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