- 2010-09-09
UK Pre-Budget Report To Be Scrapped - 2010-09-08
EUR25bn In French Tax Breaks May Go - 2010-09-09
Europe Agrees Regulatory Reforms, But Not Taxes - 2010-09-07
Increased Case Load Challenges US Taxpayer Advocate - 2010-09-06
German Cabinet Agrees 'Future Package' - 2010-09-03
South Africa Rejects Mining Tax - 2010-09-06
Report Casts Doubt On Jersey Fiscal Strategy - 2010-09-06
Switzerland Adopts Administrative Assistance Ordinance - 2010-09-08
UK Launches National Insurance Holiday - 2010-09-08
Tax Credits Boosting Employment, Says US Govt - 2010-09-03
METI Sets Out Japanese Tax Reform Proposals - 2010-09-03
DIFC Announces Strong Growth In 2010 - 2010-09-08
Caribbean Intensifies Lobbying Against UK Air Tax - 2010-09-09
Panama Expands Tax Agreement Network - 2010-09-07
EU Business Slams China's Business Tax - 2010-09-06
Pakistan Looks At 'Flood' Taxes - 2010-09-07
S. Korea Improves Free Zone Incentives - 2010-09-03
Obama's Tax Reform Panel Issues Report
Tax News 16 : 2010-09-06
Pakistan Looks At 'Flood' Taxes
It has been indicated that Pakistan’s government has made a decision, in principle, to introduce additional tax measures to generate internal revenues to provide part of the funds required for the country’s reconstruction after the devastating recent floods.
One of the measures would be a surcharge of up to 10% on all incomes above a certain limit. It would be imposed, not only on the wages and salaries of individuals, but also on firms, companies and traders. It is unlikely, however, to be levied on annual incomes of less than PKR300,000 (USD3,500).
Together with a surcharge, either on all imports or only on luxury items, it is foreseen that the additional tax revenue so generated could reach up to PKR150bn. The measures would not be introduced in this fiscal year, but would be collected from January 1, 2011, and could be in effect for two years in total.
The final assessment of the damage caused by the floods is expected to be completed by September 25. It has been estimated that this new taxation, together with previously agreed taxes, including the extension of the general sales tax, and a block on development spending, could yield some PKR500bn in internal resources to be allocated to reconstruction.
If the measures require final parliamentary approval, it is probable that the government will seek support from all political parties for the measures in order to ease their passage into force. However, some have already pointed out that such additional taxation could be unpopular, given the small percentage of Pakistan’s population that currently pays tax, and that action against tax evasion was more necessary.
It is likely that the two tax measures will also have formed part of the government’s current talks with the International Monetary Fund (IMF), as Pakistan looks to increase its access to external funding, from the IMF, the World Bank and other international aid agencies.
The IMF, while announcing that it would this month provide around USD450m in new emergency financing to Pakistan, has said it will continue to support Pakistan’s economy under the USD11bn loan programme, initially agreed in November 2008, and that the government has expressed its intention to implement measures for the completion of the programme’s fifth review, allowing the IMF to disburse an additional USD1.7bn later this year.
Given the disaster’s impact, however, the IMF has said that some of the parameters of the existing programme may need to be changed. The floods will obviously affect the Pakistani government’s budget, but the IMF confirmed that Pakistan remains committed to tax reform efforts that will put its public finances on a sustainable basis.