Daily Times

LAHORE: A recent report titled “Indirect Taxes: Current Trends across South Asia and UAE” launched by ACCA (the Association of Chartered Certified Accountants) revealed that Pakistan has the highest Value Added Tax (VAT) in the region South Asia and UAE. The report claimed that VAT rates range from the highest of 17 percent in Pakistan to lowest of 5 percent expected in the UAE on January 1, 2018. Sri Lanka, Bangladesh and India have rates between the two poles. The report was launched on Tuesday in which finance professionals and ACCA members discussed insights on the effective implementation of VAT. The ACCA is the global body for professional accountants. It offers 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. The report further revealed that the rise of consumerism in the region, the growing middle class with spending power, lifestyle spending and urbanisation was fuelling demand driven economies. Governments continued inability to bring the untaxed in to the direct taxation net means that they are opting increasingly for indirect taxes to tax consumption. Discussion points were shared with the audience regarding associated changes resulting from adoption and the impact of VAT on the future of businesses. The report also presented around 11 recommendations including deploying professionals, incentivising taxpayers, improving the appeals process and modernising state institutions. While speaking on the occasion, ACCA Head of Policy for MENASA, Arif Masud Mirza, said that ACCA has produced the report, Indirect Taxes – Current Trends across South Asia and the UAE, from years of engaging with stakeholders, who have voiced loud concern over the aggressive and ad hoc manner in which indirect taxes are being implemented and collected, we thought we would document the region’s currents trends to start a dialogue for better understanding the appreciation and planning of indirect taxes, especially VAT. Arif further said that it might be that rates were too high in some countries when they compete with others and so tax payers may be aggrieved by that, one will also have to look at regional competitiveness of each jurisdiction. What is clear is that businesses need finance professionals with strong technical skills and ethics to help with compliance and planning.’ Muhammad Awais, Tax partner said, “Indirect taxes were more prominent than direct taxes for example in Sri Lanka, where nearly 81 percent of the tax revenues come from indirect taxes and we see this trend across the region.” He also added “VAT tends to encourage savings, leading to increased investment and economic growth.” ACCA’s Head of Taxation, Chas Roy Chowdhury, stated that this report was an attempt to document administrative practices and determine trends across the region so that valuable conclusions regarding VAT implementation could be drawn. Each region has different challenges and it is important to understand that indirect taxes were here to stay and the universal inherent principles of a good tax system were transparency, accountability and simplicity. In order to promote an effective tax system, the use and adoption of technology was the key – this change takes time, therefore it was advisable that governments across the MESA region use it effectively.