Another stalemate in RGST negotiations
Technical committee of National Finance Commission unsuccessful in creating consensus amongst provinces.
ISLAMABAD:
The technical committee for reformed general sales tax (RGST) of the National Finance Commission (NFC) has been unsuccessful in creating a consensus amongst provinces over the imposition of RGST on the ten services where substantial input tax adjustment is required. The deadline of the committee was October 15. A meeting of the committee has been called once again for Tuesday next week.
According to sources, the committee’s meeting was chaired by Secretary for Finance Salman Siddique and attended by the Federal Board of Revenue (FBR) Chairman Sohail Ahmed and representatives from all four provinces.
Sources added that hostility between the provinces of Sindh and Punjab increased on the second day of the meeting. The representative of Punjab said that if Sindh does not agree to soften its stance on the list of stand-alone services, then Punjab will take back the concessions it had given earlier while negotiating on the implementation of RGST. Punjab further claimed that it had shown considerable flexibility in the past and tolerated a loss in revenues for itself but Sindh will need to relax its position too.
Sources said that Sindh wants to retain taxation on the services of clearing and forwarding agents, studios, shipping agents, customs agents and other services related to exports and imports, within the province. Punjab then inquired as to who will collect taxes on those who are registered in Punjab but operate in Sindh. Both provinces want rights over tax collection over these types of service providers.
Another issue that was raised was about who would provide input tax adjustment to these services and if the federation were to provide that, then which province would pay the federation.
Sources indicated that the meeting on Tuesday will try to resolve these issues and decide provinces’ share in tax imposition and collection. The committee was supposed to present a report on October 15 and legislation for the implementation of RGST in the country was due to be drafted in light of the report. The legislation was supposed to be presented in parliament by the first of November.
Six services have been identified as stand-alone services by the federation and provinces so far. No input tax adjustment is required on these services and provinces will implement and collect taxes on these services themselves, according to sources.
There are ten services which require considerable input tax adjustment and the federation wants to impose and collect taxes on these services. It is from this list that Sindh wants some services transferred to the stand-alone list so that the province may be responsible for their taxation, said sources.
In spite of the federation’s efforts to convince Sindh to allow these services to be under the federation’s jurisdiction, the province did not budge from its stance, sources added.
Published in The Express Tribune, October 16th, 2010.
The technical committee for reformed general sales tax (RGST) of the National Finance Commission (NFC) has been unsuccessful in creating a consensus amongst provinces over the imposition of RGST on the ten services where substantial input tax adjustment is required. The deadline of the committee was October 15. A meeting of the committee has been called once again for Tuesday next week.
According to sources, the committee’s meeting was chaired by Secretary for Finance Salman Siddique and attended by the Federal Board of Revenue (FBR) Chairman Sohail Ahmed and representatives from all four provinces.
Sources added that hostility between the provinces of Sindh and Punjab increased on the second day of the meeting. The representative of Punjab said that if Sindh does not agree to soften its stance on the list of stand-alone services, then Punjab will take back the concessions it had given earlier while negotiating on the implementation of RGST. Punjab further claimed that it had shown considerable flexibility in the past and tolerated a loss in revenues for itself but Sindh will need to relax its position too.
Sources said that Sindh wants to retain taxation on the services of clearing and forwarding agents, studios, shipping agents, customs agents and other services related to exports and imports, within the province. Punjab then inquired as to who will collect taxes on those who are registered in Punjab but operate in Sindh. Both provinces want rights over tax collection over these types of service providers.
Another issue that was raised was about who would provide input tax adjustment to these services and if the federation were to provide that, then which province would pay the federation.
Sources indicated that the meeting on Tuesday will try to resolve these issues and decide provinces’ share in tax imposition and collection. The committee was supposed to present a report on October 15 and legislation for the implementation of RGST in the country was due to be drafted in light of the report. The legislation was supposed to be presented in parliament by the first of November.
Six services have been identified as stand-alone services by the federation and provinces so far. No input tax adjustment is required on these services and provinces will implement and collect taxes on these services themselves, according to sources.
There are ten services which require considerable input tax adjustment and the federation wants to impose and collect taxes on these services. It is from this list that Sindh wants some services transferred to the stand-alone list so that the province may be responsible for their taxation, said sources.
In spite of the federation’s efforts to convince Sindh to allow these services to be under the federation’s jurisdiction, the province did not budge from its stance, sources added.
Published in The Express Tribune, October 16th, 2010.