Shariah taxation: CBR sends ATAIC report to Islamic countries

The Central Board of Revenue (CBR) has dispatched the final report of Association of Tax Authorities of Islamic Countries (ATAIC) to its members for adopting a uniform voluntary compliance strategy, raise tax-to-GDP ratio and adopt a uniform system of Zakat deduction by the Islamic states.
Official sources told Business Recorder that the CBR on Friday sought viewpoint of the ATAIC member countries on issues finalised in the 4-day Third Technical Conference of ATAIC held in Islamabad.
The board has asked the member countries to submit their suggestions on the final report to Mrs Farida Amjad, Chief (International Taxes). They said that over 70 foreign delegates representing 21 Muslim countries have agreed on a roadmap to pursue voluntary compliance model of Zakat, encourage small/medium businessmen to voluntarily register, educate and guide taxpayers to broaden the tax-base for raising tax-GDP ratio in their respective countries, sources said.
The member states would also examine the Malaysian proposal for establishing International Zakat Council to directly help the Muslim countries affected by natural disasters like earthquake, tsunami or any other catastrophe.
These member countries had adopted three reports on three different topics viz Resource Mobilisation, Voluntary Compliance and Shariah Taxation with particular reference to Zakat.
It has emphasised on three major areas recommended by the working groups. First, increasing tax-GDP ratio through resource mobilisation and bringing new taxpayers within the tax net. Secondly, tax compliance by small and medium enterprises and idea of developing Islamic Taxation Model and International Zakat Fund would be finalised for discussion in the next meeting.
Member countries agreed that there is a need of developing trust among the taxpayers to encourage voluntary compliance. However, audit would continue as a deterrent to keep an effective check on the taxpayers. A consensus was developed to encourage voluntary compliance through taxpayers' education.
General consensus was developed to encourage voluntary compliance vis-à-vis Zakat. It would be used as a social obligation and not as a parallel taxation system. ATAIC has also decided to actively work on the above mentioned three areas and follow the roadmap finalised in this conference. The member countries would benefit from each others taxation experiences through exchange of information and networking to share taxation-related information.
Officials added that the issue of establishment of International Zakat Council was to be taken up in the next conference in Kuwait during November-December 2007.
The ATAIC has particularly benefited from the taxation models of Turkey, Malaysia and Morocco. Turkey's experience has been extensively studied to raise Tax-GDP ratio through use of latest technology.
Similarly, Malaysian tax system will also help other Islamic countries for effectively use revenue mobilisation and raising Tax-GDP ratio of their respective countries, sources added.