‘Strategy for growth’: ACCA Pakistan to deliberate on the budget 2012-13

Every year, ACCA Pakistan submits its budget proposals to the Federal Board of Revenue (FBR) and the theme for the budget proposals 2012-13 is strategy for growth. ACCA Pakistan’s budget proposals support fair taxation policies by making recommendations aimed at enterprise growth, social equality, environment conversion and promoting savings and investments. In order to facilitate industry, government and financial expert engagement and perspective sharing on the shape of the upcoming Federal Budget, ACCA Pakistan is organising a Pre-Budget Seminar at Serena Hotel, Islamabad on 27 April 2012. 

Strong fiscal policies backed by long term stability are the need of the hour for a sustainable economic growth of Pakistan. Fiscal measures with long term strategy are required to create opportunities for investment, industrialisation and employment generation. Power shortages and inflation are the two key challenges faced by our economy and the improved tax collection system can lead the growth of business in the country.

In the session, ACCA Pakistan and other experts will discuss various recommendations on the upcoming budget 2012-13. The seminar speakers include Mumtaz Haider Rizvi, Chairman, Federal Board of Revenue (FBR), Yaser Sakhi Butt, President, Islamabad Chamber of Commerce and Industry (ICCI), Malik Munir, Member ACCA Pakistan Taxation Sub-committee, and Ayla Majid, Vice Chairperson, ACCA Pakistan Members Network Panel along with Arif Masud Mirza, head of ACCA Pakistan and Noor Aftab, head of ACCA Islamabad. The seminar will be attended by economists, employers and members from the financial fraternity.

PRE-BUDGET IS ALL ABOUT PLANNING THE WORK AND POST BUDGET IS ABOUT WORKING THE PLAN

PRE-BUDGET IS ALL ABOUT PLANNING THE WORK AND POST BUDGET IS ABOUT

WORKING THE PLAN

ACCA Pakistan considers Pakistan's Federal Budget 2011 to be aiming for increasing the tax base by acknowledging the need for rational, fair and equitable taxation. The devolution of certain significant budgetary decisions to provinces last year and with agriculture being a provincial subject, the provincial budgets to be announced shortly would assist in assessment of effective utilisation of the funds. The budgets would also outline provincial education, health, social development priorities for future as well as their willingness to think of out of box revenue raising measures which are extremely essential for socio-economic-entrepreneurial development of the provinces. ACCA suggests that the accountability, transparency and efficient record keeping of funds usage by provinces would benefit from investment in financial reporting, accounting, auditing and financial management skills and knowledge.

With professionalism the theme of public sector reforms around the world, budget acknowledgement of the need for reforms in Pakistan's public sector provides an opportunity for consideration of the need to

seek professional expertise in areas of taxation, auditing, corporate governance, financial reporting and financial management. Similar to last year, the salaries of federal government employees have been

increased. As the perceived outcomes of the salaries increases is improved efficiency, performance and motivation; development and communication of performance measures in annual reports or website

would help taxpayers appreciate the utility of the salary increases and the improvement in services offered to general public. It is of benefit to society, individuals and businesses if there is a clear link between tax take and its pay back benefits.

With the international focus on stakeholder aligned sustainable business model, focused and professional regulations envisaged by the budget should discourage ticking the box approach to regulations and instead focus on simplicity of regulations creating a business culture where probity and openness of business operation and disclosure is rewarded. In context of taxation laws the burden of tax should not fall unfairly on taxpayers who play by the rules and pay their fair share.

In the absence of social welfare schemes for underprivileged population and declining social development funds, poverty alleviation through creating an enterprise friendly taxation and business environment require serious consideration. The translation of the resolve to unleash the potential of youth entrepreneurship in new

creative cities into action is urgently needed given that more than half of our population is under the age of 30 and not all of them are educated or employed. The time taken in the planning and the creation of the creative cities could be utilized by the potential entrepreneurs business management, marketing, social media, accounting, financial management and auditing skills and knowledge building. With water management as a budget priority, tax benefits to water effluent treatment plants and encouragement of carbon credits schemes could have sent a strong message to international buyers and businesses about Pakistan's resolve to environmental stewardship, this may have created a competitive advantage for businesses.

ACCA considers the phasing out of the federal excise duties and the withdrawal of exemptions and concessions as the right step in the direction of simplification of taxation system. The implementation of the resolve to widen the direct tax base by inclusion of a large number of tax payers through strict enforcement is essential for creation of a perceived fair taxation system. Urgently needed enterprise growth would be assisted by increase of tax credit in establishment of listed companies and allowance of BMR expenditure as a deduction. For simplification of tax laws, monthly submission of withholding tax statements and mandatory filing of income tax returns and statements where income is between Rs. 300,000 to Rs.350,000 can be dispensed with. ACCA endorses rationalization of sales tax regime by reduction of general sales tax rate to 16%, withdrawal of certain exemptions and streamlining of procedures.

