ACCA pre-budget debate suggests documentation of agriculture sector

The speakers, while addressing the pre-budget 2010-11 discussion, stressed the need for undertaking the documentation of the agricultural sector. While addressing the pre-budget discussion on 'Supporting fair taxation' arranged by the ACCA Pakistan here on Thursday, the participants suggested that support should be given to provincial governments for an effective implementation of Agricultural Income Tax on the basis of income rather per acre yield.
The discussion was held to provide an opportunity to stakeholders to discuss the composition of upcoming Federal Budget. The panellists included Shahid Naseem, Chief Commissioner, Large Taxpayer's Unit, Lahore, Muhammad Arshad, Vice President, First Fidelity Leasing Modaraba, Asad Feroze, Partner, Muniff Ziauddin Junaidy and Co, Chartered Accountants Ms Aasia Saail Khan, Chairman, Women Entrepreneurs Development, Lahore Chamber of Commerce and Industry.
They were of the view that any gain on disposal of agricultural land for non-agricultural purposes or change in status from agricultural land to industrial or commercial land should be subject to Capital Gains Tax by the provincial authorities with a view to enhance the perceived equity of the taxation system. They further proposed that awareness of tax benefits should be created, as it would nurture a culture of voluntary tax payments.
The discussion revolved around the need for establishing a fair taxation system by widening the tax base and nurturing a culture of voluntary tax payment. Panellists were desirous of a tax system that encouraged industrial growth and commented that tax incentives aimed at promoting SMEs growth should be considered.
The participants felt that the agricultural tax reform needs an objective and critical evaluation. Value Added Tax (VAT) discussion revolved around getting the buy in of relevant stakeholders and educating the business community about whether VAT is a new tax or is replacement of General Sales Tax. If VAT would result in a more documented economy then its benefits need to be disseminated.
To attract foreign investment and to encourage the establishment of regional headquarters of holding companies, a new provision of a concessionary income tax rate, that is, a half rate, should be introduced in the new federal budget. Inclusion of tax incentives, along with carbon credits was also suggested to make alternative energy projects financially viable, encouraging investors to focus on such projects.