OVERWHELMING RELIANCE ON WITHHOLDING TAXES FOR COLLECTION OF INCOME TAX IN PAKISTAN

BY: ELLAHI BUKHSH QURESHI, ACA, APFA, LLM (UK)

Abstract:

Withholding tax is a valuable tool used by many tax jurisdictions in their tax machinery for revenue and data collection. A brief introduction to withholding tax mechanism is followed by analyses of overwhelming reliance of Pakistan tax system on withholding taxes. Currently, Pakistan has 28 provisions of withholding taxes on various transactions. The dependency is so significant that approx. 70% of the revenue collection of direct taxes is through withholding taxes. The drawbacks of such reliance on withholding taxes can be found in the form of inflation since direct taxes tend to be characterised more indirect in nature, administrative burden to both taxpayers and tax authorities, higher turnover of refund assessment and others. Conventionally the alternate to withholding tax is voluntary advance payments by the taxpayers throughout the fiscal year. Whereas, considering the dominant cash economy of Pakistan withholding should be restricted to only non-registered businesses making their business costly and on the other hand making it more attractive to them to register and be a compliant taxpayer. This way the broadening of the tax base would still operate into the tax mechanism which all will depend on the performance of the tax authorities in terms of enforcement.

Introduction:

Withholding taxes at source is a tax mechanism embodied by many countries in their tax system as a collection of taxes on individual incomes. Many countries mostly use the withholding tax mechanism on payments of wages/salaries and on payments of interest, dividends and royalties to non-residents.

Withholding taxes work in a way that the tax laws of a jurisdiction obligate certain taxpayers as withholding agents. The domestic law, outlines criteria for taxpayers to fall under the ambit of being a withholding tax agent. A withholding-agent can be defined as a person who is a “payer” and acts as a custodian for the national exchequer of the country with the duty to withhold a specified percentage of the amount as tax from payments made by it and to deposit the same into the national exchequer. It can be construed that the tax authorities in a way delegate this collection mechanism to the withholding agents for the collection of taxes. 

To elaborate on the mechanism of withholding tax, take an example of an employer who pays his employee monthly salary. The annual salary of the employee is PKR 6,000,000/- and receives a monthly salary of PKR 500,000/- per month. The employer, in this case, is required to work-out the employee’s tax bill for the year. Which, for instance, is PKR 600,000/-. So monthly share therein would be PKR 50,000/-. Thus, the employer would be required to withhold PKR 50,000/- out of PKR 500,000/- salary payment in the month, pay the net amount of PKR 450,000 to the employee and deposit the withheld PKR 50,000/- to the national exchequer.

Employer (Withholding Agent)

Salary Expenses PKR 500,000

Employee PKR 450,000

National Exchequer PKR 50,000

In the above, example, the salary expense for the employer remains the same, i.e. PKR 500,000/- for the month. The payment of tax is made on behalf of the employee by withholding employee’s salary income. Thereby, the employer is merely working as an intermediary agent to withhold and deposit the tax for the tax authorities. 

It can be regarded as a useful revenue collection tool, but it also has downsides and effects on the economy as well. At first, the benefits of the withholding of income taxes can be highlighted as under:

1. Advantageous for revenue collection, since, the national exchequer gets a regular flow of revenue collection throughout a fiscal year.

• In an emerging/developing country, where there is more tendency to an undocumented economy, the non-compliant taxpayers are identified under the withholding tax net, and same are reported to the tax authorities through reporting requirements. Thereby it can be quantified as a useful broadening of tax base policy in a developing economy where there is lower voluntary compliance on the part of taxpayers.

• Administratively advantageous for tax authorities and cost-effective, since tax collection is delegated to the withholding agents. Tax authorities, on the one hand, get tax collection during the fiscal year and on the other hand information about taxpayers which are non-compliant which is useful for tax broadening.