A budget document is a planning document which is manifestation of a government's annual revenue and expenditure expectations. The public as stakeholders have the right to know how effectively the budgetary forecasts and expectations have been achieved, how transparently the resources allocated to different expenditures have been utilized. The federal budget maker's vision of a fair rational enterprise taxation system would benefit from more accountability, transparency and probity of the budgetary exercise and utilization of funds as well as effective implementation of the budgetary plans and projections.

ITS TIME TO WORK THE PLAN.

PRE-BUDGET IS ALL ABOUT PLANNING THE WORK AND POST BUDGET IS ABOUT WORKING THE PLAN

PRE-BUDGET IS ALL ABOUT PLANNING THE WORK AND
POST BUDGET IS ABOUT WORKING THE PLAN
PRE-BUDGET IS ALL ABOUT PLANNING THE WORK AND POST
BUDGET IS ABOUT WORKING THE PLAN

14 June 2010 - Pakistan's Federal Budget 2010 aims to introduce
reforms for macroeconomic stabilization, greater provincial financial
autonomy, poverty alleviation and creation of a fair tax system. The
significant increase in the allocation of funds to provinces will
facilitate in alignment of their decisions to the socio-economic needs
of the citizens.
Looking at the budget through the lens of ACCA Pakistan, the challenge
for the provinces will be to create the financial and economic
management capacity to spend the budgeted funds in a manner that
delivers on their socio-economic aims in other words measurable
outcomes that deliver real benefits to the citizens.

A number of economic observers have repeatedly said that throwing more
money into the coffers of provincial governments is only half the job,
the other more important part is accountability and transparency of
its usage, this calls for greater financial resourcefulness, enhanced
financial reporting and management responsibilities. This results in
the need for thorough accounting, auditing and financial management
skills and knowledge enhancement as well as seeking professional
expertise.
As professionalism of public sector becomes an international best
practice, the substantial increase in salaries of federal government
employees may help in addressing challenges of recruiting and
retaining professionals with the right mix of skills and knowledge
thus contributing towards efficiency and performance of the public
sector machinery.

Organisations like the AGP and CGA are already fast-tracking their
capacity building. Programmes like the project for improving financial
reporting and auditing (PIFRA) is already resulting in greater
accuracy and timelier financial reporting to ministries. This is vital
for managing the revenue generation and intelligent spending of
budgets.
ACCA Pakistan considers the CGT (Capital Gains Tax) as a tax that
would contribute to fairer distribution of wealth; ACCA Pakistan
further endorses the phased approach to introduction of CGT. The road
map for CGT provided by the budget allows ample opportunity for the
accounting profession and their clients to factor in the impact of CGT
on their strategies and operations. Businesses should look up to their
tax advisers for better cash management and legitimate schemes to
reduce the burden of CGT.

The current budget appreciates the importance of investment to
business activity. Abolishment of custom duty on selected livestock
categories in line with the ACCA Pakistan budget proposals will boost
high yielding breeds of livestock in Pakistan. Similarly reduction in
filing requirements for withholding agents will lead to simplification
of documentation. However the increase in tax rate for small companies
from 20% to 25% may pose discouraging to enterprise in Pakistan.
Appreciating ACCA Pakistan's pre-budget recommendation to increase
income tax exemption slab for salaried and non-salaried individuals
which shall benefit 780,000 taxpayers approximately, concurrently
increasing their disposable income and stimulating consumption; this
budget envisages a fair tax system based on avoidance of
disproportionate allocation of tax burden.

The proposed system of General Sales Tax aspires to simplify the
taxation system and avoid the incidence of a single tax rate of 15% to
avoid burden on the tax payer. The tax exemption on education requires
reflection. Applying the principle of ability to pay, the education
sector may be classified into private and public sector education
whereby private sector educational institutions may be taxed at 15%.

With majority of Pakistan's population comprising of youth, skills
development especially in the rural areas is a priority. The proposed
scheme whereby unskilled workers in rural areas will be guaranteed
employment for one hundred days is commended. The success of this
scheme lies in carefully considering the training element of the
scheme which should endeavour to develop skills that are highly
practical and employable in the factor market.

A budget document is a planning document which is manifestation of a
government's annual revenue and expenditure expectations. The public
as stakeholders have the right to know how effectively the budgetary
forecasts and expectations have been achieved, and how transparently
the resources allocated have been utilized. The federal budget maker's
vision of a fair taxation system would benefit from more
accountability, transparency and probity of the budgetary exercise and
utilization of funds. ITS TIME TO WORK THE PLAN.
ends

Notes to Editors

1. ACCA is the global body for professional accountants. We aim to
offer business-relevant, first-choice qualifications to people of
application, ability and ambition around the world who seek a
rewarding career in accountancy, finance and management. We have
362,000 students and 131,500 members in 170 countries worldwide.

