It is discouraging to note that tax exemptions in various sectors, including projects, have become a culture that is hindering the growth of revenue collection. The tax ratio of the country's gross domestic product or GDP is very low and the National Board of Revenue (NBR) wants to curb tax evasion in development projects. Hence, the company is proposing alternatives by changing the existing rules of tax exemption in projects.
The government must devise prudent steps to raise revenue collection further. Policymakers can raise revenues by modifying existing tax policy, enacting new taxes, and boosting economic activity. E-commerce sector can be one of the largest tax-collecting areas. But unfortunately, authorities concerned have not been able to establish any infrastructure system to collect revenue from online business sector. We need to build a highly skilled ICT wing in order to collect revenues from the ICT firms or services.
The government must devise
prudent steps
to raise revenue collection
further
In order to collect revenue from the ICT service based business firms NBR has to bring some necessary changes in its existing VAT rules. Firstly, NBR has to identify the challenges and barriers in the area. As the revenue authority has no infrastructure in place to collect revenue from this area, they must build necessary infrastructure to collect revenues from e-commerce sector.
The revenue board will need a highly skilled ICT wing aiming to collect revenues from the ICT firms or services. Also the government should formulate and implement new taxation law for e-commerce which will more clearly define the parameters of the e-commerce industry.
More often than not NBR cannot achieve its revenue target due to tax exemption. Still our tax-to-GDP ratio is below 10 percent and Tax exemption is one of the obstacles to the non-growth of GDP ratio. Therefore, the government should gear up efforts to curb tax evasion in order to raise revenue collection further.
