Pakistan-China Joint Chamber of Commerce and Industry (PCJCCI) President Shah Faisal Afridi has said that Pakistan's tax system should be revamped in line with Chinese taxation model, which is based upon growth instead of the regulatory pressures.
Shah Faisal Afridi stated this while presiding over a meeting of the PCJCCI Executive Committee here on Tuesday. He was of the view that administrative reforms are essential in the tax system and attention should be paid to re-designing of tax recovery system.
He also gave a briefing on the proposed tax reforms roadmap based on the Chinese taxation model.
He said that there was a need to create optimal balance between a tax regime and the growth of business to create an investment friendly environment along with an effective mechanism for leveraging enough revenue for public service.
He said that China had undergone a splendorous community development on the bases of its taxation reforms and Pakistan can make a paradigm shift to have a business friendly taxation system by following Chinese taxation reforms. China made taxation central to the economic development agenda and community development goals he said adding that China had employed taxes as the principal means to transfer resources from private to public use.
PCJCCI Senior Vice President Ahmed Hassnain said that in Pakistan only 0.3 percent of the population is paying income tax, which is one of the lowest ratios in the world. Around 7 million Pakistanis are estimated to be eligible to pay income tax, but practically only less than 0.5 million people pay the tax. He regretted that the prevailing taxation system was a source of harassment and a way of corruption for the business community, which needs to be replaced with better taxation models of the world including the Chinese model that has proved to be the most successful.
The chamber's secretary general Salahuddin Hanif said that child care, education, job placement, housing, subsistence, health care and elder care are largely provided and administered through state-owned enterprises".
He said that particularly the reform of value-added tax (VAT) had boosted China's service sector and developed its position as the "world's factory. He said that VAT reform was designed to replace business tax in manufacturing sector to protect the tax revenue of local governments.
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