1. ACCA has worked with governments, national organisations and
development agencies in emerging economies- for over 20 years-
promoting the accounting profession, to create value for the
communities, businesses and individuals it serves.
2. ACCA believes that globalisation of business means that one set
of reporting standards is essential. We favour the principles-based
IFRS.
3. ACCA understands the real issues facing small businesses as
63,000 of our members work in SMEs or small partnerships worldwide.

ACCA Pakistan Pre-Budget Discuss: Stakeholders deliberate Federal Budget 2010/11

ACCA Pakistan Pre-Budget Discuss: Stakeholders deliberate Federal Budget 2010/11

ACCA Pakistan Pre-budget Discuss 'Supporting Fair Taxation' held on 4
May 2010 gave an opportunity to stakeholders to discuss the
composition of the upcoming Federal Budget. The panelist include Mr
Kashif Shabbir, President, Rawalpindi Chamber of Commerce and
Industry, Mr Zafar Ul Majeed, Member Strategic Planning and
Statistics, Federal Board of Revenue, Mr Sakib Sherani, Economic
Advisor, Ministry of Finance, Ms Ayla Majid, Director Business
Advisory Services, Khalid Majid Rehman & Co and Mr Salman Amin,
General Manager Audit, Oil and Gas Development Company Limited.

The discussion revolved around need for establishing a fair taxation
system by widening the tax base and nurturing a culture of voluntary
tax payment. Panelists were desirous of a tax system that encouraged
industrial growth and commented that tax incentives aimed at promoting
SMEs growth should be considered.

Participants felt that the agricultural tax reform needs an objective
and critical evaluation. Documentation of the agricultural sector
should be undertaken, support should be given to provincial
governments for an effective implementation of Agricultural Income Tax
on basis of income instead of acreage and any gain on the disposal of
agricultural land for non-agricultural purposes or change in status
from agricultural land to industrial or commercial land should be
subject to Capital Gains Tax by the provincial authorities in order to
enhance the perceived equity of the taxation system, Further
deliberations also suggested that awareness of tax benefits should be
created as it would nurture a culture of voluntary tax payments.

Value Added Tax (VAT) discussion revolved around getting the buy in of
relevant stakeholders and educating the business community about
whether VAT is a new tax or is replacement of General Sales Tax. If
VAT would result in a more documented economy then its benefits need
to be disseminated.

To attract foreign investment and to encourage the establishment of
regional headquarters of holding companies, a new provision of a
concessionary income tax rate, that is, a half rate, should be
introduced in the new federal budget.

Inclusion of tax incentives, along with carbon credits was also
suggested to make alternative energy projects financially viable,
encouraging investors to focus on such projects.

For information about ACCA Pakistan budget proposals please view ACCA
Pakistan Budget Proposals 2010-2011 through the following link:

http://pakistan.accaglobal.com/pubs/pakistan/general/technical/fb/bp2010

Budget 2010-2011- ACCA Pakistan organises a public platform for open debate

Budget 2010-2011
ACCA Pakistan organises a public platform for open debate

Maintaining its practice of submitting budget proposals to the Federal
Board of Revenue, ACCA Pakistan proposals 2010-2011 for Federal Budget
2010 titled "Supporting Fair Taxation" endorses the government's
efforts by outlining practical recommendations aimed at establishing a
fair taxation system by widening the tax base to create a system that
is perceived as socially equitable and nurtures a culture of voluntary
tax payment. Cognisant of current economic priorities, ACCA Pakistan's
budget proposals outline proposals for a taxation system conducive to
local industrial resurgence, which will address environmental
challenges and attract foreign investment so as to manage the national
and global economic challenges.

ACCA Pakistan is organising a Pre-budget Discuss on 4 May 2010 in
Serena Hotel, Islamabad. This Budget Discuss will be mainly focusing
upon the remedy of current challenges existing in the economy. The
panelists include Mr Kashif Shabbir, President, Rawalpindi Chamber of
Commerce and Industry, Mr Zafar Ul Majeed, Member Strategic Planning
and Statistics, Federal Board of Revenue., Mr Sakib Sherani, Economic
Advisor, Ministry of Finance, Ms Ayla Majid, Director Business
Advisory Services, Khalid Majid Rehman & Co and Mr Salman Amin,
General Manager Audit, Oil and Gas Development Company Limited.