On the other hand, withholding taxes also bear drawbacks which are as follows:

1. Administrative burden to taxpayers being withholding agents. Apart from standard tax compliance, the withholding agents are also monitored for the withholding taxes periodically and assessed where they have failed to withhold or collect the tax. In case where withholding agent is at default, they shall be subject to tax and resultant penalties and surcharge tax under tax law.

• In the case of an undocumented economy, where compliant taxpayers are substantially less than non-compliant, a withholding agent is subjected to a higher cost of doing business. At times withholding tax acts inflationary where the individual, on the other hand, is non-compliant. It, therefore, is deteriorating the competitiveness and confidence of compliant taxpayers.

• In the case of withholding on wages or salaries along with other provisions of withholding taxes, it may result in excess withholding of taxes on employees entitling them to refunds at the end of the tax year.

With the above familiar pros and cons, withholding taxes in specific cases, particularly in case of wages/salaries payments is most efficient and commonly used by most of the countries in the world.

WITHHOLDING TAX IN PAKISTAN

In many of the countries, for domestic purpose, withholding tax mechanism is only used for payments of wages. Like, in the U.S., U.K. and France, the withholding on local payments are just made in the case of wages and salaries. Pakistan, on the other hand, has dependent reliance on withholding taxes for the collection of direct taxes. Following is the tax revenue collection of direct taxes in Pakistan for the last three fiscal years[1]:

Description	FY 2017-2018	FY 2016-2017	FY 2015-2016
	PKR in Billion
Direct Taxes	1,536.6	1,344.2	1,217.5
% to total revenue collection	39.99%	39.91%	39.11%

Direct taxes have been a significant chunk of revenue generation for Pakistan and constitute approx. 40% of its revenue collection for a fiscal year. The percentage breakup of the revenue collection from direct taxes is further broken down as under[2]:

Description	FY 2017-2018	FY 2016-2017	FY 2015-2016
	%
Collection on-demand – assessments/audits	6.77%	6.90%	7.21%
Advance Tax Payments	21.85%	24.19%	24.83%
Payment with Income Tax Returns	2.71%	3.38%	3.15%
Withholding Taxes	68.67%	65.53%	64.81%
TOTAL	100%	100%	100%

As apparent from the statistics above, there is an arrogant reliance on withholding taxation for the collection of direct taxes in Pakistan and which is growing with each passing year. Pakistan tax legislation currently has 28 (more than 70) withholding tax provisions for withholding or collection of tax on transactions. Unlike commonly used in case of salaries and wages in the world, Pakistan’s tax law targets transactions which are in a personal capacity and business as well.

Pakistan’s economy can still be categorised with significant chunk operating on cash basis. The tax system, therefore, embodies two regimes for taxing income. Firstly, the normal tax basis, i.e. tax on net basis tax, in which income after allowing admissible deductions for expenses is taxed. The second regime is known as “Presumptive tax regime” PTR or “final tax regime” FTR. In the PTR/FTR regime, income is taxed on a gross basis and which is deducted at source as withholding tax by the payer of the said income.

PTR/FTR can be well described in the following words “Such taxes are used for a variety of reasons. They include reducing the compliance costs on taxpayers, especially for small-scale entrepreneurs; simplifying tax administration by removing taxpayers from the tax rolls and by providing direct measures of tax liabilities; and reducing corruption by eliminating official discretion in assessing tax liabilities”[3]. However, the presumptive regimes deviate the conventional concept of taxation, that income should be taxed on net basis rather than on gross basis. Taxing income on gross basis disregards the actual profits that taxpayer earns which can be effectively higher than what they would have had been charged for on a net basis or other way around. It breaks the link and nexus of actual income earning and tax thereon. The argument defending it is only where there is a cash economy, and there is weak voluntary compliance by the taxpayers, and by exploiting the art of simplicity, the gross basis taxation becomes favourable.

