Three-time higher withholding tax rate suggested for non-filers

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KARACHI: The Pakistan Business Council (PBC) has recommended at least three – time higher withholding tax rates for non-filers to provide incentives to filers and to document the economy.
The PBC in its proposals for budget 2018/2019, recommended the Federal Board of Revenue (FBR) that there is need to be a significant distinction in the withholding income tax rates charged from filers versus non-filers, the rate difference should be at least three times higher for non-filers as compared to filers to incentivize the filing of tax returns.
The PBC appreciated the government for introducing higher rates of withholding tax for non-filers. However, it said this has now become a revenue measure with no effort to use the data collected to increase documentation.
The PBC while urging the FBR for documenting the economy and providing a level playing field for domestic manufacturing, said there is a large pool of financial data which is available with the FBR. From the formal sector the FBR portal is constantly updated with income tax and sales tax withholding data.
It said that the data available from NADRA regarding transactions made in the large undocumented real estate sector. The PBC suggested that the FBR needs to tap into these and other data sources to increase the taxpayer base.

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