19th June 2014
Pakistan’s government announced its 2014 budget this month and it contained a number of reforms that will affect international firms doing business in the country.
As MGI Asia member Ilyas Saeed & Co says, the package was delivered amid “loads of hope” among firms for a business-friendly announcement. So did it deliver or was there general disappointment?
According to Irfan Ilyas, partner at Ilyas Saeed & Co, Pakistan finance minister Ishaq Dar missed the mark.
He said the budget “was silent on many aspects and did not address the core issues faced by our economy”, such as the availability of utilities and energy policy, agriculture tax and the technology sector.
But Mr Ilyas welcomed efforts to improve Pakistan’s woeful tax collection ratio of just nine per cent of GDP with the introduction of higher taxes for non-filers.
However, even here he says there was a missed chance, as the non- filer category should have been penalised with an even higher rate.
There are also measures to improve investment by foreign firms in the country. For example, the tax on industrial ventures established in the next three years will be reduced to 20 per cent as long as half the cost is financed through foreign direct investment.
In addition, the rates of non-financial businesses will be reduced in measured steps to 30 per cent from 35 per cent.
A mixed bag, with some welcome reforms and some missed opportunities. But Mr Ilyas is confident that Pakistan is improving and making progress.
“There is no lack of commitment, enthusiasm and courage in our nation. All we need is to follow the right path continuously,” he said.
More detail can be found in the firm’s Budget Memorandum 2014. Download this here
To speak to Irfan Ilyas or contact the firm visit the website or the MGI World member profile page.