The presumptive tax regime is against the standard rule that withholding taxes should be adjustable and not final taxes. Final withholding of income taxes causes other problems as well, specifically in the case of exports and imports which are final under Pakistan tax law, may be causing significant leakages.[4] Where the withholding taxes are creditable, they provide the incentive for the business to become compliant taxpayers. Because creditable withholding taxes would become an additional charge for the informal sector.[5]

The withholding taxes provisions embodied in the Pakistan tax law include both those which are PTR/FTR which are not adjustable, i.e. not creditable and therefore is considered full and final tax dispensing obligation on the said income. The others are adjustable, i.e. which can be claimed as a deduction at source against normal tax liability calculated on a net basis. 

Pakistan tax law has taxation on a net basis, and in case of certain income on gross basis covered under a presumptive tax regime. Following are the withholding tax provisions including both presumptive tax regime income and normal tax as advance taxation:

Sr.	Description
1.	Advance Tax withholding on cash withdrawal from bank exceeding Rs. 50,000/- a day
2.	Advance Tax on banking transactions in a bank by non-filers
3.	Advance tax withholding on purchase and registration of private motor vehicles
4.	Final tax withholding on brokerage and commission
5.	Advance tax withholding on brokers transactions on a registered stock exchange.
6.	Advance tax withholding on electricity consumption
7.	Advance tax withholding on telephone and internet users
8.	Advance tax withholding on the purchase of domestic and international air tickets
9.	Advance tax withholding on seller and purchaser of immovable property
10.	Advance tax withholding on functions and gatherings
11.	Advance tax on cable operators and other electronic media
12.	Advance tax on distributors, dealers, wholesalers and retailers of specified goods
13.	Advance tax withholding by an educational institution on educational fee
14.	Advance tax withholding on residents for the use of machinery and equipment, i.e. on rentals
15.	Advance tax withholding on education-related expenses remitted abroad
16.	Advance tax withholding on insurance premium
17.	Advance tax withholding on the extraction of minerals
18.	Advance tax withholding on tobacco
19.	Advance tax withholding on persons remitting amounts abroad through credit or debit or prepaid cards
20.	Final tax withholding at source on exports
21.	Final tax withholding at source on dividends
22.	Final tax withholding at source on profit on debt
23.	Withholding at source on payments to non-residents
24.	Withholding at source on payments on the sale of goods, rendering of services and execution of contracts
25.	Withholding at source on income from property
26.	Final tax withholding at source on prizes and winnings
27.	Final tax withholding on petroleum products and CNG stations
28.	Withholding at source on imports

The above list of haughty withholding taxes in Pakistan justifies the firm reliance on revenue collection through withholding. Apart from encompassing business transactions, most of these withholding taxes are in personal nature and effects normal individual even if not earning any taxable source of income. The withholding taxes deduction or collection on instances like educational fee, domestic electricity consumption, telephone and internet users and such sort are mostly an element of cost for individuals rather than an advance tax. Following is the detailed analysis of withholding tax collection bifurcated by transaction type[6]:

Sr.	Collection Heads	FY 2017-2018	FY 2016-2017	FY 2015-2016
		PKR in Billion
1.	Contracts	283.156	259.539	220.062
2.	Imports	218.759	197.041	179.728
3.	Salary	133.362	111.188	92.253
4.	Dividends	57.847	49.489	47.653
5.	Telephone	47.382	51.773	42.042
6.	Bank Interest	45.646	42.595	48.200
7.	Cash Withdrawals	34.003	30.487	29.535
8.	Electricity	33.832	25.840	25.526
9.	Exports	28.279	24.252	24.898
10.	Others	164.734	151.896	121.503
TOTAL		1047	1,047	944

The above bifurcation depicts that apart from items on serial no: 1, 2, 4, 6 and 9 are strictly business oriented or activity-based, whereas the remaining tax collection does not necessarily hit business activity but domestic uses as well.

The above facts and figures display heavy reliance on the part of the taxation system in Pakistan on Withholding Taxes. By saying so, it can be construed that for income tax collection, the withholding mechanism acts as a backbone to the revenue collection in Pakistan. The above analysis can display the performance of the tax administration in revenue collection which can be sketched as below:

The above graph shows that administrative reliance is heavily placed on withholding taxes which are delegated to the taxpayers. Keeping into account the economy of Pakistan, the tax administration with its withholding tax mechanism in the country concede different impacts on the revenue collection, taxpayers and tax administration itself. The impact thereon is briefly discussed below.

