Taxation System
Historical Background
Before 1960:- Taxes were collected in kind and in form of Labour contribution. Taxes in kind were gradually phased out to be replaced by nominal monetized tax on:

  • Land
  • Property
  • Business income and
  • consumption of good and services



First Major Tax Reform in 1989
Purpose:

  • To take stock of various tax measures
  • To develop a coherent and rational tax system
  • To establish a system of tax in fair, equitable and efficient manner that minimises the need for frequent change.
  • To fully document the system in a way that promotes tax payer awareness



Main features:

  • BIT on net profit replaced 2% turnover tax
  • Export income exempted
  • Plant machinery exempted from sales tax and import duty other nuisance taxes were abolished



Tax Reform in 1992
Purpose:

  • Rationalisation of tax structure
  • Expansion of tax base
  • Simplification of administrative procedures for compliance and transparency