rehan...tax environment

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    Tax Environment of

    Pakistan(A bird eye view)

    Presented By:

    Rehan Rafique

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    TAXTax includes any penalty, fee or other charge or any sum or

    amount leviable or Payable. In ordinary sense, taxes are the

    levies by the Government in exchange for the services

    provided to the general public and are the lifeline of any

    country because of the fact that major chunk of the revenue

    to run a country comes from them..

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    Types of taxes

    Income Tax

    Payroll Tax

    Capital Gains Tax

    Sales Tax

    Estate Tax

    Corporate Tax

    Gift Tax

    Transfer Tax

    Property Tax

    Consumption Tax

    Toll Tax

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    Practical Study

    Tax Year in PakistanTax year is a period of twelve months ending on 30th June and

    shall be denoted by the calendar year in which the said date

    falls.

    Taxable Income in PakistanIt is the total income of a person for a tax year reduced by

    the total of any deductible allowances, under the

    Ordinance, for the year. A person is entitled to a

    deductible allowance for the amount of any Zakat paid bythe person in a tax year under the Zakat & Ushr

    Ordinance, 1980.

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    Contd

    Total IncomeIt is the sum of a person's income under each of the heads of

    income for the year.

    Heads of Income in PakistanUnder the Ordinance income is classified into the following five

    heads:

    Salary

    Income from property,

    Income from business,

    Capital gains and

    Income from other sources.

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    Residence

    An individual is

    considered resident

    for a tax year if

    he/she is in Pakistan

    for more than 182

    days in that tax year.

    Tax Filing statusJoint tax returns

    are not permitted;

    each individual

    must file a separate

    tax return.

    Tax Deductions and

    tax allowancesDeductions and

    allowances are

    available for the non

    salaried class, but not

    for the salaried class.

    Penalties

    The penalty for

    failure to file a tax

    return is 0.1% of

    the amount of the

    tax payable for each

    day of default. Theminimum penalty is

    PKR 500 and the

    maximum is 25% of

    the amount of taxpayable.

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    Analysis of tax Rates in

    Pakistan

    Personal Tax

    Tax on Companies

    Inter-Corporate Dividend Tax

    Customs

    Sales Tax

    Income Tax

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    Short comes in Pakistans

    Taxation system

    Corruption

    Tax exemptions

    Faulty Tax policy

    Narrow tax base

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    Shares in Taxes

    Agriculture 1%

    Manufacturing 14%

    Services 34%

    Other 51%

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    SWOT Analysis

    Strengths:

    Reduction in poverty level

    Increase in revenues

    Help in building strong

    infrastructure of country.

    Weaknesses:

    Complex tax system

    Low tax to GDP ratio

    Corruption

    Poor management Lack of trust on

    Government

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    Opportunities:

    Improve tax system

    through legislation

    Build trusting

    relationships with

    taxpayers.

    Collect more taxes from

    other areas.

    Threats:

    Political uncertainty

    Broadening gap between

    rich and poor.

    Narrow tax base.

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    Recommendations

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