افراد، تنخواہ دار افراد اور ایسوسی ایشن آف پرسنز کے سال 2019 کے ٹیکس گوشوارے جاری کر دیئے گئے ہیں #FBR
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Muhammad Iqbal is known to us as a marvel of excellence in all the fields he
worked in. He is the visionary who dreamed of Pakistan, the famous Poet of the
East, a top philosopher, a revered scholar, a politician, a parliamentarian par
excellence and even a spiritual guide for many. Thanks to the recent pioneering
work published in the book of my honorable father Mr. Zaheer Ahmad Meer
Advocate, titled “The Great Lawyer – 106 Reported Cases of Allama Muhammad
Iqbal”, we’re now aware that he was a Great Lawyer too.
what most of us may be unaware of, is the fact that he was also a fine
proponent of economics. He wrote his first book on Economics titled “Ilm ul Iqtisadiyat”
or “Science of the Economics” in 1903 in Urdu, at the age of just about 26
years old, when no one was doing such work even in English in the sub-continent.
Unfortunately, this first ever book on economics
in Urdu language, largely remained unnoticed, not to be realized, never to be
Let us remember that during Iqbal’s era, the classics of Adam Smith, John Stuart Mill, Ricardo and Alfred Marshall were taught all over Europe. But in the Indo-Pak subcontinent even teachers and scholars had only a hazy idea of this subject. Actually, it was not even introduced at the University level anywhere in the Indo-Pak subcontinent baring three universities.
” Unfortunately, this first ever book on economics in Urdu language, largely remained unnoticed, not to be realised, never to be properly acknowledged “
It is therefore spellbinding that Iqbal had such
deep insights into the subject of economics and the economic plight of the
Muslims of the sub-continent. He was deeply concerned with the unequal income
distribution that turned the rich richer and the poor poorer, a challenge we
still face across the globe and in our homeland, Pakistan. The mere writing of
‘Ilm ul Iqtisadiyat’ renders him economist in the same-way as the Wealth of
Nations (1776) made Adam Smith an economist, or the Das Captia portrayed Karl
Marx as one; albeit the context eventually differed.
Iqbal also pointed out on 28 May I937 that: “The
problem of bread is becoming more and more acute. The Indian (Muslim) has begun
to feel that he has been going down and down during the last 200 years.
Ordinarily he believes that his poverty is due to (Hindu) money-lending or
capitalism. The perception that it is equally due to foreign rule has not yet
fully come to him. But it is bound to come.”
Iqbal, the learned enigma and a great thinker of Islam, was actually the first
economist of the Indo-Pak subcontinent to raise his voice against the
exploitation of Muslims by domestic and foreign classes controlling the means
Dr. Muhammad Iqbal was anti-Imperialism in his thought process, yet he was able
to point out the key problems as well as draw up workable solutions to address
1. Welfare based wealth
presented the concept of welfare based wealth, distinguishing it from the
traditional wealth. An example to
elaborate the concept would be that if skilled labor were enslaved for forced
labor, it’ll increase the national wealth but will be detrimental to the
welfare based wealth of the citizens and wider humanity. Similarly a pledged
property may be accounted for as the wealth of the creditor in the event of a
default but won’t meaningfully impact the overall wealth of the state.
2. Population Control
Allama Iqbal also pointed out the excessive increase in population as a core
issue at times of saturating economic resources, in an era when no one in the
Islamic world did that. He very logically explained that while increase in
population can be productive in a scenario of untapped or plentiful economic
resources, it becomes counter-productive economically when the situation
reverses, unless, other economic avenues can be explored to further create
economic opportunities for growing population.
can all appreciate, how this issue identified in 1903, has become a core
economic concern for us in 2019, albeit 116 years later. I ask you all, what
else do you call vision & foresight, if not this?
3. Economic Equilibrium in
Iqbal also advocated that a research-based
analysis can determine the equilibrium in various sectors of the economy and
modes of factor pricing as per the local context. Yet, at the same time he also
urges to focus upon human development through exploration and preservation of
natural resources and improving human and societal relations. By doing so,
Iqbal practically envisioned today’s HDI (human development index).
Iqbal has also put forth various strategies used
by recent economic success stories. For example, he discussed regional
specialization in producing goods and services and brought in the notion of
comparative cost, concepts that China practiced in its economic resurgence. This
basically advocates for a country or its federating units, e.t.c. to focus its
expertise in their specialzied area of production/services while accounting for
the opportunity cost of producing that good or service in order to achieve
The writer is
a leading economist and experienced tax expert who holds five top professional
finance, investment and accountancy qualifications CFA
(USA), CPFA (UK), FCCA (UK), CA (ICAEW, UK) & Anti-Money
Laundering Specialization along-with substantial international exposure and
represents Pakistan on Global Tax Forum while sitting on the boards of several
think-tanks. His profile can be accessed at: https://omerzaheermeer.wordpress.com/about
With the deadline for declaring undisclosed assets, sales and expenditures under the Asset Declaration Ordinance, 2019 (commonly referred to as Tax Amnesty scheme) being over, it’s time to analyze the results, experiences during the process and the follow-up required.