Positive Impacts of withholding tax mechanism in Pakistan:

• Accessible collection of money through less administrative involvement or burden on the tax authorities. Since the weight of collection is delegated to the taxpayers, it helps in the continuous flow of revenue to the national exchequer.

• The withholding mechanism ensures inflow of information of taxpayers whose tax is withheld, including non-compliant taxpayers which is an asset for tax authorities for tax broadening activities. Specifically, in a developing country like Pakistan, where there is an undocumented economy, it works as an excellent practice to curtail evasion.

The research suggests that high level of compliance is achieved if an income is subject to withholding tax or subject to reporting to the tax authorities in contrast to that income which is not subjected to either of them[7]. It is reasonable to construe the same since if a taxpayer knows that their income has been reported to the tax authorities by way of withholding tax or information reporting, they shall be more inclined to declare and comply said income. On the other hand, if an income is not reported to the tax authorities, the taxpayer would be more tempted to evade tax on that income. Which is common in an economy where there is a significant share of cash basis transactions.

• The withholding tax mechanism works as a check on both ends of the transaction, i.e. from the payer side and from the recipient side. A payer may under-report the expenses or conceal the same to avoid withholding-duty, but which can be crossed check by the recipient from his declaration. On the other hand, if recipient under-reports or conceals to evade tax, the transaction can be crossed check from the withholding agents reporting of the transaction. It promotes compliances overall from the taxpayers and is an implied and subtle deterrent to non-compliance.

Adverse Impacts of withholding tax mechanism in Pakistan:

• Taxpayers who fall under the ambit of withholding agents are subjected to additional reporting and compliance requirements. Withholding agents are required to deduct tax from the transactions and then depositing the same to the national exchequer. After which they are required to report to the tax authorities through periodical statements with transactions and tax withheld information. Such haughty compliance is burdensome for taxpayers.

However, it can be reasonably agreed to some extent that big corporations and taxpayers with capacity and manpower may not be much affected in comparison to small or medium-sized businesses. Since the threshold limit for a taxpayer to be qualified as a withholding agent is 50 million PKR per annum[8], which encompasses every small-scale retailer as well with a huge turnover but with a gross margin of minor scale between 2% to 4%. The Pakistan tax law also does not give any incentive or such to withholding agents for their share of the collection to the national exchequer. Therefore, withholding agents can regard it as uncalled for duty imposed by law.

Taxpayers may also be inclined to underreport their turnover and try to avoid falling under the ambit of withholding agent duty. For instance, research in Mexico found that increased incentive for employees to ensure accurate reports resulted in a decline in under-reporting. And that enlisting employee in monitoring their employers is an effective way to improve tax compliance in case of taxes on payroll[9]. The withholding tax mechanism is a double check mechanism where it can be checked either at the side of payer and at the recipient as earlier mentioned but is tough to monitor administratively.

• Taxpayers may under-report and manipulate their affairs to avoid duty as a withholding tax agent. In Pakistan tax law, an agent in default is subject to recovery of the said tax and resultant penalty and default surcharge. Such punitive measures on failure push taxpayers away from such obligation.

In such situation the taxpayers may remain informal and not register as employers or exclude some employees from withholding by paying them cash, may also incorrectly deduct tax either deliberately or mistakenly by misinterpreting rules on tax calculation[10]. Cumbersome tax compliances may incline taxpayers to avoid the same.

• Excessive withholding tax deduction on many transactions both personal and business activity may result in refund claims. It is one of the prominent consequences[11]. The resultant effect of such creation of excessive refunds in an ineffective administrative system of Pakistan, adds up to backlog to refunds and end up issuing refunds after years and years with verifications and at times after stretching judicial proceedings. Such swamp of refunds deteriorates the taxpayer’s confidence in the taxation system and mistrust the authorities, let alone frights taxpayers astray of voluntary compliance.

