ISLAMABAD : With the aim to bring the non-corporate businesses into the corporate fold and incentivise existing companies, the Securities and Exchange Commission of Pakistan (SECP) has decreased the fee for the formation of a company as well as for the filing of returns being charged under the Sixth Schedule to the Companies Ordinance, 1984, effective from May 31, 2016.
The corporate sector regulator issued an SRO notifying a reduction of 60 per cent fees in the first slab of capital fee for new incorporation cases to Rs1,000 for online and Rs2,000 for offline submission from Rs2,500 and Rs5,000, respectively.
The fee structures for other slabs of the capital fee too have been rationalised.
SECP has also made significant reduction in filing fee for returns, particularly for small sized entities, by introducing capital based filing fee starting from as low as Rs250 for online and Rs500 for offline submission replacing the existing structure of fixed filing fee of Rs600 and Rs1,500, respectively.
In order to further incentivise the corporate sector, the SECP will also provide a set of certified copies of all incorporation documents free of cost on its registration.
The certified copies of all statutory returns will be provided free of cost at the time of issuing the acknowledgement of filing of return without any formal application for the same.
According to the SECP, the aforesaid measures have been taken with an aim not only to reduce the overall cost of starting a business but also to enhance the rate of statutory compliance by the companies regulated by it and encourage corporatisation.
However, the step taken by the SECP will only have a limited impact in luring the business to convert into a company as ‘corporate tax’ is higher in the country compared to the non registered business.
“The issue has been taken up with the Federal Board of Revenue (FBR) several times that there are many benefits of having corporate entities in the country such as there are SECP regulations, tax collection is easy besides there are several audit requirements too,” said a senior official of the SECP. “But there is negligible oversight on non registered firms.”
The SECP in its budget recommendations has asked the FBR to reduce the corporate tax for small businesses.
Currently, the taxes on corporate sector amounts to around 32pc, whereas the taxes on small business termed at Association of Persons (AOPs) is around 25pc.
There are around 60,000 companies registered with the SECP, but the officials expect that the number could jump several folds only if tax relief is provided to the business opting to form a registered company.
“The fear of tax regime is one of the reasons that the traders have not participated in the recent amnesty scheme launched by the government,” the official added.