Govt planning to shake up FBR, introduce centralised sales tax collection

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ISLAMABAD: In a major shakeup, the government has decided to restructure the entire tax machinery and introduce centralised collection of general sales tax (GST) on services and goods, reported Dawn.

According to the report, the proposed measures were already approved by PM Imran Khan on October 3 with a restructuring plan to convert the incumbent Federal Board of Revenue (FBR) into Pakistan Revenue Authority (PRA) with a deadline of June 2020.

But, the proposed timeline did not go as planned as the Inland Revenue Service (IRS) chief commissioners opposed the move in a meeting held on Monday.

A source quoted in the report said that IRS officers will hold another meeting on Tuesday with the FBR chairman to appraise him about their concerns. Both tax groups — IRS and customs – have also warned to go on a pen down strike in case government did not change the proposed plan.

According to the report, the Ministry of Finance will prepare a comprehensive framework for PRA and centralised GST collection on services by the PRA. These reforms are part of the World Bank-funded ‘Pakistan Raises Revenue Project’.

On the issue of centralised collection of GST on services, it has been decided to constitute a joint committee comprising representatives from the Ministry of Finance, the FBR and provincial revenue authorities to finalise a proposal.

The finance ministry will work out the mechanism for the transfer of tax proceeds of GST on services to provinces, claimed the report.

The decision to collect GST at the centralised level was taken on the plea that the collection potential is not fully realised owing to the jurisdiction issues between the FBR and provincial authorities. Cross-provincial jurisdictional and conflict of interest issues also stifle GST collection on services.

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