Short-term revenue generation measures: gross asset tax may be the solution

One of the short-term revenue generation measures could be gross asset tax to be levied on company''s gross assets, on the basis of their balance sheets. Analysts told Business Recorder on Monday that there is an immediate need to generate additional revenue on short-term basis. The FBR has the option to examine the repealed taxes or rescinded levies imposed in the past on one-time basis.
This way the tax department would be able to generate reasonable amount needed through one-time measure. The FBR should consider proposal to levy gross asset tax, which could be some kind of levy on company''s gross assets, declared in the balance sheets. The gross asset tax would not be collected on the net amount declared in the balance sheets. A certain percentage of tax might be levied on gross assets of the companies. However, the levy is not likely to be collected on the net liability.
Tax expert said that a tax was collected on value of assets of companies in the past. The "Corporate Assets Tax" was levied under Section 12 of the repealed Finance Act, 1991. This tax was a one-time levy, payable by a company, as defined in the Companies Ordinance, 1984, on the value of its fixed assets as shown in the balance sheet.
The government had imposed this asset value tax on the value of assets of corporate entities. This asset value tax remained applicable for only one fiscal year and later it was abolished. At that time, where a company, liable to pay Corporate Asset Tax had not furnished a return and failed to pay the due tax within time, was liable to penalty. It was a one-time levy, payable by a company in respect of the value of fixed assets held by it on the "specified date.
When "Corporate Assets Tax" was applicable in 1991, the specified date meant the date falling between June 30, 1991 and June 30, 1992, for which the balance sheet was made, ie, the last date on which accounts of the company are closed. However, if a company had paid this tax on assets as on June 30, 1991, it was not liable to pay this tax on assets as on June 30, 1992. Experts further said that one of the forms of gross asset tax could be minimum tax on gross assets. This minimum tax is applicable on turnover basis, but the gross asset tax could be on gross asset basis.