35 percent uniform tax rate for corporate companies in budget: CBR chief addresses seminar

Central Board of Revenue (CBR) Chairman M Abdullah Yusuf said here on Saturday that all companies in the corporate sector would have a uniform tax rate of 35 percent from 2007.
Speaking at a per-budget seminar on ''Federal Budget 2006-07'' organised by Management Association of Pakistan (MAP) at a local hotel, he said that the listed companies would have to pay corporate tax one percent less than unlisted companies.
He said that at present different companies in corporate sector are paying different rates of taxes.
The CBR Chairman said that 14 new regional tax offices would start functioning in the country by the end of June this year. He said that three large taxpayer units are already functioning in the country and another will soon be established.
He said that beside this another 18 other tax paying units would be established in smaller places of the country.
He said that these units would provide one-window facility to taxpayers, like paying income tax, sales tax and central excise duty.
Abdullah said that all these taxpayer units would become operational by the end of 2007.
He said that the CBR has chalked out a plan to increase the tax-to-GDP ratio by at least one percent in the next five years, which would mean additional revenue of 1.2 billion rupees.
He said that this ratio is currently hovering around 10 percent that is the lowest in the region as well as in the world. The neighbouring countries have about 15 to 19 percent tax-to-GDP ratio.
He said that Pakistan has agreed with the World Bank to raise this ratio by 0.2 percent every year.
He said that in the last three years GDP growth was recorded at 6.5 to 7 percent, and hoped that it would be higher by the end of the current fiscal year. "In the years to come, we expect GDP growth at 8 percent," he added
The CBR Chairman said that in the past there were such growth rate but then the government failed to sustain that growth rate and resulted in sharp drop.
He said that the present government was taking various steps to contain the pace of growth rate. One step is continuation of the policies and to keep them improving.
Regarding higher inflation, at the rate of 11 percent, he hoped that it would not remain as high and would come down soon.
He said that one cause of high inflation was the price of petroleum products. They are beyond the control of the government.
Second reason of higher inflation was food prices. Pakistan imported huge quantity of wheat, pulses etc, which triggered inflation. And the third reason of inflation is steel and cement prices.
He said that the government was taking steps to control these factors and hoped that by next month it would be 8.5 percent and in next few years it would be 5 percent.
Regarding trade deficit, he said that it was much higher as compared to previous year. Citing reasons for higher trade deficit, he said that higher import of raw materials, machinery, import of wheat was the main cause of deficit.
The CBR Chairman said, "We have reasonable control on other side by generating 10 billion dollars and from privatisation around 2 billion dollars yearly."
He said that the government was trying to evolve a system which would be simple and transparent, cutting down tax rates, facilitating tax payers, eliminating pendency in tax appeal cases, expending refunds etc.
Regarding pendency of tax appeals cases, Abdullah Yousuf said there was no waiting time for new appeals as more than 60,000 cases of direct taxes and over 20,000 cases of indirect taxes had been decided. He said that CBR had requested the Supreme Court to set up a special bench. This request was agreed and till now 900 out of 1150 pending cases have been decided and remaining would be decided soon.
He said that intake of new cases is only two to three cases which is negligible. This is because of introduction of self-assessment scheme.
Senior Partner of Ford Rhodes Sidat Hyder and Co, Ebrahim Sidat, said that tax-GDP ratio has started moving in the positive direction. He said that tax collection would exceed the target this year.
He appreciated voluntary withdrawal of 2000 tax appeals by CBR.
He urged the CBR chairman to have a look at multiplication of direct taxes.
He said that income tax should be collected irrespective to tax generating source.
Masood Ali Naqvi and MAP Vice Chairman Abdul Qadir made suggestions to further simplify tax collection, expediting refunds and further cut in tax rates.