Business Recorder
LAHORE (July 19 2010): Chairman Federal Board of Revenue Sohail Ahmad on Sunday said the government is certain to implement the reformed General Sales Tax (GST) or the Value Added Tax (VAT) in October this year.
Talking to the media he said "We have been working on the VAT or the reformed GST since our standby arrangement with the International Monetary Fund (IMF) in 2008 to improve the tax collection ratio with our GDP. However, the decision to levy the reformed GST is our own agenda and not an IMF demand", he emphasised.
Ahmad said the implementation of reformed GST was an important item on the agenda in the meeting of the Council of Common Interest (CCI), which was presided over by Prime Minister Yousuf Raza Gilani in Islamabad on Sunday. There are no differences on the imposition of the tax on services which is a provincial subject, however matters relating to the integrated collection and disbursement of this tax among the provinces are yet to be streamlined, he added.
The chairman FBR said he had been holding meetings with a team of the IMF in Islamabad regarding expansion of the tax base and an efficient collection mechanism of taxes in the country. He said this year's revenue collection target of Rs 1.667 trillion was a tough one. However, he added, if the business community of the country pays taxes efficiently then all the revenue collection targets could be achieved.
While elaborating Ahmed said, a businessman who has an annual turnover of Rs 5 million is due to pay 0.5 percent of his turnover as tax, and a businessman who has a turnover of Rs 7.5 million is due to pay 0.7 percent of the turnover as tax. However he regretted that very few businessmen file their income tax returns and pay taxes to the government. He said if the well to do class of Pakistan pay their taxes as a national obligation, then there would be no need to have standby arrangements.
About the FBR's 2009-10 tax collection performance, he said despite the challenges, the board collected taxes of Rs 1.32 trillion against the target of Rs 1.38 trillion, missing the target by a mere 4 percent due to multiple factors as the FBR had to exempt or reduce taxes and face losses of billions of rupees. "The nation must know that a single day's strike in Karachi leads to a loss of Rs 4 - 5 billion in tax collection to the FBR, whereas the port city remains disturbed for several days due to the law and order situation", he pointed out. He said the reduction of Rs 200 billion in the Public Sector Development Programme (PSDP) 2009-10 also resulted in losses worth Rs 12-15 billion to the FBR; similarly 50 percent reduction in the Sales Tax (ST) on sugar resulted in a loss of Rs 25 billion to the federal board.
He said even now 8 percent, instead of 17 percent GST is being charged on sugar at the previous rate of Rs 27 per kilogram (kg). "We had requested the government to allow the FBR to levy ST on the market price of sugar (Rs 55 per kg), but our proposal was rejected by the Economic Co-ordination Committee (ECC)", he added.
Earlier, the chairman FBR inaugurated the Integrated Management System (ITMS) orientation for officers of the Afghan Tax Administration here at the FBR Training & Research (Inland Revenue) Academy.
He said Pakistan and Afghanistan have a lot in common, in addition to sharing a common border, religious, social and cultural values. "We both have hopes and aspirations for the progress and development of our countries. Our problems, challenges and difficulties are also quite similar in nature and this gives us a reason to support and assist each other for the good of our countries".
Highlighting Pakistan's measures for the welfare of Afghan people, Ahmad said "Pakistan intends to issue 2,50,000 multiple entry visas to applications across Afghanistan in 2010. 28,000 Afghans have studied in Pakistani schools, colleges and universities over the past 30 years and about 0.5 million Afghan children attended schools in Pakistan. Pakistan in the recent past has hosted around 5.5 million Afghans, a majority of whom continues to live here".
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Talking to the media he said "We have been working on the VAT or the reformed GST since our standby arrangement with the International Monetary Fund (IMF) in 2008 to improve the tax collection ratio with our GDP. However, the decision to levy the reformed GST is our own agenda and not an IMF demand", he emphasised.
Ahmad said the implementation of reformed GST was an important item on the agenda in the meeting of the Council of Common Interest (CCI), which was presided over by Prime Minister Yousuf Raza Gilani in Islamabad on Sunday. There are no differences on the imposition of the tax on services which is a provincial subject, however matters relating to the integrated collection and disbursement of this tax among the provinces are yet to be streamlined, he added.
The chairman FBR said he had been holding meetings with a team of the IMF in Islamabad regarding expansion of the tax base and an efficient collection mechanism of taxes in the country. He said this year's revenue collection target of Rs 1.667 trillion was a tough one. However, he added, if the business community of the country pays taxes efficiently then all the revenue collection targets could be achieved.
While elaborating Ahmed said, a businessman who has an annual turnover of Rs 5 million is due to pay 0.5 percent of his turnover as tax, and a businessman who has a turnover of Rs 7.5 million is due to pay 0.7 percent of the turnover as tax. However he regretted that very few businessmen file their income tax returns and pay taxes to the government. He said if the well to do class of Pakistan pay their taxes as a national obligation, then there would be no need to have standby arrangements.
About the FBR's 2009-10 tax collection performance, he said despite the challenges, the board collected taxes of Rs 1.32 trillion against the target of Rs 1.38 trillion, missing the target by a mere 4 percent due to multiple factors as the FBR had to exempt or reduce taxes and face losses of billions of rupees. "The nation must know that a single day's strike in Karachi leads to a loss of Rs 4 - 5 billion in tax collection to the FBR, whereas the port city remains disturbed for several days due to the law and order situation", he pointed out. He said the reduction of Rs 200 billion in the Public Sector Development Programme (PSDP) 2009-10 also resulted in losses worth Rs 12-15 billion to the FBR; similarly 50 percent reduction in the Sales Tax (ST) on sugar resulted in a loss of Rs 25 billion to the federal board.
He said even now 8 percent, instead of 17 percent GST is being charged on sugar at the previous rate of Rs 27 per kilogram (kg). "We had requested the government to allow the FBR to levy ST on the market price of sugar (Rs 55 per kg), but our proposal was rejected by the Economic Co-ordination Committee (ECC)", he added.
Earlier, the chairman FBR inaugurated the Integrated Management System (ITMS) orientation for officers of the Afghan Tax Administration here at the FBR Training & Research (Inland Revenue) Academy.
He said Pakistan and Afghanistan have a lot in common, in addition to sharing a common border, religious, social and cultural values. "We both have hopes and aspirations for the progress and development of our countries. Our problems, challenges and difficulties are also quite similar in nature and this gives us a reason to support and assist each other for the good of our countries".
Highlighting Pakistan's measures for the welfare of Afghan people, Ahmad said "Pakistan intends to issue 2,50,000 multiple entry visas to applications across Afghanistan in 2010. 28,000 Afghans have studied in Pakistani schools, colleges and universities over the past 30 years and about 0.5 million Afghan children attended schools in Pakistan. Pakistan in the recent past has hosted around 5.5 million Afghans, a majority of whom continues to live here".
-www.brecorder.com
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