FBR waits Parliaments nod to levy VAT from July

ISLAMABAD - Chairman Federal Board of Revenue (FBR) Sohail Ahmad on Thursday said that FBR was all set to implement Value-Added Tax (VAT) in the country from the start of the upcoming fiscal year once it is approved by the Parliament. Addressing a press conference here at FBR Headquarter, he said that FBR had completed the preparations for the implementation of VAT whereas it will be implemented with legal consultations. He said VAT was an alternative of GST and it will not increase the inflation. After approval of VAT law, Sales tax law would be not functional in the country, he added. He said the National Assembly as well as provincial assemblies would pass the VAT law well in time and he was optimistic that VAT would replace GST from July 2010. The rate of VAT will be uniform at 15 percent and the perception that inflation will go up after VAT implementation was wrong, he added. He said FBR had given the task to Pakistan Institute of Development Economics (PIDE) to conduct a study regarding the inflation impact after the implementation of VAT in the country. He was of the view that no additional tax is being imposed, as VAT would replace the existing Sales Tax regime. Under VAT efforts will make to bring the areas into tax net that currently are evading taxes. He said VAT would give same amount of revenue which the country was getting from General Sales Tax in the start, however revenue would increase in the coming years. A VAT implementation team has been established at the FBR, he said, and added that VAT implementation plan had also been prepared. VAT regulations have been drafted and meanwhile the drafts of registration form and return have also been designed, he said. The expeditious refund system (ERS) has been implemented in Lahore and will be extended to the other RTOs/LTUs between now and July 2010, he added. He informed that recently an international World Bank expert mission on VAT, who had helped implement the mode of taxation in more than 40 countries, visited FBR and had expressed its satisfaction on the preparedness of the organisation in the implementation of the VAT mode of tax in the country. On a question regarding GST on sugar, he said the sales tax exemption on the commodity had been causing loss of up to Rs 2 billion per month to the FBR. He said, I am quite optimistic that FBR will achieve the annual revenue target of Rs 1,380 billion at the end of current fiscal year. He further said, We have achieved around Rs 1,015 billion in the first ten months of the current fiscal year, which is almost 15 percent higher than the same period of the previous year. My organisation is regularly holding its commissioners and collectors conferences to further enhance their efficiency and sharing of their experiences. He added that intelligence wing of the FBR was also strengthened and as a result its staff had caught some exporters who were exporting pulses in the name of rice while export of pulses was banned in the country. We are also appointing honest officers with good reputations at borders to check such unlawful activities for the benefit of the country, he added.