ISLAMABAD: The government has intended to abolish large number of withholding tax provisions in the budget.
According to Medium-Term Economic Framework (MTEF), which was launched by Finance Minister Asad Umar on Monday, pointed out that withholding taxes become regressive if people who are not liable to income taxes and/or if firms treat them as consumption taxes and are generally passed them on to the consumers, badly impacting the progressivity of the tax.
As such, the tax needs some fundamental reforms.
“As a first step, the government intends to discontinue a large number of low yielding withholding taxes in the next year’s budget.”
The framework also highlighted about the taxation and valuation of immovable properties.
Since the federal government collects tax on income from property and provincial and local governments collect property and transaction tax on immovable property, all parties have an interest in proper documentation and valuation of property.
“The government intends to pursue a coordinated approach to taxation and valuation of the real estate sector in a way to collect optimum revenue from it without discouraging investment.”