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FBR plans moot to discuss VAT implementation

By: Imran Ali Kundi | Published: The Nation August 26, 2009

ISLAMABAD - Federal Board of Revenue (FBR) would organize a two-day conference to discuss implementation of Value Added Tax (VAT) on the retail sector from the next fiscal year.
The two-day conference would be held here on September 3 and 4, which would be attended by the officials from federal as well as provincial governments.
The government has planned to replace the General Sales Tax (GST) by Value Added Tax (VAT) from July 2010, and the scope of VAT would be extended to the smaller traders.
FBR has constituted a team of senior officials in July this year to draw up a plan for the enforcement of VAT at retail stage from the next fiscal year (July 2010).
The committee comprising senior Customs officials, including Strategic Planning & Statistics Member Zafarul Majeed and ST&FE Chief Abrar Ahmad Khan, has been directed by Federal Board of Revenue Chairman Sohail Ahmad to “come up with a comprehensive plan to fully enforce the VAT at retail stage by July 2010.
It may be added that the 3rd Schedule of the Sales Tax Act, 1990 provides for levy of VAT on the retail process of certain specified supplies, including cigarettes. Sales Tax Act, 1990 that was enforced in November 1996, is designed for a classical VAT model.
At present, VAT is being collected on imports and supplies by manufacturers, wholesalers, distributors and big retailers.
Sources told TheNation that those people would pay VAT who has the capacity to pay and the common people would not suffer from it. The sources further told that according to the understanding with International Monetary Fund (IMF), the government was bringing tax reforms to improve the revenue collection, adding that replacing GST with VAT was also part of the tax reforms.
The World Bank is also providing technical assistance to implement further tax administration reforms, including strengthening of the refunds system. The WB is also asking for replacing GST with VAT.
The sources further told that the committee would give the details of the wok done so far for the implementation of VAT in the country while the tax experts would also discuss the different aspects of VAT application.
He said the government needed political will for the introduction of VAT. He further said Pakistan might face difficulties in applying VAT because its economy was undocumented.