Out of the 100,000 companies registered with the Securities and Exchange Commission of Pakistan (SECP), only 50,000 are actively filing their income tax returns with the Federal Board of Revenue (FBR), as per a recent FBR report on reforms.
To facilitate the registration process for companies and align with the ease of doing business agenda, the SECP and FBR collaborate through a one-window facility known as the Virtual One Stop Shop (VOSS) for company and national tax number (NTN) registration.
While a Memorandum of Understanding (MoU) exists between the two entities for need-based data sharing, there’s a consensus among representatives that FBR should take a more proactive stance in sharing data and information.
Addressing the issue of low tax filing among registered companies requires a joint effort from both the FBR and SECP. The SECP has proposed various taxation regimes tailored to different types of companies, such as limited liability, sole proprietorship, and group companies.
These proposed regimes could create a conducive environment for improved taxation practices. Collaboration between SECP and FBR can lead to the establishment of taxation incentives and benefits for various types of companies, encouraging them to register with FBR and avail themselves of these advantages, as outlined in the FBR report. This approach could promote increased compliance and revenue generation while enhancing the overall tax ecosystem in Pakistan.
The recent FBR report has highlighted a significant gap in tax compliance among registered companies in Pakistan, with only half of them actively filing income tax returns. This challenge underscores the need for more proactive data sharing and collaborative efforts between the Securities and Exchange Commission of Pakistan (SECP) and the Federal Board of Revenue (FBR).
The introduction of the Virtual One Stop Shop (VOSS) as part of the ease of doing business initiative aimed to streamline registration processes, but the report suggests that additional steps are required to encourage tax filing.?