Excessive refunds on the other hand also increase the administrative burden on the tax authorities, since refund application is yet again, to go through procedures of verifications and mostly audits. As highlighted in the research work of Becker, Fooken and Steinhoff on effects of withholding taxes on labour supply, wherein they found that the participants who self-assess as motivated by monetary incentives reduce efforts in response to withholding taxes and increase efforts in after receiving tax refunds[12]. It can be taken that the tax refund mechanism boosts the confidence in the taxpayers and builds trusts with the tax authorities. But the tax refunds mechanism is again suffered in Pakistan due to weak enforcement.

• Since the withholding taxes in Pakistan are on transactions and are part of direct taxes, but the effect is instant as if it is an indirect tax. In a shadow economy, it acts as an indirect tax charge, since those who are not registered taxpayers add the tax charge as their cost and increase the transaction cost. Such a cost element in the transactions turns out to be inflationary also for those who are under the formal economy. 

The crucial issue is that to what extent the tax withheld is creditable and can be taken in the calculation and submission of final tax return[13]. But since the economy is running on a cash basis and tax compliance is horrifically low, not many taxpayers bother about getting their creditable tax payments and prefer not to file their returns and claim the same. In an accounting perspective an advance tax withheld is an asset which one can claim against their tax expense. An ordinary business in an informal economy doesn’t realise a tax expense, let alone this asset is also expensed out which resultantly increases the price of their products which they offer in public. Prices of products therefore in the market are increased due to withholding taxes and cause inflation.

• Withholding taxes can relatively be construed as requiring substantial compliance on taxpayers and demanding administrative workload on tax authorities as well. In Pakistan, like regular tax audits, there is also annual audit-cum-monitoring of withholding taxes of withholding agents on withholding duties. They can subject the withholding agent to demand orders for payment of tax where the taxpayer is on default[14]. This provision for assessment of withholding tax collection from the withholding agent also created a despondent situation where an income is subjected to double taxation, and in this case, the withholding agent is punished to pay tax on the income. The situation arises where if the withholding agent fails to deduct tax on a payment and the recipient of the payment, however, for whom it is income, declares and pays tax on that income at the year-end with the return of income. After the year-end, when the withholding agent is audited for monitoring of withholding taxes by the tax authorities and found in default on failure to deduct tax on the said payment, the withholding agent shall be demanded payment of that tax along with penalty and default surcharge. Although, the fact, that the recipient has already paid tax on that income thereon, double tax collection is made on that income from the withholding agent.

Ultimately an income is subjected to double taxation, but the charge of taxing it the second time is not on the taxpayer who earned the income but, on the taxpayer, who was acting as a withholding agent. Such mistreatment discouraged taxpayers from acting as a withholding agent, and as described before they tend to evade falling under the ambit of withholding agent to avoid such hassle. The issue was resolved after judicial redress in the case of Commissioner v Pepco wherein the High Court held that if the recipient of the income has paid the tax, then the same shall not be demanded from the withholding agent, however, default surcharge and penalty may be charged[15]. As in the words of Richard Humphry[16]:

“Simplicity is the holy grail of tax design; it is what everyone seems to say they want and yet it’s the thing that absolutely no one gets.”

The aftermath of such judicial redress has safeguarded withholding agents after decades since this withholding tax is implemented. It can be arguably accepted in these circumstances the inclination of taxpayers to avoid duty as withholding agents. The lack of simplicity in mechanism also aggravates the compliance by the taxpayers.

Conclusions:

The above analysis highlighting the pros and cons of withholding tax mechanism in Pakistan, do concede a critical fact that the withholding tax is the backbone of direct tax collection in the country. Giving away with it must be supported with a real alternative to support the revenue collection.

Firstly, the question is what benefits can be achieved by reducing the impact of withholding taxes on income in Pakistan. A pragmatic study was undertaken by the Shapiro and Slemrod [17] to study the change in withholding tax on consumer behavior. It was found to be puzzling and not outrightly suggesting a specific reaction, but they did see that 43% of the participant taxpayers responded with the intention to spending extra-take home pay where the withholding tax was reduced. It was intended to provide stimulus to the economy in 1992 by President Bush.

