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Tax Environment Essay

5962 words - 24 pages

Subject: Financial Management
Project: Tax Environment and Its Relation with Financial Management
Submitted By: Hooria Majid
Submitted To: Sir Khalid Mehmood

ACKNOWLEDGEMENT
I would like to thank Allah Almighty for giving us the courage and devotion to complete this project.
I am highly grateful to our advisor Mr. Khalid Mahmood whose supervision and guidance in relation to selection of material for perusal and formatting of the research paper helped us to do the work on time and in a professional manner.
I extend my gratitude towards University of Lahore Islamabad Campus for ...view middle of the document...

However it is suffering from structural weaknesses including narrow tax base, low compliance, widespread exemptions, low coverage and weak audit and enforcement which are responsible for such low tax to GDP ratio.

TABLE OF CONTENTS
Introduction ................................................................................. …………………………5
Historical analysis of low tax to GDP ratio .........................................................................7
Tax Structure Of Pakistan…………………………………………………………………..12
Introduction Of Telecom Industry………………………………………………………….17
Taxation In Mobile Sector…………………………………………………………………18
Revenue Contribution Of Telecom Industry……………………………………………….19
Swot Analysis………………………………………………………………………………20
Conclusion…………………………………………………………………………………..24
Recommendations…………………………………………………………………………..25
Bibliography…………………………………………………………………………………26
Annexure1……………………………………………………………………………………27

INTRODUCTION of TAX
“Tax” includes any penalty, fee or other charge or any sum or amount leviable or Payable. In ordinary sense, taxes are the “levies” by the Government in exchange for the services provided to the general public and are the lifeline of any country because of the fact that major chunk of the revenue to run a country comes from them. Taxes whether direct or indirect are linked with the economy of the country and that is generally represented with the term Gross Domestic Product (the total market value of all final goods and services produced in a country in a given year).
Tax-to-GDP ratio can be defined as total government tax collection divided by the country’s GDP. The Countries with the best tax-to-GDP ratios are Denmark 50 percent, Sweden 49.7 percent, Zimbabwe 49.3 percent , Belgium 46.8 percent, France 46.1 percent, Cuba 44.8 percent, Finland 43.6 percent, Norway 43.6 percent, Lesotho 43.9 percent, and Italy 42.6 percent. If we analyze Tax-to-GDP ratio in Pakistan it is worse even than its neighboring South Asian countries. For example India’s tax to GDP ratio is 17.7 percent, Maldives’ 20.5 percent and Sri Lanka’s 15.3percent. Now if we want to compare Pakistan’s tax to GDP with any country of the region we can find only Bangladesh with 8.5%, Bhutan 10.7 percent and Nepal again 10.7 percent. So, indeed Pakistan’s tax to GDP ratio is one of the lowest in the region2.
Pakistan barely managed 8.9 percent Tax-to-GDP ratio in fiscal year 2009-10. Unfortunately the country is being run on the financial oxygen being provided by international donor’s agencies. Government borrowing from State Bank of Pakistan has reached astronomical figures. The burden of circular debt has shot up to 63 percent from 58 percent of GDP. This financial inflexibility has ultimately squeezed public sector development programs with the result that government spending on education and health sector is equal to nothing.
It is unfortunate that the Government has failed to persuade the feudal class to give taxes but on the other hand...

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