Finance Minister Shaukat Tarin has emphasised the need for evolving consensus between the federation and provinces in matters relating to sales tax harmonisation.
Speaking at a meeting of the National Tax Council (NTC) at the Finance Division on Thursday, he stressed the need for resolving tax-related issues in the spirit of cooperation between the federation and the federating units.
The Federal Board of Revenue (FBR) chairman made a detailed presentation and outlined areas for further deliberation to work out an arrangement in a collaborative manner relating to harmonisation of sales tax between the federal government and the provinces.
The FBR and the provincial finance ministers narrated their respective positions on taxes on transportation, restaurants, manufacturing and construction.
Different proposals were considered by the NTC for creating a single portal for filing sales tax returns, which was being developed and was likely to be launched by the first week of October 2021.
The launch of the single portal for filing tax returns will reduce the compliance cost for taxpayers and will help increase Pakistan’s rating on the Ease of Doing Business (EODB) Index.
It was decided that detailed input would be taken from the provincial revenue authorities (PRAs) for development of the single sales tax portal acceptable to all.
Similarly, the FBR should also develop a standardised income tax return format, in consultation with the provincial governments.
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After due deliberation with all the relevant stakeholders, the NTC decided that sales tax on toll manufacturing would rest with the federation, while taxation rights for transportation business would be vested in the provinces.
Regarding taxes on the construction business, it was decided that the taxation right would be shared as per constitutional arrangements, and a technical committee consisting of all revenue authorities would decide on the operational modalities.
On the levy of taxes on restaurants, the finance minister, in his capacity as the NTC head and after receiving views of the FBR and provinces, decided that the provinces would continue to tax the restaurants. However, a reference drafted in consultation with the provinces will be sent to the Law Division for opinion on the decision.
All stakeholders agreed to press ahead in the spirit of greater national interest and harmony under the umbrella of NTC.
Published in The Express Tribune, September 17th, 2021.
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