FBR not prepared for new GST

[Lahore_Real_Estate]

ISLAMABAD: The Tax Reforms Coordination Group (TRCG) headed by Finance Minister Dr Abdul Hafeez Shaikh criticised the Federal Board of Revenue (FBR) on Sunday for its lack of preparedness to implement the reformed general sales tax.

According to sources, the group noted with concern that the FBR wanted to continue with the GST collection mechanism and simultaneously start introducing the reformed GST.

“The two systems cannot go along simultaneously and yield the objective of broadening the tax base and recovery for which the reform process has been taken in hand,” a participant of the meeting told Dawn.

According to a statement issued by the finance ministry, the sub-group on sales tax and excise led by former FBR chairman Abdullah Yousaf also questioned the board’s preparedness for implementing the RGST.

Three sub-groups, on RGST, customs and income tax, submitted their reports that were discussed in detail. The group decided to hold its next meeting in Karachi to involve in the process major stakeholders like the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the textile industry and chartered accountants. The meeting will be held after the finance minister returns from the United States where he will attend the Pakistan-US strategic dialogue next week.

In its recommendations on the RGST, the sub-group headed by Mr Yousaf emphasised the need for reducing the pending refund claims, creating a warehouse of third-party data to broaden the tax base, reducing the tax gap and implementing a seamless cycle from the submission of returns to the automatic transfer of refunds to the tax payers in their bank accounts.

The customs sub-group led by former FBR chairman Ahmed Waqar highlighted the need for skilled manpower, a robust automation system and sustained commitment from the political leadership and senior management for the reforms. It stressed administrative issues of post-clearance audit, internal audit and certain infrastructure measures. It also presented recommendations regarding unauthorised trade, countering smuggling, customs integrity and human capacity.

The recommendations of the income tax sub-group led by Vakil Ahmad Khan included the setting up of a fiscal policy board headed by the finance minister and comprising the FBR chairman, renowned economists and representatives of stakeholders like the FPCCI, Aptma and Icap. The focus of the board will be on industrial growth, increasing foreign exchange earning and export. The report recommended a review of the functional organisational set-up of the FBR. The finance minister asked the FBR to formalise the recommendations of the sub-groups for their early approval by the government.

The TRCG includes former FBR chairmen and members, as well as representatives of trade and industry.

The meeting was also attended by the deputy chairman of the Planning Commission, the governor of State Bank, the finance secretary, the chairman of the FBR and other officials.