4. Contents
What is tax
Types of taxes
Tax simplification
Importance of tax simplification
Recommendations for tax simplification
Mind sets of people about tax system
Solutions
6. What is tax?
A compulsory contribution
to state revenue, levied by
the government on workers'
income and business
profits, or added to the cost
of some goods, services,
and transactions.
8. Tax Simplifications?
It refers to simplify and clear the
rules and regulation about tax
calculation and collection.
REASONS
Complexity permits additional
ways to shield income from tax
Complexity increases mistakes in
calculating tax liabilities
9. Objective of simplifying tax system
Reasonable simplification can
more adequately combat tax
evasion and avoidance
Simplification would make
standard enforcement policies
more effective without
increased enforcement
spending.
10. Learning Objectives
To provide easy way to tax
payers (reduce ambiguity)
To communicate effectively
Increase tax collection
To enforce policies more
effectively
To make FBR more efficient
11. Policies about tax in
PA K I S TA N
Income tax ordinance 2001
Sales tax act 1990
Federal excise act 2005
Federal board of revenue act 2007
Income tax amendments 2016
12. Recommendation of taxation
reforms
By National Tax Reform Commission
Salaried Persons be required to file the standard
return of total income under Self Assessment
Scheme.
The basic rate of tax for private companies should be
reduced
Existing pattern of tax incentives should be reviewed
and the exemptions that favour specific entities
should be discontinued.
13. All business income of charitable and religious trusts
and welfare foundations may be made subject to tax
Small retailers without account books and with
annual turnover not exceeding Rs.400,000/= be
made subject to an annual tax of Rs.600/=.
Tax payers maintaining regular books of account for
their business or profession be eligible for self
assessment scheme.
Tax evaders may be isolated and subjected to social
rejection by debarring them from holding social and
political positions.
14. Indirect taxes
Custom duties
Custom duties should not be used as the principal
source of revenue generation
The rates of duties should be kept as low as possible
because high tariff is responsible for inducing
smuggling and under-invoicing.
There should be a thorough re-examination of the
standard rates of rebate and issue of notification in
individual cases should be stopped.
15. Sales tax
Role of revenue generation should be assigned to
the sales tax which should emerge as the major
revenue generation tax.
Sales tax should be levied across the board on all
the imported goods and domestic production other
than agriculture produce and unprocessed food.
Standard rates of adjustment for different raw
materials may be prescribed.
16. Public mind sets
Following responses from public adequate to indicate their
perception:
Whatever money is collected is looted by rulers are spent
on unnecessary luxuries of the powerful classes of
Pakistan.
“Government wastes our money. If people believed their
money will be used for health, education, infrastructure,
etc., 90% will pay.”
“I do not see good use of money in any case. The state
is not fulfilling its contract of protecting life, property, and
health. So why should we fulfil our contract”
17. “If bigger sharks do not pay taxes and get away with
it then why should the middle-class pay?”
Focus on Indirect Tax rather Direct Tax (its effects
our businesses)
Government unable to Control Corruption or change
the Bureaucratic Mind-set
“It is cheaper to evade taxes than to pay them.”
18. Improve tax system
Following are some recommendation to improve Tax
System resulting in change of General Public Mind-set;
Develop a system with key features of universal self
assessment with taxpayer education and customer
service.
Initiate education of taxpayers and withholding
agents through a well-integrated programme of
media campaign, booklets and brochures.
Simplify and standardise the process of issuance of
exemption certificates.
19. Avoid introducing tax amnesty schemes
Create a healthy relationship between stakeholders
in the taxation system viz: FBR and taxpayers
Government should Focus on Expenditures for social
and economic cause
20. FBR
FBR is regulatory institution for all tax matters and tax
collections in Pakistan
21. VISION
To be a modern, progressive, effective and credible
organization for optimizing revenue by providing
quality service and promoting compliance with tax
and related laws
MISSION
Enhance the capability of the tax system to collect
taxes through application of modern techniques,
providing taxpayer assistance and by creating a
motivated, dedicated and satisfied, professional
work force
VALUES
Integrity – Professionalism – Teamwork – Courtesy –
Fairness – Transparency - Responsiveness
22. Organizational Structure FBR
CCFR
Secretary General/
Chairman
PRAL
Support
Members
Functional
Members
Direct Taxes
Sales Tax &
Federal Excise
Customs
Tax Policy &
Reform
Legal
Administration and
Coordination
HRM
Audit
Fiscal Research
Information
Management System
Facilitation &
Taxpayers Education
Line Members
23. Strengths of FBR
Contribution towards federal and provincial
total revenue is around 65%
Revenue collected is sufficient to meet 75% to
80% of Government expenditure needs
Monitor Fiscal Policy through tax incentives to
encourage flow of FDI
24. Generation of resources
for smooth economic
management of Federal as
well as Provincial and
Local Governments
Keeping the economy
vibrant
25. Impact of Tax simplification on FBR
it improves efficiency level of FBR
Helps in enforcement of laws
Increase revenue collection
Increase confidence level of FBR
Add more values in economy