World Bank Urges Implementation of Simpler Tax System in Pakistan

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In this week’s edition:

🏭 “Made in China” or is it?

🧾 Pak’s taxing tax system

🛒 The new barcodes to revolutionize the retail industry

🤖 Pak to launch NTF (National Task Force) for fast AI adoption

- The Itla Squad 💼

Business

Global 🌎️

The end of ‘Made in China” phenomenon?

One of the major water-heater manufacturers in China reported that its customers in the United States had requested relocation of their production facilities from China due to increasing geopolitical tensions.

Backing up: Large corporations are reviewing their worldwide activities following the invasion of Ukraine by Russia, the impact of the pandemic, and the escalating tensions between Beijing and Washington. Moreover, they are becoming more anxious about China's association with Russia and the possibility of sanctions.

Who’s going to be the new hub of production then? It’s not decided yet. However, Vanward, one of China's biggest water heater manufacturers, opted to transfer some of its factories from a southern Chinese industrial zone to Egypt and Thailand, despite encountering some challenges in those areas. Lu Yucong, chair of Guangdong Vanward New Electric, cites supply chain issues and corruption as possible challenges as Southeast Asia is still an underdeveloped region. He also said although labor costs may be lower in Thailand, the supply chain there is not as extensive as it is in China.

TLDR: Large corporations are considering moving production facilities out of China due to geopolitical tensions and concerns about China's relationship with Russia. Vanward has opted to transfer some of its factories from a southern Chinese industrial zone to Egypt and Thailand, despite encountering challenges in those areas.

What else is new in news

✶ Moderna’s mRNA vaccine, when combined with Merck’s Keytruda, showed promise in treating melanoma, a type of skin cancer. Wall Street analysts aren't quite sure what to think yet - some are hopeful, while others are doubtful.

Local 🇵🇰

WB to Pak: Your tax system is taxing

No one likes doing taxes and The World Bank wants to change that. It has recommended that Pakistan's tax system undergoes a well-structured overhaul to simplify its provisions, close loopholes, and ensure an equitable distribution of the tax burden.

What the overhaul should look like? The report suggests that Pakistan unifies its tax system to increase revenue potential and improve its tax base, with special emphasis on the country’s powerful elite. The report notes that Pakistan’s current tax system provides preferential treatment to economic and political interest groups through concessions, exemptions, and other policy measures.

What different types of taxes should look like? 

• Sales tax: Sales tax is a tax on goods and services purchased by consumers. Pakistan should make the tax rates the same for all goods sold within the country. It also says to set the same sales tax registration limit as the corporate income tax limit and make the sales tax system the same across all provinces and the federal government.

• Personal income tax: It is a tax on the income earned by individuals. The report says to unify and simplify the personal income tax schedule for salaried and non-salaried taxpayers and consider establishing a dual-income tax regime that only differentiates income by two sources: labor and capital.

• Corporate income tax: It is a tax that companies have to pay on the profit they make. The report says to make things easier for small companies by creating a simpler system for them to pay less tax. It also says to bring in a standard tax rate, limiting certain tax breaks that some companies use to pay less tax.

TLDR: The World Bank recommends Pakistan to simplify and unify its tax system, reduce preferential treatment, and increase revenue potential. This includes setting uniform sales tax rates, simplifying personal income tax, and creating a simpler tax system for small businesses. A standard tax rate and limitations on tax breaks for corporations are also suggested.

News Flash

✶The government reduced the size of the Public Sector Development Programme (PSDP) by 25%, from an allocation of Rs. 800 billion to Rs. 600 billion due to fiscal constraints.

Tech

Global 🌎️

The barcodes that will still beep but can tell you a lot more

You know those barcodes you see on almost everything you buy? Well, get ready for an upgrade. Soon, we'll be seeing new "2D" barcodes that are way more powerful and packed with info. These fancy barcodes will give us all sorts of extra online goodies as consumers, and make things a lot easier for retailers to manage their inventory.

What else is in it for consumers? Imagine scanning a barcode and finding out exactly where your food was grown, or where that shirt you're wearing was made. These barcodes will even tell you about a company's sustainability practices, or give you the best washing instructions for your clothes

How it's gonna work: At the cash register, the scanning of the product will still give a beep sound, but the new barcodes offer real-time benefits like loyalty points, games, and coupons. The square QR code can hold more information than the UPC (Universal Product Code) because it can be encoded on both dimensions. Retail stores expect better inventory control thanks to the 2D barcodes. According to Carrie Wilkie, SVP of Standards and Technology at GS1 US, brands and retailers need machine-readable information as they invest more in AI and robotics.

What's to come? GS1 US launched a "barcode capabilities test kit" to help retailers gauge their readiness for the 2D barcode transition. It means that we can see more products with 2D barcodes, or both 2D and 1D barcodes, soon.

TLDR: Upgraded 2D barcodes are coming that are more packed with info such as benefits like loyalty points, games, and coupons, and can hold more information. Retailers expect better inventory control, and brands and retailers need machine-readable information as they invest more in AI and robotics.

What else is new in news

✶Apple is taking a bite out of the banking world with its new Apple Card savings account. It offers a juicy 4.15% annual percentage yield, with no minimum deposit or balance required, all from the comfort of your iPhone Wallet app.

Local 🇵🇰

Pak to launch NTF (National Task Force) for fast AI adoption

It seems like Pakistan finally realized that it needs to step up in the AI world. The Planning Minister is ramping up efforts towards national development by forming a National Task Force on Artificial Intelligence. With 15 experts onboard, the team will focus on AI and its role in meeting the country's goals.

What it aims to do? The Task Force on artificial intelligence is to craft a 10-year roadmap for the fast adoption of AI in healthcare, education, governance, development, and business sectors. The NTF will include AI experts and government and private sector representatives.

Not everyone is celebrating: Some experts are concerned about its size and the 10-year roadmap. Some experts think that the 15-member team might be too large to operate efficiently and that a 10-year timeframe is too long for a rapidly changing tech landscape. He argues that Pakistan needs to keep up with other countries that are making rapid progress in AI development.

TLDR: Pakistan's Planning Minister has formed a 15-member National Task Force on Artificial Intelligence to create a 10-year plan for AI adoption in various sectors. However, some experts worry about the team's size and the 10-year timeframe, arguing that Pakistan needs to keep up with other countries' rapid progress in AI.

Tech tour of news

✶ According to a recent report, TikTok removed more than 12 million videos posted from Pakistan for violating community guidelines during the fourth quarter of 2022.

More interesting Itla (اطلاع) we consumed:

📝GMAT takers, the winds of change are blowing, and they're carrying some good news and bad news. The good news is that you no longer have to struggle through the dreaded "analytical writing assessment" section as it will be removed. The bad news is that you'll have to face a new section called "data insights".