ISLAMABAD: One of the revenue generation measures might be “gross asset tax” on companys gross assets, taking into account their balance sheets. Sources told Business Recorder on Tuesday that the government is examining a proposal to levy “gross asset tax”, which might be some kind of levy on companys gross assets, declared in the balance sheets.
The “gross asset tax” would not be collected on the net amount declared in the balance sheets. A certain percentage of tax might be levied on gross assets of the companies. However, the levy is not likely to be collected on the net liability, sources added. The IMF Country Report Pakistan: 2009, issued on Tuesday under Article IV Consultation and First Review under the Stand-By Arrangement, said that other revenue measures, such as the introduction of a carbon tax or a gross asset tax, are under discussion, but are yet to be approved, the report said.
When contacted, tax experts said that a tax was collected on value of assets of companies in the past. The “Corporate Assets Tax” was levied under Section 12 of the repealed Finance Act, 1991. This tax was a one-time levy, payable by a company, as defined in the Companies Ordinance, 1984, on the value of its fixed assets as shown in the balance sheet.
The government had imposed this asset value tax on the value of assets of corporate entities. This asset value tax remained applicable for only one fiscal year and later it was abolished. At that time, where a company, liable to pay Corporate Asset Tax had not furnished a return and failed to pay the due tax within time, was liable to penalty. It was a one-time levy, payable by a company in respect of the value of fixed assets held by it on the “specified date.
When “Corporate Assets Tax” was applicable in 1991, the specified date meant the date falling in the period between June 30, 1991 and June 30, 1992, for which the balance sheet was made, ie the last date on which accounts of the company are closed. However, if a company had paid this tax on assets as on June 30, 1991, it was not liable to pay this tax on assets as on June 30, 1992.
Experts pointed out that in the past, the government had also prescribed the slabs for collection of “Corporate Assets Tax” in 1991. According to the slabs, where the value of assets was not more than Rs 50 million, the payable tax was zero; where the value of assets was more than Rs. 50 million but more than Rs 100 million, payable tax was Rs 500,000; where the value of assets was more than Rs 100 million but not more than Rs 250 million, the payable tax was Rs 1,000,000 and where the value of assets is more than Rs 250 million, the tax was Rs 2,000,000.
Other experts opined that one of the forms of the “gross asset tax” could be minimum tax on gross assets. This minimum tax is applicable on turnover basis, but the “gross asset tax” could be on gross asset basis.
Source: Business Recorder