- Federal Minister for Finance Shaukat Tarin presides over a meeting of National Tax Council
Islamabad: In a major breakthrough between the federation and provinces, the Ministry of Finance, the Federal Board of Revenue (FBR), and the provincial revenue authorities almost resolved the issue of collection of sales tax on toll manufacturing; transportation business and restaurants through mutual consensus, here on Thursday.
Federal Minister for Finance and Revenue Shaukat Tarin presided over the meeting of the National Tax Council (NTC) at the Finance Division Thursday.
Provincial finance ministers, secretary Finance Division, chairman FBR, chairman Sindh Revenue Board, and other senior officers also participated in the meeting.
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 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.
On taxation of restaurants, the finance minister, 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.
Different proposals were also considered by the NTC for implementing single portal for filing sales tax returns, which is being developed and is likely to be launched by the first week of October 2021.
The launching of single portal for filing returns will cut the compliance cost for the taxpayers and will help increase Pakistan’s rating on Ease-of-Doing Index.
It was decided that detailed input will be invited from Provincial Revenue Authorities (PRAs) for development of single sales tax portal acceptable to all.
Similarly, the FBR shall also develop a standardised income tax return format, in consultation with the provincial governments.
Sources told Business Recorder that the sales tax on all services including toll manufacturing; transportation business and restaurants are currently being collected by the provinces.
The NTC had already directed the FBR to review the revised definitions of “Goods” and “Services” in line with the unanimous definitions agreed among provincial revenue authorities.
The province’s position on these issues was much stronger as compared to the viewpoint of the FBR.
The provincial stance was duly recognised by the finance minister, while taking these decisions.
According to sources, it is important to mention that the provinces have given sacrifice while finalisation of the decisions taken during the meeting of the NTC.
As far as reference to the Law Division is concerned, sources said that the Law Division would be taken into confidence.
The provinces have no objection on the issue of the single portal and single sales tax return, but the FBR and PRAL should take provincial revenue authorities and boards into confidence, the sources added.
In his opening remarks, the finance minister welcomed the participants and emphasised the need for evolving consensus between the Federation and the provinces in matters relating to sales tax harmonisation.
He stressed upon the need to resolve tax-related issues in a spirit of cooperation between the Federation and the Federating units.
The chairman FBR made a detailed presentation and outlined areas for further deliberation to work out an arrangement in a collaborative manner relating to harmonisation of GST among 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.
All stakeholders agreed to proceed ahead in the spirit of greater national interest and harmony under the umbrella of the NTC.
Copyright Business Recorder, 2021