Assignment:

Business Taxation
Submitted by:
Ali Sajjad 11350
M.Waqas 11354
M.Naeem 11364
M.Arslan 11358
Raza Ahmad 11346
Submitted To:
Sir: Muhammad Umer Zakka















Dedicated to our
Beloved Parents,
Respected teacher & for All who are fighting for Truth.

(INSPIRING, ENCOURAGING AND SUGTAINGING)














ACKNOWLEDEGEMENTS



All praises and admiration are for Allah (SWT), who is bounteous and merciful
and whose care and guidance led all of us to complete this ample task. And peace is Upon
Prophet Muhammad (SAW) who is a torch of guidance and knowledge for humanity
forever.
I thank my parents for their love and support while I decided to be a
Professional student for awhile.
I thank my teacher, Muhammad Umer Zakka, for giving me the opportunity to work in
a very Interesting area, and for his support and guidance.

I thank the members of my group for their time and effort as well as the financial support
of my work.
Last but not least, we are thankful to our parents, family members and friends who really
believed in ourselves throughout our stay in this university and in the completion of this
project.











TABLE OF CONTENTS

Serial No: Pages No:



Bar Graph .. 6... 16
Tax Culture .. 17
People Opinions .. 18
Our Opinion .. 20
Summary .. 21
Recommendation . 24











Tax culture of Pakistan
Tax culture is an expression of human spirituality and creativity. according to Spitteler
taxation is influence by economic, social cultural, historical, geographical, psychological
and further differences prevailing in the individual countries and their societies. The
culture cant be changed only in a year or in a few years-that is what weve to do by
promoting a new tax culture but of course we should tread on the right path not being
disillusioned from achieving the object of a prosperous and bright future. I hope that the
theory of tax culture will be able to lower the gap between pure theoretical economic
fiction and cultural reality, particularly in the sphere of taxation. A country-specific tax
culture is the entirety of all relevant formal and informal institutions connected with the
national tax system and its practical execution, which are historically embedded within
the countrys culture, including the dependencies and ties caused by their ongoing
interaction.










Tax culture in Pakistan is undeniably weak. Low tax base, large informal economy,
unlimited short filers and non-filers, and lack of enforcement of tax laws etc. are the main
indicators of the weak tax culture prevalent in our country. Reasons for low levels of
voluntary compliance of tax laws and lack of intrinsic willingness to pay taxes are
manifold and may vary according to the perceptions of different stakeholders. Arguments
can be advanced from political, historical, religious and political economy perspectives.



People Opinions:
People do not pay tax because high rate of tax. When govt reduce rate of tax rate then
people pay tax.
Prepare proper law and control inflation.
People do not pay tax because they do not get any facility from the tax as taxes are
collected by government to provide facilities to nation. We can collect tax by giving
people facilities to people.
First of all I think that government should make a transport system for tax collection. And
it will be equal to all. Everyone should declare his/her assets to the respective of their
province. In case of increase in declared assets a person should bound to inform the
government.
For the collection of taxes I must say that people offices or head quarters are made in
every city. People should be awared to pay their taxes and if they do not they will be
fined by the government. Government would have power to change the fine in case any
one does not pay his tax. They respective income tax head quarter office would have
power to built case against the defaulter.
Tax is income of government cash and all the pay people pay the tax, government budget
prepare base on tax and the tax is company.
People not paying taxes because of these points but govt should be increased the taxpayer
and comes the new tax pares. Not only burden on old tax pare should come new taxpayer.
Tax is very imported for a country. This is duty of every person who does not pay tax.
We collect the tax from the people through the bank transaction. And people knew that
the tax cannot help to future.
Corruption must be eradicated to improve the taxation system.
Government should appoint the fair employees in the tax collection.
The people have no trust on the govt employees because they are corrupt.
I think on Muslim tax is not applicable. None Muslims who lives in Muslim country
should give tax that is called in Islam diet.
Islam a good system that is zakat. My idea is that zakat system is appear and awareness
of zakkat for the people.
In this way we are follow Islamic laws and progress is over.
First give the incentives to the people then ask poor the tax.
Tax limit should be under control and tax officer must honest, fair awareness provide to
the people.
People do not pay tax because the tax rate very high.
First got give awareness of tax then tell people how this gives taxes. Collecting system
must corruption free?


These are many reasons for not paying taxes because every one wants to save his income
for the better future.
The rules for collecting taxes should be equal for everyone.


Our opinion:

The system of collecting taxes here in Pakistan is not transparent so it is one major reason
people don't pay taxes because they don't trust on this system

The tax collector guy also gives you a tax exemption if you pay the collector guy
something... its cheaper people sitting at the top don't pay taxes themselves which is true.
Other than that people don't trust the government, they believe taxes will go in pockets of the
politicians in power

people are victims of poverty they dont have money even to have meals 3 times a day how
can they pay taxes

Poverty rate is very high in Pakistan so they dont pay taxes and gangster politicians and
corrupt government employees dont give taxes and also middle class and lower class give
taxes by deducting taxes from their pays.


On the one hand there is a feeling of mistrust and obscurity among the taxpaying community
against the government as to the fact that the funds generated out of their taxes are not
properly used rather they are mishandled.







