LAHORE: Association of Chartered Certified Accountants (ACCA) Head of Taxation Chas Roy-Chowdhury suggests the government to consider a low rate broad based Value-Added Tax (VAT) to increase the number of taxpayers in the country.
“Unless the tax pyramid is broadened, one will continue to overburden those in the legitimate system,” the global tax expert said during an exclusive interview with Daily Times.
He said the government needs to encourage businesses to comply, adding that SMEs need to be helped not only to comply through the complexity of the system but also through amnesties or tax holidays to bring them into the system. “Any amnesty policy should have clear timelines, be easily understood and reinforce the fundamentals of future compliance,” he added.
On a query, Chas said that privatisation would certainly help the economy become more efficient and streamlined. “Privatisation would bring high performing management, improve governance and attract investment over and above the government limitations. It may be painful in the beginning but in the long run, should be beneficial to the economy.”
Highlighting the contributions of his association towards the betterment of the country, the renowned economist said ACCA had conducted multiple events on taxation for the Federal Board of Revenue (FBR) and business organisations and that his association would continue to bring international topics to the country in order to further enhance knowledge and understanding on the system of taxation.
“We have held two sessions this month with the Lahore and Islamabad Chambers of Commerce and Industries on sales tax on service and interprovincial harmony. What we have learnt is that owner managers are struggling with their tax affairs; they see the system as unfair and overburdening. The owners are not fully using the skills of professional accountants, who should be standing shoulder to shoulder with the owners to create business strategies including planning on taxation,” Chas observed. “There is a lot that can be done in managing cash flows to ensure tax savings and early reclaim of input tax.
SME owners also have to show courage to turn down suppliers and or customers who ask for ‘kachaa’ invoices. Transactions must be supported by genuine sales tax invoices to allow the system to operate in a meaningful manner. The FBR has a mechanism in place to allow businesses to check the authenticity of sales tax invoices.”
On another query, he said entrepreneurship is more of an attitude than anything else, adding that there is no lack of entrepreneurial attitude in the country but this has to be converted into an innovative supply of services and goods that are needed by both business customers and non-business customers.
“We are fortunate to be living in a time when human needs can be created rather than actually inherently being there, so for example nobody needed Whatsapp but the technology was there and someone invented it and now everyone needs it. There are many young people in excellent institutes looking at how to harness technology and earn money from it. But they do need to have a financial strategy, business plans and budgets. They need professional support to meet bank, tax and other compliance. In Pakistan, there are numerous bureaucratic traps waiting for new start-ups but professional accountants can help with forms, templates and other submissions,” opined the ACCA expert, who also stays in regular contact with many government departments such as the European Commission, HM Treasury and HM Revenue and Customs through formal committees and ad hoc meetings.
ACCA is a global body for professional accountants, which aims at offering 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. It supports 170,000 members and 436,000 students in 180 countries, helping them develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 91 offices and centres and more than 8,500 approved employers worldwide, who provide high standards of employee learning and development.