been imposed on such taxpayer          A chapter about importance of tax for a
 during the last 5 years;                                       nation may be included in the syllabus of
                                                                graduation.
 iii.     All income tax returns and    applicable
 withholding tax statements were filed in time
          without any extension in time during     the
 last 5 years.
                                                                       Strengthening the Parliament
 iv.     No penalty or concealment           proceedings
 are pending in respect   of last 5 tax years.
                                                                No tax can be levied without authority of
 An ‘Hon’ble taxpayer’ and the ‘highest taxpayers’ should       the Parliament. This privilege imposes a
 be given the following benefits for next 3 (three) tax         very heavy responsibility on the Parliament
 years:                                                         to act judiciously while legislating any tax
 i.       Their returns may not be subjected      to            provision or amending it. It should exercise
 audit. [However, department can take action if it has          its control. Presently discussion on tax
5positive evidence of concealment]                              provisions is seldom satisfactory. There is a
                                                                feeling in the community that tax is not
 ii.      Their refunds, if any, should be paid                 spent for the welfare of the people but for
          within 7 working days of filing of tax return.        profligacy of the rulers and bureaucrats.
                                                                Therefore, it is proposed that the
 iii.     All         rectification       applications/appeal   Parliament may constitute a ‘Ways and
          effects, etc should be finalized within       7
                                                      Pakistan Law Associates- Tax proposals   2009




 It would be a sort of accountability of the FBR
 the way it is shaping tax administration in the
 country. Similarly, each item of expenditure
 should be scrutinized.

 Recommendations of the committee should be
 published for the sake of transparency and
 building confidence among the people. It will
 increase effectiveness of the Public Accounts
 Committee too through timely cognizance of
 different fiscal matters. The constitution of the
 committee may be such that all provinces and
 political parties having presence in the
 parliament are represented in the committee. It                   “No problem can
 will promote sense of participation and ‘say’ in                withstand the assault
 the matters of the Federation and help in its                   of sustained thinking.”
 strengthening.

 The same committee can also act as a                                            Voltaire
 supervisory body in respect of sub-ordinate
 legislation on tax matters.

  You can view tax returns of the President and
  Vice President of the USA on the internet. This
  explains the importance they give to
  transparency and the principle ‘lead by example’.
  If our Parliament takes steps on its own to place
  income tax returns of all members of the
  Parliament on internet, it will send a
  encouraging and confidence building message to
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  the public.
                                 Pakistan Law Associates- Tax proposals   2009




                     DIRECT TAXES
                       (Proposed amendments)




A.   Income Tax Ordinance, 2001




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                                                               Pakistan Law Associates- Tax proposals              2009




Income tax is a direct tax having its impact on the person who pays it. Unfortunately, over the years it is
being implemented in indirect mode bereaving it of the benefits associated with direct taxes. The FBR should
work on the ways to reduce withholding taxes specially those where they are treated as final tax under
Presumptive Tax Regime (PTR) or otherwise. The following proposals may be considered in this regard.




    A.1       Option may be given to be     assessed on the           A.2        Rate of tax for non- salaried
    general   principles of taxation                                  persons

    All the taxpayers whose receipts/turnover and incomes             Paragraph (1) of Division I of the First
    are subject to withholding taxes, should be given an              schedule deal with tax rate of non-salaried
    option to be assessed according to general principles of          persons. The tax card is defective as it results
    taxation applicable to the category to which that                 in huge increase in tax where a bracket of
    taxpayer belongs. To prevent misuse of this right, the            income is marginally crossed. For example,
                                                                      where income exceeds by one Rupee over
    option once exercised may be made irrevocable for next
                                                                      income bracket No. 13, tax liability on
    3 tax years. The objective can be achieved by
                                                                      increased Rs. 1 is Rs. 52,000. Similar defect
    amendment in section 169 and other sections dealing
                                                                      present in tax card of salaried persons was
    with withholding taxes.                                           removed last year. It is proposed that a
                                                                      proviso be added to the paragraph (1) ibid to
    The PTR regime should be abolished gradually and                  give marginal relief to non-salaried persons
    normal law taxation should be the rule. If FBR acts               also.
    wisely and honestly there will be no decrease (if not
    increase) in overall tax revenue at national level on             A.3        Tax Rates for Corporate
    account of this shift. However, the shift (resulting in
    fairness) will help in promoting tax culture.                     Tax rates for different types of companies
                                                                      (based on activities rather than legal
                                                                      structure) may be fixed giving special
                                                                      incentives for those sectors which are growth
                                                                      drivers of the economy. It is suggested
                                                                      that:




