Page 59 - CMA Journal (May-June 2025)

Focus Section

To combat this, Pakistan must strengthen its legal
interpretation capabilities, create a specialized treaty
enforcement unit, and deepen cooperation with
international bodies such as the OECD and FATF. These
reforms are critical for establishing a fair and enforceable
tax regime.
Information Systems and
Institutional Fragmentation
Despite initiatives like PRAL, IRIS, and the Tajir Dost app,
institutional data silos persist in Pakistan. Key entities
such as banks, FBR, SRB, NADRA, and SECP continue to
operate in isolation.
This lack of integration hinders real-time profiling,
complicates enforcement, and increases reliance on
manual follow-ups. To overcome these barriers, all navigable, and integrated. A system that breeds opacity,
economic databases should be linked to CNICs through a uncertainty, and penalizes effort cannot expect voluntary
national data warehouse. This will help modernize the tax compliance. Reforming tax complexity is not merely a
system and improve compliance outcomes. technical need—it is a foundational one.

Reform Agenda: Simplification and Integration References
The three main pillars of a comprehensive tax reform plan • Ahmad, E. (2010). Why is it so difficult to implement a GST in
Pakistan? The Lahore Journal of Economics, Special Issue, 1–30.
for Pakistan must be taxpayer empowerment,
integration, and simplification. • Aslam, S., & San, M. F. (2021). Voluntary tax compliance behavior of
individual taxpayers in Pakistan. Financial Innovation, 7, Article 67.
• First, to create a single, cohesive legal framework
• Federal Board of Revenue. (2023). Tax expenditure report. Islamabad:
encompassing income tax, sales tax, and excise Government of Pakistan.
duties, a unified tax code is essential.
• International Monetary Fund. (2016). Pakistan: Selected issues (IMF
• Second, firms and individuals can reduce Staff Country Report No. 16/2). Washington, DC: International
Monetary Fund.
compliance costs and errors by adopting simplified
return filing procedures, ideally auto-filled using • Kleven, H. J., Brockmeyer, A., Best, M. C., Spinnewijn, J., & Waseem, M.
third-party data from registrations, utilities, and (2015). Production versus revenue efficiency with limited tax
capacity: Theory and evidence from Pakistan. Journal of Political
banks.
Economy, 123(6), 1311–1355.
• Third, presumptive taxation schemes can offer • Latif, F., Jabeen, M., & Jabeen, M. (2023). The impact of tax knowledge,
small-scale, low-risk traders a practical route into the tax system complexity and tax fairness perception on compliance
formal tax system without excessive administrative behavior of a taxpayer in KPK. International Journal of Business and
Management Sciences, 4(4), 19–40.
burden.
• OECD. (2022). Revenue statistics in Asia and the Pacific 2022:
• Fourth, accessibility—particularly for less literate or Emerging challenges for the Asia-Pacific region in the COVID-19 era.
rural taxpayers—can be greatly enhanced by
• Pakistan Bureau of Statistics. (2023).
developing user-friendly taxpayer services, including
internet portals, mobile applications, and • Silvani, C. A. (1997). Improving tax compliance (IMF Working Paper
No. WP/97/30). Washington, DC: International Monetary Fund.
multilingual support.
• Usman, M., Ahmad, A., & Rehman, R. Z. (2024). Tax audit, tax penalty
• Lastly, the use of ad hoc Statutory Regulatory and tax compliance: A case study of Pakistan. Journal of Asian
Orders (SROs) should be minimized. Instead, legally Development Studies, 13(2), 267–281.
binding circulars and advance rulings should be • World Bank. (2019). Pakistan revenue mobilization project:
issued to ensure predictability and transparency. Diagnostic report. Washington, DC: The World Bank.

By fostering transparency, equity, and trust, these pillars About the Author: The author is an Associate Member of ICMA and
can help transform Pakistan’s tax system from one that is currently serves as the Manager of Litigation and Audit at Sui
overly complex and discouraging to one that supports Southern Gas Company Limited (SSGCL) in Karachi. Prior to this, he
held the position of In-Charge of Taxation at the Utility Stores
voluntary and sustained compliance.
Corporation of Pakistan. With over 17 years of extensive experience
Complexity remains a major hindrance to tax compliance in tax operations and litigation in Pakistan, he brings a wealth of
knowledge to his current role.
in Pakistan. The system must become more equitable,
ICMA’s Chartered Management Accountant, May-June 2025 57