The government is currently contemplating a series of significant tax reforms that could impact various sectors of the economy. These proposed reforms are designed to help achieve the Federal Board of Revenue’s (FBR) ambitious tax collection target of PKR 9.2 trillion and to elevate the tax-to-GDP ratio to 15% (equivalent to PKR 13 trillion) within the next two years.
One of the key measures under consideration is the imposition of a wealth tax on movable assets. This would represent a significant departure from the existing tax framework and could have far-reaching implications for individuals and businesses alike.
Additionally, the government is looking into potential amendments to the taxation systems governing the retail, agriculture, and real estate sectors. These sectors play crucial roles in the country’s economy, and any changes to their taxation structures could have wide-ranging effects.
One specific area of focus is the rationalization of the Capital Gains Tax (CGT) on immovable property. This could involve an increase in the CGT rate, which would be part of a broader strategy to enhance the tax-to-GDP ratio.
To bolster tax compliance and documentation, the FBR is actively working on the development of a comprehensive documentation law. If a consensus is reached on this initiative, an ordinance may be promulgated to facilitate the process. Simplification of tax returns and withholding tax regimes is also on the FBR’s agenda. These reforms aim to streamline the tax collection process and make it more efficient.
The proposal to impose a wealth tax on movable assets is a noteworthy development. It signifies a shift in the government’s approach to taxation, as it seeks to tap into previously untapped sources of revenue.
The details of how such a tax would be implemented and the threshold for its applicability would be crucial considerations, as they would determine its impact on different segments of society.