Summary
Tax culture of Pakistan is very weak Low tax base, large informal economy, unlimited
short filers and non-filers, and lax enforcement of tax laws. A balanced and an equal tax
culture could not be introduced in Pakistan without removing the feudal and tax evaders
from the national politics. There is a need to promote accountability and justice to
change the approach of the public so that they would bring the change with confidence.
Taxes are not paid just for the sake of it. Since there is no return of favors by the
establishment so its only logical for people to think that its a practice of no use. The
reason people quote is that the people sitting at the top don't pay taxes themselves which
is true. Other than that people don't trust the government, they believe taxes will go in
pockets of the politicians in power. Instead people choose to pay the same amount extra
in charity, and the tax collector guy also gives you a tax exemption if you pay the
collector guy something... its cheaper also that much of the people are victims of
poverty they dont have money even to have meals 3 times a day how can they pay
taxes. The system of collecting taxes here in Pakistan is not transparent so it is one major
reason people don't pay taxes because they don't trust on this system. Poverty rate is very
high in Pakistan so they dont pay taxes and gangster politicians and corrupt government
employees dont give taxes and also middle class and lower class give taxes by
deducting taxes from their pays. People dont pay taxes here because they know that the
money wont be spent on welfare, infact it would end up in politicians pockets.
Secondly, bureaucracy is also comfortable with tax evasion as it opens doors for
corruption. Only people who pay taxes are the salaried people. No one else pays their
fair share of tax. The tax to GDP ratio in the previous government was 12.5 percent,
which lowered to 8.8 percent in the present government regime. People are not ready to
pay taxes as impression of spending money on lavish activities by the rulers was
discouraging them to pay taxes. Pakistan has one of the worlds highest Indirect Taxes.
Their are high pricing controls on Agricultural produce in Pakistan which causes indirect
taxation on all Farm income. Their are taxes on fuel/petroleum product which causes
indirect taxation on all Pakistan. These are all the reasons of weak tax culture in Pakistan









Recommendations:
The following measures therefore needs to be adopted for immediate and long term
stability and efficiency of taxation system, which would also help to expand the tax base
and increase revenue.
Tax revenue can be increased by removing the corruption. All the upper
class people, politicians and government employees do not pay taxes they
do corruption. They do not declare their assets FBR should apply high
penalties for that person and fulfill it.
There is no enforcement of law if it is enforced due to this tax system
become well and generates the tax revenue.
Employing in a government departments is quite a commendable step.
They are killing two birds with a stone.
a) Hoping to collect taxes and
b) Providing them with a respectable government job. The tax collectors
seem to be quite proud to be doing their jobs. In addition, this may be
generalization, but they will be less prone to bribery as they know
government jobs are limited for them the penalty of accepting bribery
should much higher for them than others.
Income from property of corporate sectors should be excluded from the
marginal tax regime.
The rate of withholding the tax on cash with draw should be increased
from 3% to 5%, the exemption limit 25000 on the other hand should be
increased to 50000 through this the tax collect in a huge amount.

FBR must be considered as an essential state institution. The right people for the
right job must well define career oriented in the organization hierarchy. FBR is
traditionally plagued with political pressure. The first should be to select a
chairman FBR on merit. For this purpose, the post of chairman should be
advertised for selection through public service commission for a fixed tenure of
four of five year based on academic qualification and professional experience such
step would go a long way in stability and efficiency of the FBR with no political
reference, due to applying this corruption rate decreases.

According to our point of view the most frequently raised objection by the
business community in particular and public in general is that politician violate the


law themselves when it comes to paying tax. Very few legislatures of the nation,
senate and provincial assemblies are on tax rolls and those who have NTN pay an
insignificant amount compared to their lavish expenses. It should be made
necessary under the law for every person contesting in the election (at any level) to
sent NTN and file their return of income and wealth statement. Any person found
quality of tax evasion must immediately be disqualified. Such step will give
substantives boost to payment of taxes as leaders of the people will become a role
model for them.

Due to power lobby of authoritative landowners and landlord politics agriculture
income is exempt from income tax. Tax exemption to such a large section of
economy reflects a huge distortation .taxing the agriculture income will make the
taxation system not only equitable but it will greatly help boost the low tax to
GDP ratio.

Our present system has not envisaged any provision of incentives to the taxpayers
to promote tax culture, the government must provide some special incentives to
them for instance a certain payment of tax (says RS 200000) can be fixed for an
individual taxpayer for one year and if a taxpayer pay tax of that amount are above
than then he should be allowed some privileges for that year. for instance :

i. Priority in obtaining telephone, electricity, gas connections
ii. VIP treatment in hospitals
iii. Social security system should be introduced
iv. In case of old age or disability the government should paid some percentage
of amounts out of the tax already paid by them over the years.
Government should show people that if they pay more through taxation than their
expenses will be reduced by the state , in some way through
i. Cheaper education
ii. Cheaper healthcare
iii. Social security
Hence axes would not simply be reducing the disposable incomes of
people but also a way of increasing incomes, through reduction in
expenditures on private purchases of traditionally public services
(infrastructure, public transportation e.t.c)
Non salaried person should allow marginal relief where the income
marginally exceeds from a particular slab of income.



We can increase the tax revenue by putting only the direct taxes.
Removing the indirect taxes it is cause of inflation in country. It is not
fair that millionaire peoples pay same sale tax as the poor peoples. It is
our recommendation that FBR put only direct taxes through it the no. of
taxpayer is increases. It is the very big reason people not pay direct
taxes because they think we paid taxes in indirect form why we paid
direct taxes.
We can increase the taxes by creating awareness in the people
.according to our point of view large number of peoples is not aware
with that where the government spends the amount which is selected
where it spends. For this purpose it is necessary that the FBR do
seminars in the towns, villages and cities and aware the peoples and tell
them where their taxes spends. And this also can be done by arranging
talk shows and programmers on television and by print media.
Tax revenue can be increase by hiring the honest employees in tax
department, because the percentage of employees gets bribery from the
people and industrialists and give them concession. If this type of
activity is stop we can increase the tax revenue. If any employee can get
bribery and it prove, the FBR discharge that person put high penalties
on them.