Even, if there was no outright win for consumer behaviour towards consumption, but it did significantly provoke consumers to spend more and stimulate the economy. It can be contended that such excessive withholding tax is hindering the spending by the consumers in Pakistan economy, and by reducing the withholding taxes, it can boost its economy with more spending in the hands of consumers.

It can be argued that withholding tax mechanism is a cobweb to trap non-compliant taxpayers and letting down the guards on that note would deteriorate the broadening of the tax base and the information regarding taxpayers would not be obtained. The withholding tax mechanism does indeed work as a cross-checking and information gathering engine for incomes and expenses at both end and to trace non-compliant taxpayers. The success, however, depends on the enforcement power of the tax authority to cash that information provided and reach out to non-compliant taxpayers.

Before resorting it to a possible alternative, it is pertinent to mention that the tax law in Pakistan maintain an “Active Taxpayers List” (ATL) which is updated each year with taxpayers who have filed their tax returns and are referred to as “filer”[18]. Whereas, those who don’t file their tax returns duly are not on the ATL and are referred to as “non-filer”[19]. The withholding agents then use the ATL and are required to charge “filer” with the normal rate of withholding tax and whereas “non-filer” is subjected to higher and punitive withholding tax rates. This punitive treatment of non-filers has been operational for two years and is pushing broadening of the tax base by increasing compliance by taxpayers through compelling them for voluntary compliance.

Now keeping into account this filer and non-filer discrimination, it is opined that the same should be applied but where if the taxpayer is a filer, withholding of tax should not take place at all. Whereas in the case of non-filer, the withholding agent should deduct tax and deposit the same to the national exchequer with information reporting thereon as well. This concentrated and limited withholding tax would at one end still be adding value to the broadening of tax base, and on the other hand, it would be treating filers with an incentive and advantage to look forward.

Suggesting a lessening of reliance on withholding taxes in Pakistan as evident would result in a massive reduction in tax collection and would demand to suffice the same through other alternate. In the absence of the withholding system, an adequate substitute must be strengthened to fill in the gap of the collection. The second revenue collection agent in Pakistan as highlighted in the graph above is voluntary tax payments by taxpayers. These payments include quarterly advance tax payments by the taxpayers and payments with the filing of return of incomes. The most common approach for ensuring timely flow of revenue is advance payments or instalments of tax, in doing so it should be effective and efficient which keeps compliance burden on taxpayers and workload on tax administration at reasonable levels[20].

Avoiding all such hassle and giving it a self-assessment in the hands of the taxpayer to pay advance taxes along with limited withholding tax implication on non-filers only would result in the following outcomes:

1. Less administrative burden on the tax authorities regarding monitoring of withholding taxes wherein only transactions with non-filers will be monitored. It would also reduce cumbersome delegation of work on the withholding agents. Appealing a win-win situation at both ends for tax authority and taxpayers acting as withholding agents. 

• An incentive to taxpayers on becoming a filer with the subjection of no withholding taxes on their income and let alone allowing them more cash in hand to stimulate the economy through spending. It will also act as a reward ship to compliant taxpayers. It will also occur as substantial incentive for businesses to become a compliant taxpayer.

• Will result in a regular flow of tax revenue through enforcement of quarterly advance tax payments by filers. Although the same would demand effective implementation on the part of the tax authority.

• Fewer refund claims, since the quarterly advance tax payments shall be self-assessed and last quarter tax payments shall be made to pay the final tax liability for the year-end on an estimated basis. It would result in more confidence in taxpayers and at the same time giving them room for maintaining their cash flows which will eventually be rotated in the economy with the multiplier effect. Administratively this will lead to less verification and audit assessments by the tax authorities for refund claims.

