A contradiction of guidelines to lower the current tax rates by 50 %, provided by the Tax Reforms Commission (TRC ) has been found in the proposal issued by Federal Board of Revenue (FBR ). Federal Board of Revenue has put forth a proposal, According to this proposal firms and individuals will pay 25 percent more in ‘minimum tax’.
According to the currently issued proposal upcoming budget will be the cause of increment in the tax rates from 1% current rates to 1.25 %.
Purposes of the introduction of minimum tax
The minimum tax was introduced to ensure the dues paid by the taxpayers. A corporate having turnover of Rs. 10 million was bound to pay 1% of its overall sales in taxes, According to the law enforced.
Either a company was earning a profit or not, it had to pay the tax.
A view of the taxpayers
But today, there are round about 24000 companies following the law and paying taxes, but 30 percent of these companies are facing loss the percent of these companies are in the mid, with no profit no loss.
Now it is expected that FBR’s proposal will effect 7000 companies if the mentioned proposal is passed through the preliminary stages.
The recent taxation measures grew revenues by Rs. 1.2 trillion, over the course of the previous four budgets. It is also reported that total tax collection has also been increased from Rs. 1.956 trillion in June 2013 to Rs. 3.114 trillion by June the last year.
Though FBR’s set target of collecting in taxes in the upcoming fiscal year is Rs. 3.887 trillion, while according to International Monetary Fund the target should be Rs. 4.06 trillion.
Sources have claimed that it will have to rely on this new and proposed method to enhance its revenues and meet their set targets since FBR has failed to improve its efficiency.
FBR stated that the filers of income tax returns are below 1.1 million. But it was also stated by the FBR that the organization will be looking to improve on those statistics as well.