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                                                            Pakistan Law Associates- Tax proposals              2009




    A.3.1    To reduce excessive burden of tax                      extent of determination of their total turnover.
    on our manufacturing        sector, tax rate
    may be reduced to 30% inclusive of WWF                A.4.3     Every individual taxpayer whose tax liability
    from the current 35%        exclusive     of          under presumptive tax         regime is Rs.50,000/-should
    WWF.                                                  be        required to file wealth statement. For
                                                                    reconciliation any increase in net    worth or
    A.3.2     As       an         alternative        to   expenses, etc. either audited accounts should be adduced
              proposal at A.3.1, the levy of              as        evidence or an imputable income
    WWF may be suspended            for next 2 tax                  formula be introduced as was in the repealed
    years as a tax      break. Even otherwise, at         Income Tax Ordinance,         1979.
              present more than 66            Billion
    Rupees of WWF are               un-utilised (April,   A.4.4     Supplies and services upto Rs.        150,000
    2008).                                                may be exempted from tax                keeping in view
                                                          exemption of        income under the normal law upto
    A.3.3     Banking sector in Pakistan is                         Rs. 100,000/- and Rs.180,000/-        available
    enjoying unprecedented        spread. Keeping         under the normal law to      non-salaried and salaried
    in        view       nature of        banking         persons, respectively. This will place persons
    business, its taxation at 35% is not upto                       with low turnovers at fairly equal    level
    the mark and should           be enhanced to          whether they are under the              normal law tax
    at least 42%.                                         regime or           presumptive tax regime.

    A.4       Withholding taxes and           related     A.4.5       Tax is deductible on payments for        supplies
    provisions                                            if they, from a single person,              exceed Rs. 25,000/-
                                                          in a financial        year and on services it is
    If proposal regarding abolition of PTR is not                     deductible if        they exceed Rs.     10,000/- a
    accepted, at least the following changes may          year. These thresholds           were fixed in 1991. Keeping
                                                          in view inflation over           the years, the limits
    be brought about.                                                 are too low to be realistic. It is       proposed
                                                          that no tax should be            deducted on payment to a
    A.4.1 Tax rate for commercial                         person where supplies from such person are upto Rs.
          importer on imports at 2%                       100,000/- and services are upto Rs. 50,000/- during a
          is low and needs to be             revised      financial year. This will reduce cost of doing business
    upwards specially              for luxury goods.      for small businesses.
    The                  blanket rate of 2% is            A.4.6       Rate of tax deduction and the same being
                         ridiculous for luxurious         final liability @ 6% of the                 gross    amount
                                                          of payment for        services is very high and needs to be
               goods.                                               rationalized by slashing it down to
    A.4.2     Further, taxpayers covered    under
    the presumptive tax regime should be required
              to maintain books of accounts and may
    be        subject to audit to the




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                                                         Pakistan Law Associates- Tax proposals           2009