Asset Declaration Ordinance,
2019 was promulgated on 14th May 2019. The stated aim of the
initiative was to bring new people, previously unregistered, within the tax-net
voluntarily. The initial response just like the 2018 Tax Amnesty scheme was
lukewarm, perhaps owing to both the lack of clarity and the Ramadan and Eid
Initiatives that showed
Thankfully, following our
advice, the concerned quarters ran public information campaigns and announced
that they had successfully integrated databases
of various authorities in the country and now also possessed the information
gained via OECD multilateral convention about Pakistani residents’ offshore
accounts and are further strengthening the mechanism to launch a compliance
drive immediately following the amnesty. An adjudication authority for
enforcement of The Benami Transactions (Prohibition) Act, 2017.
This, after a lapse of almost two years since the law
came into being, signaled the seriousness of the government for enforcement
The scheme, however, really took off in the last ten days of June 2019 with the seriousness of the Government in enforcement becoming even more clearer and the arrests of top political figures by NAB and stringent sentence in corruption case of ex bureaucrat by the Supreme Court of Pakistan sending strong messages.
“The promised enforcement action coupled with structural reforms to eliminate taxpayers’ harassment and to rationalize the tax system should be undertaken. Without these measures, this scheme would be remembered as just another one in the history of the amnesties launched in Pakistan. However, with the right approach and actions this can become the turning point for the taxation compliance culture in Pakistan”
Moves that backfired
NADRA and FBR then tried to
further shore up these efforts by launching their databases. NADRA launched its
database first with initially a fee of Rs. 500 to access the records of a
person held by NADRA. Unfortunately, it was a disaster due to the lack of data
and the people were taken aback that if this was the data held by the
authorities then nothing much has changed. The move backfired big time. Many
people started talking of taking a “risk” believing that the claims are a
Next came the FBR database,
free to access. The quality of data was better than NADRA’s database but was still
very weak. However, FBR atleast did the sensible thing of posting a message
that it was not a complete profile and that the details were still being
populated from the database. A rumor was also spread claiming that whoever
logged in to the databases would be recorded and followed up by the FBR. This
negativity infact saved the day with people starting to avoid checking their
profiles and simply preferring to avail the scheme to streamline their affairs.
Experiences and Challenges
Despite these setbacks, most
of the people, including those belonging to the powerful segments as retired
military officials, bureaucrats, judges, journalists, e.t.c. were flocking to
avail the scheme. Just a clarification that the bar on Government employees’
being excluded from the scheme was for those currently serving or retired
within the last 10 years.
With the results showing
healthy signs and uniform demands of an extension from all professionals, tax
practitioners, legal fraternity, chartered and chartered certified accountants,
businessmen, e.t.c., the Government did the best it could in the face of the
IMF pre-conditionality of no Amnesty scheme during their program, which was an
extension of 3 days, till 3rd July 2019. The response erupted!
People were literally
running from pillar to post to avail the scheme in the last few days which led
to regular breakdown of the online system of FBR (IRIS). With extreme load on
the last day, the system constantly got choked. Furthermore, a confusion led to
the rumors of the systems being partially shutdown at 5 PM on 3rd
July 2019 instead of the usual tacit understanding of the English calendar’s
end of day at 11:59 PM, in line with the past practices of the FBR. This led to
atleast 6,000 applications of the already paid tax being stuck in the system
with tens of thousands not being able to submit. Mr. Shabbar Zaidi, the FBR
Chairman, allowed the processing of the former while the fate of the latter
remained unclear to this moment.
Despite all the challenges, the scheme became the most successful in terms of the numbers availing the scheme and the new tax registrations being issues. At the time of publication, 137,000 people had availed the scheme compared to 84,000 over a much larger duration in the 2018 amnesty scheme. Out of the 137,000, almost 100,000 were new tax registrations. With the stuck cases being cleared, the number is expected to grow from 137,000 to closer to 150,000. Almost $ 20 billion worth of previously undisclosed assets were declared. However, the tax collection was less compared to the 2018 scheme owing to the low rates of this scheme (1.5% – 4% for most asset classes) compared to the last one’s 5%.
The challenges faced during this scheme should be
studied, and lessons learned for the future particularly about the capacity
building of the state institutions both in terms of the human resource and the
technology. The promised enforcement action coupled with structural reforms to
eliminate taxpayers’ harassment and rationalize the tax system should be
undertaken. Without these measures, this scheme would be remembered as just
another one in the history of the amnesties launched in Pakistan. However, with
the right approach and actions this can become the turning point for the
taxation compliance culture in Pakistan.
writer is a leading economist and tax expert who holds five top professional finance,
investment and accountancy qualifications CFA (USA), CPFA (UK), FCCA (UK), CA (ICAEW,
UK) & Anti-Money Laundering
Specialization along-with substantial experience and represents Pakistan on
Global Tax Forum while sitting on the boards of several think-tanks. His
profile can be accessed at: https://omerzaheermeer.wordpress.com/about
With the ongoing budget debate, there is increased focus on the need for fiscal discipline and reforms to be achieved chiefly by a turnaround in the taxation system of Pakistan. Generally speaking, taxation laws are set of laws to derive revenues for the Government to function & service the citizens with the aim of improving their quality of life while continuously improving the facilities and infrastructures provided.
a complex taxation system with a focus on indirect taxes with over 70 different
taxes. This has led to several sets of laws dealing with specific taxation areas.
