SECP proposes reduction in corporate tax to the National Assembly – Part 1

The equity market regulator of Security and Exchange Commission of Pakistan sat before the National Assembly Standing Committee on Finance this Thursday. Securities and Exchange Commission of Pakistan (SECP) Chairman Muhammad Ali pleaded to the commission on behalf of the regulator handing out a proposal for reduction in corporate income tax from 35 per cent to 25 per cent.

The equity market regulator proposed to the government to lower income tax imposed on the corporate sector in an attempt to lure more business to the stock market. Moreover, Mr. Ali also proposed to increase the levy for partnership-based companies by the same level to increase market capitalisation.

On the other hand, the regulator also offered a suggested idea to increase the income tax on the Association of Persons to create a balance in the taxation system. Ali asserted that the taxation system in Pakistan is not justified with leverage given to the rich who do not want to pay taxes in the first place.

“All over the world, the corporate income tax is lower than the tax on AOPs, but we are providing incentives to those who do not want to pay tax,” said Ali, adding that corporate sector has low attraction to businesses in Pakistan due to requirements of documentation, disclosure of income and high taxes.

Ali said the AOPs maintain two books; one for the payment of taxes and another for personal usage. According to him, in Pakistan there are only 59,530 registered firms whereas, other development countries that fall in the same income per capita bracket have million of organizations registered with their respective SECs.

Ali assured the media that Security Exchange Commission will be able to sway Federal Board of Revenue (FBR) to revise the rates on income flowing from the corporate sector. Past attempts in this regard have all been shrugged in the initial stages.

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Posted by Usman Khalid on Jan 13 2012. Filed under National. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.