3. Types of taxes levied in Pakistan
A brief introduction
DirectTax ;and
IndirectTax
Collection pattern of Gov’t and revenues percentages
Tax Evasion AndTax Avoidance
Effect of tax evasion on economy and Gov’t techniques to reduce them
Attitude of public regarding tax and factors acting upon
How Can It Be ReducedTo An Acceptably Low Level
4. Tax
To tax (from the Latin taxo; "I estimate") is to impose a financial charge or
other levy upon a taxpayer (an individual or legal entity) by a state or the
functional equivalent of a state such that failure to pay is punishable by law.
Direct tax
In the general sense, a direct tax is
one paid directly to the government
by the persons (juristic or natural) on
whom it is imposed (often
accompanied by a tax return filed by
the taxpayer). Examples include
some income taxes, some corporate
taxes, and transfer taxes such as
estate (inheritance) tax and gift tax.
Indirect tax
an indirect tax or "collected" tax
(such as sales tax or value added tax
(VAT)); a "collected" tax is one which
is collected by intermediaries who
turn over the proceeds to the
government and file the related tax
return.
6. Tax evasionis the
illegal evasion of taxes by
individuals, corporations,
and trusts.Tax evasion often entails
taxpayers deliberately
misrepresenting the true state of
their affairs to the tax authorities to
reduce their tax liability and
includes dishonest tax reporting,
such as declaring less income,
profits or gains than the amounts
actually earned, or overstating
deductions
Tax avoidanceis
entirely legal and is where you
take steps to minimize your tax
bill.Think of it like bending the
rules rather than breaking them.
On a small scale it can mean
saving into an ISA so you don't
have to pay income tax or capital
gains on that money. On a
grander scale it can mean paying
an accountant or tax expert to
exploit loopholes in the law to
minimize your tax bill.
7.
8. Companies
registered
for CIT
Corporate
Tax files
%
60000 25551 42.85
Represent only 0.8%
of commercial and
industrial users
GST
registered
retailers
Retailers %
178190 1.4 million 12.72
Whereas
approximately,
there are 3.4 million
commercial and
industrial electricity
users
9.
10. No strictness from government on tax evasion.
Corrupt government discourage tax payer to pay tax
Taxpaying system is very complicated in Pakistan.
People don’t take responsibility to pay tax.
Laws are not based according to ground realities.
Corruption of govt. encourage tax payer to evade taxes.
11. People don’t pay taxes because they usually “Go with the flow”.
There is no benefit for tax payer from government.
Tax rates are higher in Pakistan
Tax evaders motivate tax payers not to pay taxes.
12. Proper tax audit
introduction of amnesty schemes and proper implementation
Low tax rate as much as possible (application of canon of equity)
Tax system should be easily understandable
Strict policy against tax evaders
Accountability of Gov’t can eliminate
