Establishment of National Tax Council notified

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ISLAMABAD: As per the decision of the National Finance Commission’s Monitoring Committee, the Finance Division on Friday notified the establishment of National Tax Council (NTC), a national body to resolve tax issues among centre and provinces.

As per the notification, Adviser to PM on Finance and Revenue Dr Abdul Hafeez Shaikh would be the chairman of the council while finance ministers of the four provinces — Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan — would be the members of the council.

According to the Terms of Reference (ToR) set for the NTC, the council will look into the harmonized rates of tax applied to supplies of goods and services as applicable to the entire country.

Besides, the national body would also be responsible to formulate a model sales tax law on goods and model sales tax law on services, definitions of goods and services, principles of levy, apportionment of sales tax on services made in the course of inter-provincial trade and principles that govern the place of supply.

NTC would see the turnover threshold below which sales may be exempted from the sales tax. It would also bring clarity about exempted goods and services as applicable to the entire country

The council, as per the ToR, will also set any special rates or cesses for a specified period for an individual province or provinces, to raise additional resources due to emergencies arising as a result of any natural calamity or disaster.

It would also suggest rules governing the administration of sales tax across provinces and the ICT to reduce duplication of administration for taxpayers. A mechanism will be developed to resolve disputes arising on matters related to powers vested by it on tax matters, between the federal government and the provincial governments and amongst provincial governments.

The council would also resolve the issues related to overlaps in collection of FED and sales tax.

The NTC is also tasked for data harmonization which include but not limited to monthly sharing of data on FBR collections, oil and gas productions, electricity production and formulation of mechanism to ensure that payments due to provinces are made in time.

As per the ToR, the decision of NTC would be implemented by the federal and provincial governments. The NTC will meet at least once every quarter.

According to sources, apart from the council’s main body, there would be an executive committee comprising federal finance secretary as chairman, Federal Board of Revenue (FBR) chairman, finance secretaries of four provinces, Sindh Revenue Board chairperson, Punjab Revenue Authority (PRA) chairperson, KPRA director general and BRA chairperson.

According to officials, the executive committee would forward its suggestions/proposals for approval.

It is pertinent to mention that the International Monetary Fund (IMF), in its recent report, had recommended Pakistan to establish a joint working group, comprising centre and provinces, to provide recommendations on GST harmonisation, to be approved by the Council of Common Interests (CCI) by end-March 2020.

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