World Bank calls for simplify tax regime

According to the World Bank’s recent assessment, Pakistan’s tax system requires reform to clarify regulations, address loopholes, and ensure equitable tax burden distribution.

According to the paper, ‘Enabling a Modern and Efficient Tax System,’ despite tactics and declared objectives throughout the last two decades, the outcomes have yet to be realized.

“Instead of a complete system overhaul, which may be infeasible from a political economy standpoint,” the evaluation stated, “a carefully prioritized approach that bundles reforms with compensation mechanisms, stakeholder consultations, and continued investments in taxpayer services may be more promising.”

It stated that in the long run, reforms should strive to create a simple regime with a single provision for smaller enterprises, a personal income tax system focused on taxing revenue exclusively at the source, and a non-discriminatory comprehensive sales tax system.

The report also provided a timeline for implementing its recommendations. It gave initial priority to harmonizing rate structure and eliminating zero ratings on domestically marketed products when it came to sales tax revisions.

According to the analysis, one way to streamline the sales tax system is to unify the registration level for all industries.

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