PkRevenue.com – The Institute of Chartered Accountants of Pakistan (ICAP) has proposed a major shakeup in the tax regime for listed companies. In its recommendations for the 2023-24 budget, ICAP suggests replacing the current withholding tax (WHT) system with an adjustable advance tax regime.
This move aims to ease the tax burden and streamline the process for compliant corporations.
ICAP highlights challenges faced by the corporate sector under the existing WHT system. The complexity of the system, coupled with difficulties obtaining credit for withheld taxes, creates hurdles for businesses. Issues like missing Computerized Payment Receipts (CPRs), delays in depositing withheld taxes, and verification problems with the Federal Board of Revenue’s (FBR) database further complicate matters.
To address these burdens, ICAP proposes removing WHT obligations for listed companies and replacing them with monthly advance tax payments. This would involve amending Section 147 of the Income Tax Ordinance, 2001, requiring listed companies to make advance tax payments on a monthly basis instead of quarterly.
ICAP believes this shift would significantly benefit both businesses and the FBR. Listed companies would experience a lighter administrative burden and a simplified process. The FBR, by receiving tax payments directly from companies every month, would no longer need to rely on withholding agents. This reduces the risk of fraud and simplifies verification procedures.
Furthermore, ICAP argues that the proposed system would improve cash flow for companies and minimize their exposure to tax refunds. Reduced paperwork and verification hassles would streamline tax compliance, making the process more efficient for all parties involved.
ICAP’s proposal for an adjustable advance tax regime reflects their commitment to fostering a more efficient and transparent tax system. This change has the potential to benefit the corporate sector by simplifying compliance and ultimately enhance the overall effectiveness of tax administration in Pakistan.
