Karachi, February 17, 2025 – The Pakistan Business Council (PBC) has put forward a significant proposal to the Federal Board of Revenue (FBR), recommending that wealth reconciliation be made mandatory for all tax return filers.
This measure, as outlined in the PBC’s tax proposals for the upcoming 2025-26 budget, aims to ensure a more equitable distribution of the tax burden across the economy.
The PBC emphasized that all resident tax return filers should be required to submit comprehensive wealth reconciliations. This, according to the PBC, will promote transparency and accountability in the taxation system. The council stressed the importance of addressing key factors such as people, processes, and technology to broaden the tax base. Sharing the progress of these efforts with existing taxpayers will reinforce trust that the tax base is indeed being expanded.
Furthermore, the PBC suggested that the formal sector’s responsibility to verify tax credentials should be confined to its direct suppliers and customers, as displayed on the FBR portal. This recommendation aims to streamline compliance processes for businesses while maintaining robust oversight.
The PBC also proposed implementing an advance tax of 39% on electricity and gas bills for commercial and industrial consumers who are not registered tax filers. If these consumers fail to comply within a specified timeframe, their utility connections should be disconnected to encourage tax compliance.
Additionally, the PBC highlighted the need to align tax rates on land disposal with corporate profit taxation. Currently, gains from land disposal are taxed at 15%, regardless of the holding period. The PBC recommends taxing these gains at 39% if the disposal occurs within ten years of purchase. A reduced rate of 15% should apply only when the holding period exceeds ten years.
To ensure a level playing field for the formal sector, the PBC advocated for phasing out tax concessions for regions like FATA and PATA, which currently enjoy preferential treatment. This change would reduce distortions in the competitive landscape.
Lastly, the PBC urged the government to establish Electronic Data Interface (EDI) arrangements with major trading partners. Providing anonymized visibility of import declarations would help curb under-invoicing without compromising confidentiality.
The PBC’s proposals reflect its commitment to fostering a fairer, more transparent, and efficient tax system in Pakistan.