Pakistan’s tax system should be revised, improved: Wang

LAHORE: Pakistan’s tax system should be revised and improved, based upon growth instead of the regulatory pressures.

The administrative reforms are essential in the tax system and attention should be paid to re-designing of tax recovery system, said Wang Zihai, President Pakistan China Joint Chamber of Commerce and Industry (PCJCCI) on Monday during an online meeting at PCJCCI Secretariat.

He also gave a briefing on the proposed tax reforms road map based on the Chinese Taxation model.

He said that there is a need to create an optimal balance between a tax regime and the growth of business to create an investment friendly environment along with an effective mechanism for leveraging enough revenue for public service.

He said that China had undergone a splendorous community development on the basis of its ‘taxation reforms’ and Pakistan can make a paradigm shift to have a business friendly taxation system by following Chinese taxation reforms.

China made taxation central to the economic development agenda and community development goals, he said, adding that China had employed taxes as the principal means to transfer resources from private to public use.

Ehsan Choudhry, Senior Vice President PCJCCI, while expressing his views, informed that China, a socialist state has fulfilled the needs of society from cradle to grave. Child care, education, job placement, housing, subsistence, healthcare and elder care are largely provided and administered through state-owned enterprises.

He added that the prevailing taxation system is a burden for the business community, which needs to be replaced with better taxation models of the world including the Chinese model that has proved to be the most successful.

Sarfaraz Butt, Vice President PCJCCI said that particularly the reform of value-added tax (VAT) had boosted China’s service sector and developed its position as the ‘world’s factory’.

He added that VAT reform was designed to replace business tax in manufacturing sector to protect the tax revenue of local governments. The tax, in China, emerged as a by-product of growth and the government in Pakistan should also concentrate on growth that would automatically increase taxes, he added.

Salahuddin Hanif, Secretary General PCJCCI said that once equity and fairness in the tax system had been demonstrated by the state, enforcement as well as compliance would dramatically improve.

Copyright Business Recorder, 2022