Below are some major issues in dire need of major reforms to achieve our
Extremely Low Numbers of Income
Tax Returns Filers:
From approximately 3.5 million income tax returns filers to just
above 1.4 million for the (last complete) tax year 2017 with a filing deadline
ending in 2018, this is an area of major concern. The filing for tax year 2018
is still ongoing. In a country of over 220 million, this amounts to just 0.6%
of the total population and is troubling.
Some steps have been proposed in the budget 2020 to address
this challenge including requirement to register for tax after undertaking some
transactions and the duty of the FBR to register those who paid withholding
taxes but are not registered for NTN using the data to compute the imputed
Undocumented, Black economy:
This builds up from the above issue of low return filers. A
larger proportion of the economy, some estimates put the number close to 100%
of the GDP, is believed to be undocumented black economy. This by any standard
is massive and a point of major concern. Low literacy rate, a fearful
reputation of FBR, low public service delivery and rampant corruption are
amongst the major reasons for this massive level of black economy.
The steps proposed in the budget to counter this include the
key move to require any property transaction over 5 million to be done through
banking channel otherwise hefty penalty and tax losses would be incurred.
Taxation Complexities and Ease of
mentioned above, Pakistan has a very complex taxation system and as per the
data by the World Bank, has placed the country on 136 which though an
improvement from the ranking of 147 out of 190 countries,
is still worrying. The complex, non-harmonized and multi-layered laws in
operations not only make it more expensive but also time-consuming for the
a business for taxation particularly sales tax is a very complicated and HR
driven in this age of technology and when we already have databases and systems
like IRIS and STRIVE in operation by the FBR. Steps needs to be taken to
automate and facilitate these processes.
issue of lack of harmonization among various taxation laws has increased
many-fold post the devolution of Sales Tax on Services regulation and
administration to the provinces and each Province setting up its own Revenue
Authority for the same, as a result of the 18th Constitutional
Amendment. In an era, when countries are agreeing to facilitating arrangements
on the likes of European Economic Area, making borders irrelevant in terms of
economic activities, Pakistani businesses are facing the challenges of a gone
era while expanding their businesses in other provinces within the same
country. The regulations are as if these are not the provinces of one country
but different countries sans economic treaties.
needs to be harmonization between various provincial taxation bodies among
themselves as well as with the FBR on various issues particularly that of
jurisdiction and tax adjustments. This should also lead to rationalization of
tax laws in a harmonizing manner.
High Costs of taxation:
addition to having one of the most complex taxation systems in the world,
Pakistan also has high taxation rates compared to other countries in the
region. This adversely impacts the investment climate and business eco-system
in the country.
the taxation rates are also several times that of the cost of tax avoidance in
the country, making it an attractive proposition for some businesses to keep
operating beyond the radar of the legal economy.
the highly complex nature and high-handedness of the taxation regimes also
translates into further costs for taxpayers in terms of the time and
administration required to ensure compliance. Even from a pure business
perspective, this makes tax avoidance an attractive proposition keeping in view
the weak and slow judicial system.
structural issues including confusing and highly subjective taxation laws,
focus on indirect taxes, the ancient systems, mal-practices, singular focus on
revenue collection, harassment of the existing taxpayers rather than using the
same resources to focus on expanding the tax base and a general ill-perception
have all contributed to the current state of affairs and needs to be reformed
if the situation is to improve.
the confidence of the masses, removing the fear of harassment and changing the
ill-repute of the FBR are the biggest challenges in this regard. Sans these, no
reforms can work to achieve the full potential of our taxation system.
above issues require serious efforts to address the critical issues concerning
the taxpayers particularly the businesses in the country. With CPEC and its
associated possibilities materializing, now is a good time to ensure these
reforms are put to action to achieve the full potential of not only the
existing economy but also the developments accruing. We’ve been discussing the
possible proposals for reforms and share more in the next issue. Till then, we
leave our readers to ponder over this topic.
The writer is a leading economist
and experienced tax expert who holds five top professional finance, investment
and accountancy qualifications CFA (USA), CPFA (UK),
FCCA (UK), CA (ICAEW, UK) & Anti-Money Laundering Specialization
along-with substantial international exposure and represents Pakistan on Global
Tax Forum while sitting on the boards of several think-tanks. His profile can
be accessed at: https://omerzaheermeer.wordpress.com/about
Peace be on you. They say a picture speaks a thousand words so how many words will a picture with words speak?
Read the image below for a historic, pioneering and unique work. This recently published book is a fantastic new year gift for all particularly legal practitioners, academics, researchers, historians and students.