                                                                   part.
         around 4% if option           is        not
                                                         iv.        The withholding tax statement           audit or
         given as proposed above.
                                                         verification wherever           required      should     be
A.4.7     At present the department is                   conducted by         the department within 1 year
          using audit of withholding agents as a                    of the close of the financial year in   which
source of revenue by          issuing notices for the    payment is made.
last      many years. While they are collecting tax
for the FBR,        they are the ones who get            A.5       Promotion of Saving Culture
          burnt for the inability or   incapability of   A.5.1.    Tax Free Saving Accounts
the FBR to          collect     taxes    from      the             Recent turmoil in Malakand Division           has
          payees of           such amounts. It is        brought into light weak         economic strength of the
proposed            that:                                          people.      They        have      no    savings
                                                                   whatsoever and see to others as         soon as
         i.        The withholding tax                   a hard time comes. There is need to promote saving
                   statements should be                  culture. Countries          like      Canada       provide
                   made quarterly to reduce                        incentive to its residents for saving money
         cost of doing business.                         through banks and mutual funds, etc. A scheme on
                                                         the same             pattern may be introduced in
         ii.        The format of                                  Pakistan. Under the scheme, each
                    withholding tax                                Pakistani individual 18 years and       above
                                                         be allowed to open a            ‘Tax     Free       Saving
          statements should be                           Account’ (TFSA) with            any scheduled Bank or
          revised appropriately so              that     other     financial institution. The account      holder
present practice of                    issuance    of    may contribute up to            Rs. 300,000/- annually to a
notices under                  Rule 44(4) of the         TFSA. The investment income              earned on their
Income              Tax Rules, 2002 to get               contributions may not be subject to income tax.
          reconciliation of each                                   Unused contribution room may be         allowed
          payment is stopped.                            to be carried forward           and used in future years.
                                                         The       account holder may make withdrawals from
          iii.      Where the withholding                the       account at            any time with no tax
                                                                   consequences,         and the amount they
          agent provides complete                                  withdraw              may be added back to their
          evidence of payment, tax                                 TFSA       contribution        room in the
          should be recovered from                 the             following year(s).
payee. However, in                      such
          cases, a penalty of           1% of the        A.5.2     Benefit of Section 62 to     Employees
amount of tax                 deductible but not         exercising Employee           Share    Option Schemes
                    deducted should be
                                                                   Under section 14, taxpayers making
                    collected from the
          withholding agent where                  it
was on account of                       deliberate
failure on its




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                                                            Pakistan Law Associates- Tax proposals          2009




use of employee share option schemes are subjected to          areas.
tax keeping in view difference in the market price and
the price at which they are offered shares by their            FDI in hot spots like stock exchanges is not that useful
company. However, where the company is a public                as it would be in projects involving transfer of
listed company, it is                                          technology or value addition by making use of domestic
proposed that tax credit to the extent allowable in
                                                               raw material, etc. Tax incentives for FDI in such areas
section 62 may also be extended to persons taxed under
                                                               will be more beneficial for the nation.
section 14.
                                                               A.8      Tax Facilities for Disadvantaged       persons
A.6      Promotion of power saving and          green
technologies
                                                               Tax liability of widows, orphans below age of 25 and
Pakistan is power deficit country. To   promote energy         disabled person should be reduced by 25-50% subject
saving, suitable tax credits may be     given to home          to a maximum amount of such reduction in tax say Rs.
owners and businesses that purchase     and use energy         300,000/-
efficient equipments as notified by      the concerned
                                                               A.9      introducing certainty in the Ordinance
ministry.
                                                               There is need to seriously deliberate that how tax cases
Similarly we should encourage environment friendly
                                                               can be disposed of within a reasonable period, otherwise
technologies. Use of alternate renewable sources of
                                                               our system would never acquire credibility. The
energy be encouraged. Companies engaged in the
                                                               ordinance has a number of provisions where no time
production of power through windmill or solar energy
                                                               frame is given. The departmental officers make use of
projects may be given a tax incentive by way or reduced
                                                               this lacuna and issue notices at their pleasure and to
rate of tax for a fixed term.
                                                               their advantage. For example, they can issue notice of
A.7      Foreign Direct Investment                             audit at any time in respect of a tax year. Notices of
                                                               tax year 2006 are being served now in 2009.In the
Though Pakistan is not negatively placed in terms of           repealed Ordinance the limit was one year. There is no
taxes when compared to regional players, consolidation         time limit to complete audit under section 177. The limit
of taxes and simplification would be more helpful.             to issue order after completion of audit is not provided
Pakistan still needs to fine tune its various taxes to         in the law. No time frame has been given to pass orders
make FDI more attractive in Pakistan despite other             in respect of withholding tax default under section 161.
handicaps. This can be achieved by reducing tax rates,
giving incentives to FDI and retaining it in Pakistan by       A.10     Updating the Ordinance
reinvestment.
                                                               The FBR keeps on sleeping till Superior Courts set aside
Further in order to reduce regional disparities, there is      tax demand (sometime in
need to establish tax free industrial zones in far flung
backward areas.




