The Institute of Chartered Accountants of Pakistan (ICAP) has recommended taxation of real estate business and, what it called, speculative stock market transactions.
The recommendations were made at a pre-budget seminar, organised by Southern Committee (Sindh-Balochistan Zone) ICAP on Tuesday, which was addressed by ICAP President Shabbir Zaidi and council member Saqib Masood. Former president of the institute Khaliq-ur-Rahman presided over the meeting.
Zaidi said that presently, a substantial part of national productive resources were being diverted to speculative ventures in stock markets and real estate business. According to him, one of the reasons of diversion of funds to these sectors was that such sources were exempted from taxes, he added.
He stressed the need for reviewing the situation keeping in view the commitments already made.
With reference to real estate, he said there was an immediate need to reinstate provincial capital gain tax with reasonable rate and place the collection with the Federal government for co-ordination purpose only.
Commenting on the performance of the Large Taxpayers Units (LTUs), Zaidi said that one main theme of tax reform was to provide integrated service to taxpayers.
"We have observed substantial diversion and disintegration among persons sitting on the same floor in the LTUs. The other aspect is the integration on the policy side. Whenever any tax incidence is reviewed on policy side, all aspects, including customs, income tax and sales tax be examined in toto," he added.
"This represents co-ordinated policy integration. There has been substantial improvement in this field, however, further sectoral analysis is needed," he said.
Zaidi also suggested that the capacity building process of the Central Board of Revenue (CBR) must be accelerated and salaries of officers must be in line with market practices. "Bad audit is worst than no audit, so present policy of no audit must continue at least for coming three to five years.
"Sectoral analysis of presumptive tax regime should be conducted and if required present rates of presumptive tax should be enhanced. The present minimum value-addition concept for sales tax needs review and according to him everybody, coming under this, not willing to pay more than what had been prescribed," Zaidi said.
On exports, he suggested that presumptive tax be abolished and exports income should be brought under income tax. "Present system of payment of sales tax on government and other contracts should be changed and sales tax be expanded on services," he suggested.