Officials of the Federal Board of Revenue (FBR) and Sindh Revenue Board will meet at the FBR headquarters on August 16 to try and resolve the dispute over collection of sales tax on services and other issues of concern after the introduction of the 18th Constitutional Amendment.
According to sources, the issue of 19.5 per cent sales tax on services of telecommunications companies and 16 per cent tax on other services will also come up for discussion during the high-level deliberations.
The FBR has already extended the date for filing sales tax returns from August 15 to August 30 in order to clarify things related to tax collection before the expiry of the deadline.
Sources said the Sindh government, in a letter sent to the FBR a few days ago, reminded that in a meeting with FBR authorities, including Chairman Salman Siddique, on August 2 the provincial government officials had categorically said that federal excise duty (FED) should be abolished by August 15 on all those services on which sales tax had been imposed to save taxpayers from the threat of double taxation. Under the 18th amendment, provinces have the right to collect sales tax on services.
Sources said FBR authorities during the August 2 meeting with Sindh Revenue Board officials had shown a draft of the notification for abolishing FED on services and also said the Law Division had given its approval to it. However, despite that it has not yet issued the notification.
According to the sources, the FBR argued that sales tax on telecoms services in Punjab and Khyber-Pakhtunkhwa was 16 per cent while in Balochistan many services had not been brought under the purview of sales tax. It was of the view that if a unified rate of sales tax was not applied across the country, it would create fresh problems for the tax authorities.
Keeping in view the gravity of the situation, the FBR has called a meeting with the Sindh Revenue Board on Tuesday to resolve the dispute. Taxpayers are in a fix whether to pay FED or sales tax on services of telecoms companies, bank and non-bank financial institutions, advertisements in newspapers and periodicals, construction, shipping agents, insurance, franchises, stock brokers and others.
Sources said the Sindh government was considering approaching the 18th amendment implementation commission if the FBR further delayed the matter.
Published in The Express Tribune, August 14th, 2011.