FBR prepares to enforce value added tax

Express May 05, 2010

ISLAMABAD: The Federal Board of Revenue (FBR) has constituted a team of senior officials to draw up a plan for the enforcement of value added tax (VAT) at the retail stage from the fiscal year 2010-11.

The five-member committee comprises Strategic Planning and Statistics Member Customs Zafar-ul-Majeed, Sales Tax and Federal Excise Chief Abrar Ahmad Khan and other senior officials. FBR Chairman Sohail Ahmed has directed the committee to come up with a comprehensive plan to fully enforce VAT at the retail stage by July 2010, said a press release issued on Wednesday.

The decision to constitute the process re-engineering team has been taken in view of the importance of extending VAT to the entire retail sector, allowing adjustment of tax paid at earlier stages. The decision comes in the wake of growing realisation that a large number of transactions in the economy take place at the retail level.

While existing legislation provides for levy of VAT at the retail stage, its practical enforcement and collection has brought to the fore many problems. Currently, only retailers with yearly business of Rs7.5 million are required to be registered. The third schedule of the Sales Tax Act 1990 provides for the imposition of VAT on retail process of certain specified supplies, including cigarettes.

At present, general sales tax, which will be replaced by VAT on July 1, is being collected on imports and supplies by manufacturers, wholesalers, distributors and big retailers.


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