PBC recommends abolishing FTR, making withholding tax as adjustable


KARACHI: Pakistan Business Council (PBC) has recommended abolishing Final Tax Regime (FTR) and deduction of withholding tax should be treated as advance tax.
In its proposals for budget 2018/2019, the PBC recommended that full and final tax regime should be discontinued and withholding tax deducted at source should be treated as advance tax.
It further said that taxation should be on the basis of income and not on the basis of presumptive/value added/fixed tax regimes, as this will lead to better documentation of the economy.
Highlighting the issue, the PBC said that the presumptive / value added / fixed tax regimes are taxing turnover as opposed to income. In addition, entities availing this regime are not required to file tax returns.
Under garb of the final tax regime, massive evasion of customs duties and sales tax are taking place putting the fomral sector under undue pressure.
The informal economy has outgrown the formal economy and major driver has been the fixed tax regime.

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