• Keeps in pace with the broadening of tax base, by information reporting on transactions with non-filers so that the same may be used by the tax authorities in their proceedings to reach out to non-compliant businesses. This way, it would keep the machinery working on broadening of the tax base in the country.

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Bibliography

Table of Cases: Pakistan

Commissioner of Inland Revenue v Pepco 2015 PTD 863 (Lahore High Court)

Table of Legislation: Pakistan

Income Tax Ordinance 2001 s 161, s 153 (7), s 2(23A), s 2(35C)

Research Papers & Journal Articles

Matthew D. Shapiro and Joel Slemrod, “Consumer Response to the timing of Income: Evidence from a change in tax withholding”, National Bureau of Economic Research, US – Working Paper No. 4344 April 1993

Johannes Becker, Jonas Fooken and Melanie Steinhoff, “Behavioral Effects of Withholding Taxes on Labour Supply” The Scandinavian Journal of Economics, 02/2019

T. Kumler, E. Verhoogen and J. Frias, Enlisting Workers in Monitoring Firms: Payroll Tax Compliance in Mexico, Department of Economics Discussion Paper No. 1112-07

Books

Matthijs Alink and Victor van Kommer, Handbook on Tax Administration (2^nd Revised Edition, IBFD 2015)

Jorge Martinez-Vazquez and Musharraf Rasool Cyan (eds), The Role of Taxation in Pakistan’s Revival (OUP 2015)

Richard Murphy, The Joy of Tax (2015)

Revenue Year Book 2016, 2017 and 2018, Revenue Division, Ministry of Finance, Government of Pakistan

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[1] Year Book 2016, 2017 and 2018, Revenue Division, Ministry of Finance, Government of Pakistan

[2] Revenue Division, Ministry of Finance, Government of Pakistan

[3] Jorge Martinez-Vazquez and Musharraf Rasool Cyan (eds), The Role of Taxation in Pakistan’s Revival (OUP 2015) 630

[4] Jorge Martinez-Vazquez and Musharraf Rasool Cyan (eds), The Role of Taxation in Pakistan’s Revival (OUP 2015) 47

[5] Jorge Martinez-Vazquez and Musharraf Rasool Cyan (eds), The Role of Taxation in Pakistan’s Revival (OUP 2015) 634

[6] Revenue Division, Ministry of Finance, Government of Pakistan

[7]Matthijs Alink and Victor van Kommer, Handbook on Tax Administration (2^nd Revised Edition, IBFD 2015) 456

[8] Income Tax Ordinance 2001, s 153(7)

[9] T. Kumler, E. Verhoogen and J. Frias, Enlisting Workers in Monitoring Firms: Payroll Tax Compliance in Mexico, Department of Economics Discussion Paper No. 1112-07

[10] Matthijs Alink and Victor van Kommer, Handbook on Tax Administration (2^nd Revised Edition, IBFD 2015) 416

[11] Matthijs Alink and Victor van Kommer, Handbook on Tax Administration (2^nd Revised Edition, IBFD 2015) 847

[12]. Johannes Becker, Jonas Fooken and Melanie Steinhoff, “Behavioral Effects of Withholding Taxes on Labour Supply” The Scandinavian Journal of Economics, 02/2019

[13] Jorge Martinez-Vazquez and Musharraf Rasool Cyan (eds), The Role of Taxation in Pakistan’s Revival (OUP 2015) 633

[14] Income Tax Ordinance 2001, s 161

[15] Commissioner of Inland Revenue v Pepco 2015 PTD 863 (Lahore High Court)

[16] Richard Murphy, The Joy of Tax (2015) 179

[17] Matthew D. Shapiro and Joel Slemrod, “Consumer Response to the timing of Income: Evidence from a change in tax withholding”, National Bureau of Economic Research, US – Working Paper No. 4344 April 1993.

[18] Income Tax Ordinance 2001 s 2(23A)

[19] Income Tax Ordinance 2001 s 2(35C)

[20] Matthijs Alink and Victor van Kommer, Handbook on Tax Administration (2^nd Revised Edition, IBFD 2015) 456