Summary Weak compliance and enforcement have been highlighted by the IMF in Pakistan's tax system
ISLAMABAD (Dunya News) – International Monetary Fund has stated in a report that 65 percent of Pakistan’s total tax returns comprise of indirect taxes collected through services and products.
According to the international organization, shortcomings in the tax system and limited tax base cause reduced direct taxes.
Report states that collections of the government through income tax and corporate tax have also gone down in numbers owing to the shortcomings.
It should be added here that the government becomes dependent on direct taxes more so for giving tax relief to different departments.
International Monetary Fund stated that income tax makes around four percent of the Gross Domestic Product which is dismal compared to developing countries. In developing countries, it is at least 5.5 percent while indirect taxes make around 45 percent of the total taxes collected.
Weak compliance and enforcement have been highlighted by the IMF in Pakistan’s tax system.
