The Federal Board of Revenue (FBR) team of tax managers will give a presentation to the International Monetary Fund (IMF) on Single Stage Sales Tax (SSST) and explore possibility to replace SSST with existing standard rate of 17 percent sales tax.
Sources told Business Recorder Saturday that a delegation of the FBR headed by FBR Chairman Tariq Bajwa is expected to meet the IMF at Dubai next week to discuss Value Added Tax (VAT) mode of taxation and Single Stage Sales Tax. Beside FBR senior officials, the delegation also comprises Masud Naqvi, Chairman, Tax Reforms Commission (TRC) and Ashfaq Tola Member TRC, who is author of TRC proposals on sales tax including SSST.
The tax authorities will seek guidance of the IMF experts in implementation of the Single Stage Sales Tax in Pakistan. The FBR is exploring the possibility of replacing the existing standard rate of 17 percent sales tax with Single Stage Sales Tax as recommended by the Tax Reform Commission.
According to sources, the issue of Single Stage Sales Tax is also one of the important terms of reference before the TRC formed with a view to reforming the tax structure and policy keeping in view the importance of the issue, discussions with the donor agency will greatly improve the understanding of the FBR on the issue and provide a guidance for future strategic decisions.
One of the key recommendations of the TRC is that the federal and provincial sales tax authorities should form a fully empowered commission to bring harmony in the sales tax laws dealing with services. The report of the TRC said that there is a need to change the present system of sales tax which is not only cumbersome and difficult to comply but is full of leakages and abuse. Single stage, single digit non-adjustable sales tax (with provision to cater to special needs of exporters) is a strong way forward.
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