The Federal Board of Revenue (FBR) has decided in principle to move towards replacing the existing General Sales Tax (GST) with Value Added Tax (VAT) across the board for all sectors under the World Bank funded loan conditions.
Under the proposed reform plan on which the implementation was so far deferred till establishment of Pakistan Revenue Authority (PRA) and holding of consultation with all stakeholders, it has been decided in principle that the FBR will move gradually towards replacing the existing GST and come up with the VAT mode across the board for all sectors to ensure effective collection of real due taxes.
“In this regard, the FBR will conduct assessment surveys of different industrial/business segments under proposed reform plan,” according to an official source.
When contacted, FBR Chairman Shabbar Zaidi said FBR would ultimately move towards full implementation on VAT in order to bring all sectors for contributing in country’s taxation system.
He said the Computerized National Identity Card (CNIC) condition was a move towards implementing the VAT and FBR stood firm on it.
Zaidi added the establishment of PRA was deferred for time being but all other reforms including moving towards VAT was part of the overall reform agenda of the FBR.
It is relevant to mention here that the efforts made by FBR in the past to put in place VAT had miserably failed and once it had resulted in suspension of International Monetary Fund (IMF) sponsored program during the Pakistan Peoples Party-led regime in 2011.
The FBR will also finalize stages and complexities in each product value chain with time and resources for VAT assessment surveys of particular industrial/business segment.
The reform plan proposed that the political considerations-voters’ constituencies and support of business communities/industrialists would also be taken into consideration for finalizing its roadmap.