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                                                                Pakistan Law Associates- Tax proposals        2009




     billions when seen in aggregate) on the basis that the            Act.
     provision in the Ordinance is not commensurate with
     other laws or other provisions in the same law. A                 A.11     Taxation of capital Gains on Listed
     number of such lacunas are still present in the Income            Shares/Stocks etc and        Dividend
     Tax Ordinance, 2001 (‘the Ordinance’). A few are
     pointed out below:                                                In order to bring stability in the stock market and
                                                                       promote investment instead of speculation activity it is
     A.10.1 Whereas Section 113 was omitted         in the             proposed that:
     Finance Act, 2008, section 113A still contains the
     provision          that ‚turnover‛ shall have the same            i.       Capital gains exemption provided   in the
               meaning as assigned to it in sub-     section           Second Schedule should not be extended beyond 30-6-
     (3) of section 113’’ rendering application of   section           2010.    (and may not be curtailed by 30-6- 2009 as
     113A      doubtful.                                               per rumors in the market circles).
     A.10.2 Section 113B provides taxation where turnover              ii.       Where dividend income is received    out of
     of a non-corporate            retailer exceeds Rs. 5
     Million and         ‚who is subject to special procedure          tax-paid profits of the      company, it should be
               for       payment of sales tax         under            exempt as it         is effectively double taxation
               chapter III of the Sales Tax Special Procedure                    notwithstanding deemed     provision of the
     Rules, 2006‛.                                                     law to the contrary.         People will invest for
                                                                       long term            then, a must for stability of the
                However, Sales Tax Special Procedure Rules,                      market.
     2006 have already been          rescinded by   the FBR
     itself.    So to whom this section would be
                applicable? None. And yet the FBR   expects             A.12    Agricultural Income Tax
     to treat returns in the tax years 2008 and 2009
     under this           section illegally.                           Agricultural income tax is a provincial subject and
                                                                       should be retained as such. Its shifting to the Federal
     A.10.3     Clause (131) of Part I of the Second                   Government would be perceived as ‘attack on provincial
                Schedule to the Ordinance provides benefits            autonomy’. No such shifting, advocated by power
     to certain taxpayers          earning    income     from          hungry hawks of the FBR for their own vested interests,
     abroad. While       the intention is to continue this             be made.
                exemption (and the department is     allowing
     it also) but the expression ‘tax year’ is still missing
     and instead         is ‚assessment     year‛. The last
                assessment year was 2002-03.

               The above list is just indicative and not
     exhaustive. These lacunas may            be removed in
     the coming Finance




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                                                               Pakistan Law Associates- Tax proposals       2009



                          B.        Capital Value Tax


 B.1       Capital Value Tax on          Commercial                   B.2      Capital Value Tax on purchase         of
 Properties                                                           Shares on Stock Exchanges

 In cases where the value of an immovable property is                 Keeping in view dull activity at the stock market and
 not recorded, tax is levied at the rate of Rs. 50 per                attract foreign buyers, the capital value tax imposed on
 square yard irrespective of its category i.e. whether it is          purchase of shares be withdrawn. It will reduce cost of
 commercial or residential. It is suggested that rate for             the transaction and enhance volumes traded at the
                                                                      exchanges.
 commercial property should be enhanced as value of
 commercial immovable properties is normally
 substantially higher than residential immovable
 properties.




                                             INDIRECT TAXES
                                                   (Proposed amendments)
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                                                             Pakistan Law Associates- Tax proposals         2009




      C.      Sales Tax Act, 1990 and FE Act, 2005




C.1        Compulsory Registration                                ‚Explanation:

Compulsory registration where annual utility bills                To remove any ambiguity, it is explained that where a
exceed Rs. 600,000/- is not a prudent piece of                    contractor or a sub-contractor constructs an immovable
legislation. It should:                                           property under a contract or a sub-contract as the case
                                                                  may be, neither the immovable property nor any goods
a.         preferably be deleted as a criterion   for             consumed in the construction of such immovable
registration; or                                                  property constitute supply of goods for the purposes of
                                                                  this Act.‛
b.        alternatively, deleted for those        whose
supplies are exempt; or                                           C.3      Section 26(3) for revised return

c.        at least, basic threshold of Rs.         600,000        It is suggested that the condition of prior approval of the
be increased to                Rs.1,000,000/- per annum.          Sales Tax Collector for revising a return be done away
                                                                  with being an unwanted and undesirable burden.

