- Only 50,000 out of 100,000 registered companies in Pakistan are filing taxes.
- SECP and FBR are urged to collaborate to improve tax compliance.
- Virtual One Stop Shop (VOSS) simplifies registration but data sharing needs a boost.
In Pakistan, only half of the 100,000 companies registered with the Securities and Exchange Commission of Pakistan (SECP) are diligently filing their income tax returns with the Federal Board of Revenue (FBR). This startling revelation comes from a recent report by the FBR on reforms.
The report highlights the existence of a one-window facility known as the Virtual One Stop Shop (VOSS), which enables data sharing between SECP and FBR for company and national tax number (NTN) registration.
This initiative, launched to simplify the registration process for companies as part of the ease of doing business agenda, holds great potential. However, it appears that the full potential is yet to be realized.
While a Memorandum of Understanding (MoU) exists between SECP and FBR for the sharing of need-based data, stakeholders believe that FBR should take a more proactive approach to sharing data and information. The concern is valid, considering the alarming gap in tax compliance.
SECP, in its quest for a more efficient tax regime, has been working on various taxation models tailored to different types of companies, including limited liability, sole proprietorship, and group companies. These initiatives could create an enabling environment for improved taxation practices.
Collaboration between SECP and FBR is crucial to bridging the tax compliance gap. By establishing taxation benefits for diverse company types, businesses will be encouraged to register with FBR and avail themselves of these incentives, as emphasized in the FBR report.
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