A jettison for corporate sector difficulties

Jettisoning is the act of voluntarily throwing cargo overboard to lighten or stabilize the ship that is in immediate danger. Hence, any immediate solution acceptable to both the parties may prove to be useless in the longer run serving neither the purpose of business community nor the country. I am of the view that the task force on corporate tax policy will not apply the above technique in Pakistani corporate sector. This article is an endeavour to understand the purpose and impact of such exercise over the business community and the country.


The government’s primary economic objectives are raising the underlying growth rate of the economy and maintaining high levels of employment. I feel that the key criteria for corporate tax reforms should be business competitiveness, fairness and balance to competitiveness.

Business competitiveness means removing tax distortions to ensure that decision making is driven by commercial factors rather than by tax considerations. It also means to promote productivity by tackling market failures that ultimately undermines growth such as under investment in research and development. It further means that removing tax distortions and outdated restrictions.

Fairness and a balance to competitiveness means ensuring that the businesses pay their fair share of tax in relation to their commercial profits and compete on a level playing field. However, there is always a need for the government to ensure that companies do not get an unfair competitive advantage through artificial tax planning. As we know that tax system is the best policy instrument, hence, it must be used to correct market failures that impose wider costs to the society.

On the other hand, the government is trying to understand what businesses want. It is well evident from the past that businesses want simplification of corporate tax structure, reduction in corporate tax rates, provision of greater clarity as to the overall policy framework within which any future change would be made, transparency and more certainty in particular transactions and a desire to see that commercial and taxable profits move closer together by allowing all genuine business expenditure.

After understanding what both the parties wants; we must now move to the most irritating items which may be at the core of discussion on 11th and 12th of February, 2005 at the fifth floor of State Life Building No 2, Wallace Road, Karachi being the meeting place with the task force.


“I would probably kick myself on having said this but when do we have the courage to say that corporate tax is the most unwanted tax in our tax regime.” – Ronald Reagan [Ex-president USA].

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