Budget 2010-201: ACCA Pakistan organises a public platform for open debate

Budget 2010-2011
ACCA Pakistan organises a public platform for open debate

Maintaining its practice of submitting budget proposals to the Federal Board of Revenue, ACCA Pakistan proposals 2010-2011 for Federal Budget 2010 titled "Supporting Fair Taxation" endorses the government's efforts by outlining practical recommendations aimed at establishing a fair taxation system by widening the tax base to create a system that is perceived as socially equitable and nurtures a culture of voluntary tax payment. Cognisant of current economic priorities, ACCA Pakistan's budget proposals outline proposals for a taxation system conducive to local industrial resurgence, which will address environmental challenges and attract foreign investment so as to manage the national and global economic challenges.

ACCA Pakistan is organising a Pre-budget Discuss on 15 April 2010 in Avari Hotel, Lahore and on 17 April 2010 in Sheraton Hotel, Karachi. This Budget Discuss will be mainly focusing upon the remedy of current challenges existing in the economy. The panelists in Lahore will include Mr Shahid Naseem, Chief Commissioner, Large Taxpayer's Unit, Lahore, Mr Muhammad Arshad, Vice President, First Fidelity Leasing Modaraba, Mr Asad Feroze, Partner, Muniff Ziauddin Junaidy & Co. Chartered Accountants, Ms Aasia Saail Khan, Chairman, Women Entrepreneurs Development, Lahore Chamber of Commerce and Industry. The panelists in Karachi will include Mr Asrar Rauf, Member Direct Taxes, Federal Board of Revenue, Mr Arif Masud Mirza, Head of ACCA Pakistan, Mr Kaiser Bengaliwala, Advisor to Chief Minister, Planning and Development Department and Mr Abdul Majid, President, Karachi Chambers of Commerce and Industry.for business - creating sustainable value www.accaglobal.com/accountants_business<http://www.accaglobal.com/accountants_business>
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[Analysis]ACCA Pakistan appreciates relief to automobile and telecommunications industry

By Dr Afra Sajad, Head of Education and Policy Development, ACCA Pakistan

The Federal Budget announced in the National Assembly on 13 June 2009 aspires to facilitate economic stabilization by mitigating poverty, revitalizing the industrial sector, advancing the agricultural sector, reducing price inflation, raising tax revenue by relying on indirect taxes and further taxing the existing tax payers. As none of the four sectors for enhancing the tax revenue as identified by the government before the budget announcement has been taxed, the Federal Budget 2009-10 may not be able to address the prodigal challenge of increasing the tax base. There is not much evidence that the budget encourage savings and investment thus raising concerns about sustainable economic growth.

The current budget places heavy reliance on financial aid from the Friends of Pakistan and other donors. In case the foreign financial aid is not received, the government may obtain IMF funding or borrow from banks. This would ultimately result in inflation with the burden being borne by common man.

ACCA supports export efficiency and thus believes that the export encouragement benefits announced in the budget are steps in the right direction. There is also an increasing need to reduce reliance on imports. Innovative measures like exploring the option of growing tea leaves in the country and reducing the import expenditure on tea may be considered.

ACCA believes that local industrial growth would result in employment creation, national productivity and economic growth. Thus the relief to automobile, mobile sector and cement sector is appreciated. Duties and taxes on import of luxury items may also have further stimulated local industrial growth.

The Budget proposes levy of carbon surcharge (carbon tax) on POL products. In its present form, carbon surcharge which would replace the Petroleum Development Levy (PDL) might inflate the POL prices consequently affecting small businesses and consumers. ACCA believes that a fair mechanism for the imposition of carbon taxes aligned with the principles of carbon taxes need to be devised. Carbon Tax is a means to achieve stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Carbon Tax only intends to tax the carbon content of the fuel consumption rather than the entire fuel consumption as proposed by the Finance Bill. The carbon tax collected may be used to fund environmental related projects. The proposed withdrawal of duties on wind power plants and initiatives for the water conservation are in line with ACCA Budget Proposals. ACCA Budget Proposals advocate social equality thus we support the social welfare initiatives announced in the budget. The success of poverty alleviation measures announced in the budget for example Benazir Income Support Fund and the increase in micro-finance lending depends greatly upon transparency and effectiveness in implementation of these schemes. Against the background of reduced donor funding for micro-finance institutions and increasing inflation where the borrowers struggle to payback the principal amount and the interest, the announced increase in micro-finance lending may be an ambitious target. The sustainable development of SMEs is essential for employment creation. ACCA Pakistan advocates convenient access to finance for SMEs through better resource allocation thus we hope that the Rs.10 billion fund created for SMEs would achieve the desired outcome of SME survival and subsequent growth. We appreciate FBR for introducing the accelerated depreciation for alternate energy projects, the measure being at par with the ACCA Pakistan budget proposals that suggested the tax relief in form of accelerated depreciation on capital equipment purchased to ensure the continuity of power supply.