How is the existing Tax policy in Pak? What is the lowest tax rate and how many (approx no) pay taxes on a regular basis? How much interest does a common Pakistani have in discussing tax policies? What are (have been) governments initiatives in this area?
Any thoughts about this: http://www.brecorder.com/index.php?id=202636&currPageNo=1&query=&search=&term=&supDate=
Re: Pakistan Tax System
Every individual is required to submit tax returns, public sector and pivate sector companies mostly do this servce for the employees (they act as with-holding tax agent)
bellow 1 lakh yearly income is totally exempt from income tax(earlier it was 80,000).
Minimum yearly income should be Rs. 100,000 (i think ) or more so that one has to pay tax.
For Rs 200,000 ~ 300,000 yearly income, tax is quite low ( 5~10% ) it changes every year.
With increasing income, tax rate also increases and goes to some 30% ( but there are many exemptions also applicable like charity zakat etc)
Last I heard total registered tax payers were around 1.5 milliion. It must have increased now. I will get the latest firgures :)
Re: Pakistan Tax System
excellent question sabah! i always wondered the same thing about pakistan tax system!
Re: Pakistan Tax System
plus how is that foreign income not taxed at all in pakistan?? does anyone here know the reason behind this policy?
Re: Pakistan Tax System
^Foreign income? Income of overseas residents?
Codie, 1.5 mil of how many? How is income monitored in private sector?
What's the avrg income per year in public and private sectors?
What's employments percentage in Pak? And approx how many are below Rs. 100,000, bw 2-300000 and so on.
Re: Pakistan Tax System
The bulk of Pakistans taxation revenues come from indirect taxation…this article is slightly dated…97 i think..but it lists in detail what the situation was at that time..
(the situation has improved during Mushys time..)
Pakistan today has a mind-boggling taxation system that defies comprehension of the average citizens and experts alike. In 1990, Karachi Chamber of Commerce and Industry had established that the industry was subjected to 50 direct and indirect taxes but the statement of Senator Ilyas Bilour, President PFCCI at the Businessmen Conference in Islamabad on March 25, 1997 that 37 govt deprtments and agnencies were collecting taxes gives a meaure of the proliferation of taxes that has taken place in Pakistan.
It was not in the province of this book to catalogue the taxes being collected by the federal, provincial and local governments but I have identified 70 major taxes to which consumers and producers are subjected. In addition there are host of specific taxes like a Research and Development Levy, Drug Manufacturing Licence Fee and Drug Registration Fee. It can be said safely that there are at least 100 taxes in vogue in Pakistan.
It is not the proliferation of taxes that is mind-boggling. It is the exemptions to these taxes for the privileged, their duplication and triplication for the common man, the method of their collection and making refunds, utilization of specific-purpose taxes that is mind-boggling. There is an education cess levied by the federal govt, another education cess is collected by provincial govts. The Central Excise Duty (CED) is being collected on the telephone bills by Pakistan Telecommunication Corporation but Baluchistan govt introduced a duty on telephone calls in the 1996-97 budget. Federal govt has levied a Tobacco cess but in the 1997-98 budget the provincial govt of NWFP levied a Rs one per Kilo Tobacco Cess. Civil Aviation Authority collects an airport tax. There is a Workers Participation Fund and another Workers Welfare Fund.
There are federal taxes like Ushr being collected by the provincial govts, provincial taxes like motor vehicle tax being collected by the federal govt. Local taxes like the property tax is being collected by the provincial govt and reimbursed to municipal corporation and committees.
An appeal by the leading hotels and restaurants of Lahore in the national newspapers after the 1997-98 budget exemplifies the multiplication of taxes in Pakistan.
“In the recent Punjab provincial budget, an additional tax of 10% has been levied on the posh restaurants and international hotels of the province. This is in addition to 12.5% Central Excise Duty and 5% provincial tax levied on July 1, 1996. Cumulatively, these taxes add up to about 30% which, by any national and international standards is extremely high”, the appeal said.
The Stamp Act provides for stamp duty on 55 different categories of documents at a prescribed rate. Some of the documents specified are affidavits, agreements, allotment orders, attestations, bank guarentees, custom bonds, debentures, import documents, insurance policy, lease, partnership, power of attorney, security bonds, share transfer certificates, cheques, bank drafts and pay orders.
It is this proliferation of taxes and tax collectors which create an ideal situation for pilferage’s. This proliferation and pilferage of taxes has pitched the people and govt in Pakistan, at two opposite horns of an economic dilemma. While the people are groaning under the heavy burden of taxation, the govt leaders bemoan that the people do not pay taxes. They are both right because the taxes paid by the people do not reach the govt coffers. They end up lining the pockets of the contractors and collectors.
Following are major taxes levied by the federal and provincial governments.
Federal Government Taxes:
Income Tax
Super Tax
Wealth Tax
Gift tax
Turnover Tax
Corporate Asset Tax
Corporate Income Tax (A)
Import Duties
Import Surcharge
Export Duties
Iqra Surcharge
Income Tax on imports
Import Licence Fee
Import Registration Fee
Export Registration Fee
Central Excise Duty
Sales Tax on Manufactured goods
Capital Value Tax
Export development Surcharge
Development Surcharge on Petroleum
Gas Development Surcharge
General Sales Tax
Federal Education Cess
Workers Participation Fund
Workers Welfare Fund
Estate Duty
Zakat
Ushr
Oilseeds Development Cess on Companies
Tobacco Cess
Cotton Cess
Development Surcharge on Electricity
Textile Technology Cess
Airport Tax
Cargo throughout @ 2% charges freight charges and an additional three 3% for immediate clearance at Quaid-e-Azam Airport, according to an advertisement in daily, Business Recorder, February 12, 1998.
Capital Gain Tax
Provincial Taxes:
Professional Tax
Property Tax
Vehicle Tax
Stamp Duty
Entertainment Tax
Betterment Tax
Social Security Contribution
Explosive Licence Fee
Provincial Education Cess
Capital Gain Tax
Punjab Airport Tax
Provincial Excise Duty
Karachi Dock Labor Board Cess
Cess on Hotels
Cotton Fees
Paddy Development Cess
Provincial Excise Duty
Land Revenue Tax
Employee Old Age Benefit Contribution
Trade Tax on Jewelers, Garment shops imposed by Baluchistan govt in 1997-98 budget
Re: Pakistan Tax System
Pakistan’s population is 150 million nearly half (40%) are bellow 18 and out of rest of population, 60% are based in rural area. there is no income tax on agriculture sector. Also one third of country’s populaiton lives bellow poverty line.
So practically 1.5 million(who pay tases) are out of some 20 million roughly.
The largest number of tax payer belong to service sector (public and private).
Avg. income in public sector varies, tax payers belong to grade 17 or above avg income for grade 17 is around Rs 150,000 ~ 200,000 /year (including allownces)
for private sector, it is difficult, roughly we can take Rs.100,000 ~200,000 /year. but it goes up for managment level job, mostly in excess of 200,000
officially per capita income in Pakistan is $450/ year