ISLAMABAD: The Institute of Chartered Accountants of Pakistan (ICAP) has proposed to gradually increase the Federal Board of Revenue (FBR) rates on immovable properties.
The ICAP budget proposals for the next fiscal year 2018-19 available with Pakistan Today indicate that FBR value rates were far below than the fair market rates. Recently, FBR has further devalued immovable properties located in areas of six big cities. Such low rates, in comparison with actual fair market values, are causing immense loss of revenue due to lower advance tax collections on sales and purchase of immovable properties.
The FBR values immovable properties may be gradually increased to match the actual fair market values. However, at the same time, the rates of Stamp Duty and other transfer taxes levied by provinces should be reduced to keep the cost of transfers stabilised.
In addition to this, ICAP proposed that all fixed tax schemes should be abolished and all such sectors may be brought under the uniform tax regime to promote the culture of income-based taxation rather than receipt-based taxation.
In another proposal, ICAP suggested that income from export of all types of services should be exempted. Alternatively, the export of services be subject to a reduced rate of tax as in case of export of goods.
In tax administration, accountability is absent, work culture is missing and slackness is apparent. High pitched tax demands are raised, arbitrarily with perversity and malafides. The taxpayer is required to deposit tax demand within 30 days of the service of the assessment order. In case, additions made by the assessing officer are deleted in appeals, the taxpayer is not provided any compensation. Hence, a directory should be published annually by the FBR to list down names of tax officers along with sales tax/income tax demands raised by them during the year while separately highlighting tax officers, whose demand/additions do not stand the test of appeal as a percentage of total demand raised by them.
Moreover, it should be kept in mind that asset whiteners like section 111(4) and liberal foreign exchange laws need to be revisited and loop holes in all such laws need to be plugged before any declaration scheme is launched. This will not only induce persons having foreign undeclared assets to make proper declaration but also stop further misuse of any such available avenues for systematic non declaration without repercussions. If required, ICAP is always prepared to assist the government in its advisory capacity to achieve this objective in drafting appropriate amendments in different laws.
ICAP recommended that the law should be amended so that the authority of Director General Intelligence and Investigation is exercised only to investigate Suspicious Transactions Reports (STRs) or other assets of persons or classes of persons impounded by any department or agency of the Federal or Provincial government and prepare/transmit reports to the respective RTOs or LTUs for the purpose of application of Section 111 and for taking appropriate action under the ITO.
