The Federal Board of Revenue (FBR) has considered four international tax models, including those of Egypt, Turkey, Iran and Japan, for incorporating viable proposals in the 2008-09 budget.
Sources told Business Recorder on Friday that the Egyptian tax model is based on three basic pillars ie slashing corporate tax rates from 42 percent to 20 percent; withdrawal of all exemptions and blanket amnesty for past transactions, covering all categories of businessmen. These three revolutionary measures are backed by massive enforcement efforts to ensure compliance.
The tax officials have picked some viable proposals of the Turkish model for consideration by FBR. These include levy of inheritance tax on the shares of the individual recipient @ 10 percent of the net wealth payable, in three years. Tax on property may be levied once-and-for-all @ 2 percent of the increase in value of land due to permission to develop and for additional local facilities provided by the government.
Sources said that the Turkish tax department has introduced the concept of tax identification number (TIN). The process of registration for tax identification number (TIN) may be simplified and quick, verification of applicants credentials may be made through physical visit by tax officers after the issuance of TIN. To enhance the tax base, the TIN may be made mandatory for the purchase of any moveable and immovable property.
Tax exemptions should be phased out to avoid regressiveness of taxation system in line with the Turkish system. Field formations have submitted their suggestions on the innovative ideas keeping in view Egyptian, Iranian, Japanese and Turkish experiences.
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