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ISLAMABAD: The federal government and provinces have agreed to implement the much-awaited single portal for filing sales tax returns to reduce the compliance cost for taxpayers.
The understanding was reached on Thursday during the second meeting of the National Tax Council (NTC) presided over by Finance Minister Shaukat Tarin at the Finance Division. The NTC considered different proposals for filing sales tax returns.
The portal is being developed and is likely to be launched by the first week of October 2021, an official announcement said. It is one of the major decisions as part of harmonisation involving an agreement between the federal government and the provinces to apply the same definitions, principles and rates for general sales tax (GST) on goods and services.
The launching of single portal will cut the compliance cost for the taxpayers and help increase Pakistan’s rating on Ease-of-Doing Index.
Portal is likely to be launched early next month
It was decided that detailed input will be invited from Provincial Revenue Authorities for development of single sales tax portal acceptable to all. Similarly, the Federal Board of Revenue (FBR) would also develop a standardised income tax return format, in consultation with the provincial governments.
FBR chairman Ashfaq Ahmad made a detailed presentation and outlined areas for further deliberation to work out an arrangement in a collaborative manner relating to harmonisation of GST between the federal government and the provinces.
The FBR and the provincial finance ministers narrated their respective positions on the taxation of transportation, restaurants, toll manufacturing and construction.
After due deliberation with all relevant stakeholders, the NTC decided that the sales tax on toll manufacturing will rest with the federation, while taxation rights on transportation business would be vested in the provinces.
Regarding taxation on the construction business, it was decided that the taxation right would be shared as per the constitutional arrangements, and a technical committee consisting of all revenue authorities would decide the operational modalities in this regard.
On taxation of restaurants, Finance Minister Tarin in his capacity as head of NTC and after having views of the FBR and the provinces decided that the provinces will continue to tax restaurants. However, a reference drafted in consultation with the provinces will be sent to the law division for opinion on the decision.
Punjab Finance Minister Makhdoom Hashim Jawan Bakht, Khyber Pakhtunkhwa Finance Minister Taimur Khan Jhagra, and Balochistan Finance Minister Mir Zahoor Ahmed Buledi attended the meeting. Sindh was represented by the chairman its Board of Revenue.
The federal finance secretary and FBR chairman and other senior officials also attended the meeting.
At the outset, Mr Tarin welcomed the participants and emphasised the need for evolving a consensus between the federation and the provinces on matters related to sales tax harmonisation. He stressed the need to resolve tax-related issues in a spirit of cooperation between the federation and the federating units.
All stakeholders agreed to proceed ahead in the spirit of greater national interest and harmony under the NTC umbrella.
The World Bank is pushing Pakistan for more harmonisation of general sales tax on services and goods among the federating units, maintaining that this will help tap 87 per cent potential revenue which remains largely uncollected.
The bank is also proposing to the provinces to agree on a single law, supply side rules and tax rate. The idea is to apply the same definitions, principles and rates for GST on goods and services, with the end result of easing compliance.