PBC proposes measures to broaden tax base, combat benami transactions

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By MG News | January 27, 2025 at 04:19 PM GMT+05:00

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January 27, 2025 (MLN): To enhance transparency and reduce the prevalence of benami transactions, the Pakistan Business Council (PBC) delegation shared a series of proposals aimed at broadening the tax base and encouraging non-filers to join the tax net.

The proposals were presented during a meeting with the Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, as part of the ongoing consultation process initiated by the Ministry of Finance and Revenue ahead of the Federal Budget for FY 2025-26.

The delegation led by PBC Chairman Shabbir Diwan, included Vice Chairperson Zeelaf Munir, CEO Ehsan Malik, and other office-bearers, according to the press release issued today.

They emphasized the need to discourage the parking of untaxed money in informal sectors, promote the documentation of the economy, and reduce taxpayer harassment.

They also proposed measures to incentivize tax filers.

The delegation outlined a comprehensive set of recommendations for fiscal policy and the tax regime for FY 2026 and beyond.

The goal of these recommendations is to align the country’s economic objectives with sustainable growth and social development.

Key economic priorities discussed included balancing the external account through exports and indigenization and balancing the fiscal account by formalizing the economy and broadening the tax base.

Among the proposals were calls for a fair distribution of the tax burden, the imposition of competitive tax rates, and long-term policy predictability.

The PBC also urged for the simplification, unification, and digitization of the tax return process, while minimizing the impact on business cash flow.

Minister Aurangzeb expressed his appreciation for the PBC’s proposals, assuring that teams from the Federal Board of Revenue (FBR) would engage with the PBC to review all suggestions.

He highlighted the government's commitment to creating an equitable, efficient, and optimal taxation system.

The Minister also announced that the government would move the tax policy unit out of the FBR and place it within the Ministry of Finance, in order to protect the integrity of tax policy from revenue collection pressures.

He reaffirmed that the private sector is viewed as the main driver of economic growth, with the government committed to fostering an enabling business environment.

In his remarks, Senator Aurangzeb expressed concerns over Pakistan’s current tax-to-GDP ratio, which stands at a low of 8 to 9%.

He described this as unsustainable for the country’s fiscal health and global standing, stating the government’s goal to raise the tax-to-GDP ratio to 13.5% within the next three years.

This target will be pursued through broadening the tax base, leveraging technology, improving data analytics, and streamlining tax processes.

The meeting concluded on a positive note, with both parties reaffirming their commitment to collaborate in aligning Pakistan’s fiscal policy and tax regime with the nation’s growth and development objectives.

Copyright Mettis Link News

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