MoF urges Cabinet to approve withdrawal, curtailing of tax exemptions 

ISLAMABAD: The Ministry of Finance (MoF) has proposed the federal cabinet to approve the withdrawal and curtailment of tax exemptions given to the pharmaceutical and other sectors.

Sources said that the ministry in this regard will present the Finance Supplementary Bill, 2021, in the federal cabinet meeting scheduled to be held on Tuesday.

As per details, the Federal Board of Revenue (FBR) has proposed curtailing and withdrawing billions of rupee worth exemptions under the fifth, six, eight, and ninth schedules; however, sales tax exemptions would continue on food, education, health. Tax exemptions given to diplomats would also continue. 

The FBR has proposed to streamline the zero-rating regime and withdraw sales tax on certain entries under the fifth schedule, and curtail exemptions under the sixth schedule including those given to the pharmaceutical sector, stressing that such exemptions should be restricted to import and local supply of essential commodities only.

Similarly, it has also been proposed to streamline the reduced rates of sales tax under the eighth schedule on certain items in order to achieve equity in the tax system. 

Likewise, sales tax on import of high-end mobile phones in CBU condition under the ninth schedule has also been proposed to be rationalised in addition to to rationalising the scope of Tier-1 retailers.

Further, a few notifications issued from time to time prescribing reduced rates in respect of some services were not consolidated under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, but is being done now. 

Sources said that the government has also proposed that the Cabinet should approve the disclosure of information in respect of high-level public officials in line with the requirements of development partners, rule of law and integrity.

They said that FBR has initiated far-reaching structural and administrative reforms during the tenure of the present government to achieve economic and financial stability through inclusive reforms and sustainable economic growth.

“FBR is committed to achieving tax reforms with the assistance of development partners with the ultimate objective to be able to generate sufficient revenue for the state,” they added.

It is pertinent to note that the government, after the approval of the Cabinet, will present the bill in parliament for approval in the coming days.

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Shahzad Paracha
The writer is a member of Pakistan Today's Islamabad bureau. He can be reached at [email protected]


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