                                                                  C.4      Input tax on acquisition of fixed       assets

                                                                  While Sales Tax is in a VAT mode, condition of claiming
                                                                  input tax, paid on purchase of fixed assets, in 12
C.2        Definition of Supply                                   instalments instead of in one go during the relevant tax
                                                                  period is unjustified, cumbersome and source of errors
Definition of supply is misconstrued by the                       for the taxpayer but of little significance for the
departmental officers in direct conflict with the                 department. The input tax may be allowed during the
Constitution of the Islamic Republic of Pakistan. It is,
therefore, proposed that the following explanation be
added in the definition of ‘supply’ under section 2(33)
of the Sales Tax Act, 1990.




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                                                                 Pakistan Law Associates- Tax proposals        2009




     relevant period fully.                                             persons making and receiving supplies are not
                                                                        associates.‛
     C.5       Section 8A needs to be scraped.
                                                                        Definition of associates can be taken from either the
     Section 8A reads as under:                                         Companies Ordinance, 1984 or the Income Tax
                                                                        Ordinance, 2001.
     ‚Where a registered person receiving a taxable supply
     from another registered person is in the knowledge or              C.6      Rate of sales tax
     has reasonable grounds to suspect that some or all of
     the tax payable in respect of that supply or any previous          To reduce cost of production and inflation, it is
     or subsequent supply of the goods supplied would go                recommended that sales tax rate be reduced to 12-13%.
     unpaid, such person as well as the person making the               It will promote employment, circulation of wealth and
     taxable supply shall be jointly and severally liable for           increase in income tax collection from the resultant
     payment of such unpaid amount of tax.                              increased employment and profitability of the
                                                                        businesses.
               Provided that the Board may by notification in
     the official gazette, exempt any transaction or                    C.7.     Federal Excise Duty
     transactions from the provisions of this section.‛
                                                                        Federal Excise duty should be abolished and merged in
     Can a piece of legislation be more unjust?                         sales tax and rate of sales tax may be adjusted
                                                                        accordingly on different products and services currently
     This is classical example where honest taxpayers are               being liable to FED.
     punished for lethargy and incompetence a government
     revenue collecting department.

     When the taxpayer provides full information to the
     department from whom taxable supplies has been
     received, and the department does not care to recover
     tax or verify payment of tax from the supplier, why
     Sales Tax Department is given a license to kill an
     honest businessman . Businessmen are businessman and
     not detectives whom you assign the duty of suspecting
     their suppliers.                                                          D. Customs Act, 1969
     It is therefore recommended that either section 8A may
     be scraped or alternatively the proviso should be
     replaced by the following:
                                                                        Keeping in view present state of socio-economic
     ‚Provided that nothing contained in this section shall             conditions, it is recommended that:
     apply where the registered                                         i.       Duties and sales tax on import of       luxury
                                                                        goods be increased           substantially so that pressure
                                                                        on       rupee is eased.

                                                                        ii.        Duties and sales tax on the import of machinery
                                                                        and equipments designed to promote economical use of
                                                                                   agricultural water and save power     may    be
                                                                        abolished.




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                                                            Pakistan Law Associates- Tax proposals          2009




 iii.      Proposal of the APTMA that the           customs
 duty of 4.5% on Polyester Staple Fibre on the import
 stage     should be reduced for local consumers merits
 to be considered keeping in view shortage of Polyester                 “Problems cannot be solved at
           staple fibre at present. Similarly, duty levied on           the same level of awareness
 other Man Made Fibres like Viscose, Acrylic Fibres etc.                that created them.”
 should also be withdrawn in the next budget.
                                                                                           Albert Einstein




                                        E.        Pricing of Petroleum
                                                  Products



     Tax is to be levied with the authority of the Parliament. Unfortunately, the government by charging
     excessively high prices of petroleum products is extorting incomes of the people by resorting to disguised
     taxation.

     Lack of transparency in pricing breeds mistrust and acts against efforts to promote tax culture. Further, non
     reduction of prices by Pakistan government has not only hampered reduction in inflation but also rendered
     Pakistani products uncompetitive to the other countries which have reduced cost of production of their
     goods by lowering POL prices.

     The report of Hon’ble Supreme Court of Pakistan be made public and steps taken to bring transparency as
     suggested in it on permanent basis.




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                                          Pakistan Law Associates- Tax proposals   2009




For further information please contact:

M. Arshad
Pakistan Law Associates
34- First Floor, Sadiq Plaza
The Mall, Lahore, Pakistan
Tel. (92) 300 8439447
taxopinion@accamail.com
www.knowyourtax.com




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