News
Thursday, April 21, 2011
Corporate tax rate may go up by 5% in budget 2011-12
* Corporate sector comprises 55,511 companies registered with Securities and Exchange Commission of Pakistan
By Sajid Chaudhry
ISLAMABAD: Pakistan’s corporate sector is likely to suffer a heavy blow as the federal government is expected to increase the corporate tax rate from the existing 35 percent to 40 percent in the forthcoming budget 2011-12, official sources informed Daily Times on Wednesday.
It could be a major revenue measure in the upcoming federal budget and increase in corporate tax rate is expected to generate huge revenues in 2011-12 with increased tax burden on the corporate sector. “Tax experts within the government and private sector in a meeting at FBR have discussed the proposal and it would be submitted to the government soon,” sources added.
Pakistan’s corporate sector comprises of 55,511 companies registered with Securities and Exchange Commission of Pakistan, a main contributor to the national revenues in terms of their annual corporate tax payments as well as largest private employment-generating sector.
Increase in corporate tax rate is expected to invite criticism from the local as well as foreign companies operating in Pakistan, as such were already demanding lowering the tax rate.
The government had promised to the corporate sector few years back that it would lower the corporate tax rate from the existing 35 percent to at least 25 percent to help them re-invest in Pakistan from their profits for employment generation in the private sector. However, government’s failure in introduction and implementation of the reformed general sales tax on goods and services in the last year’s budget 2010-11 is compelling the government to put additional burden on the existing tax base and generate required revenues for the country.
Although corporate sector is largely tax non-compliant in Pakistan and hardly 19,000 companies file their returns and few thousand companies actually pay tax.
Thousands of corporate entities do not file their mandatory corporate tax returns and FBR has selected some 50,000 corporate companies for the enforcement of their returns and collection of due corporate tax by May 15, 2011.
Courtesy www.dailytimes.com.pk