The Pakistani government continues to pursue a pro-investment agenda in the second federal budget of its term announced last Tuesday by Finance Minister Ishaq Dar. The business-friendly budget for the 2015 fiscal year starting on July 13 comprises an array of proposals including fiscal incentives for new businesses and export-oriented sectors and a cut in corporate tax rates.
As well, deliberate steps are being taken to encourage filing returns by imposing high tax rates within various sectors for non-filers. The aim is to improve the country’s abysmally low tax collection ratio of 9% of GDP.
Dar, a chartered accountant by profession and a close confidante of Prime Minister Nawaz Sharif, expressed enthusiasm about the economic recovery and “sound policies” of the government. Thanks to changing business cycle globally and marginally improved energy supply at home, the economy is estimated to have grown by 4.1% in fiscal 2014 that ends on June 14 – the highest growth since 2008. The industrial sector expanded by an impressive 5.8% against 1.37% in 2013. However, performance in the agriculture and services sectors was subdued.
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