Businessmen appreciate single portal for sales tax return filing
The Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) Businessmen Panel on Sunday appreciated the government’s resolve to implement the much-needed single portal for filing sales tax returns, as harmonization of general sales tax on services and goods among the federating units to enhance revenue collection ratio.
FPCCI Businessmen Panel Chairman Mian Anjum Nisar hailed the decision of the National Tax Council (NTC) to develop the portal, calling it the right decision in the right direction for harmonization, involving an agreement between the federal government and the provinces to apply the same rates for general sales tax (GST) on goods and services.
He said that the launching of a single portal will cut the compliance cost for the taxpayers and help increase Pakistan’s rating on Ease-of-Doing Index, asking the FBR to also invite detailed input from Provincial Revenue Authorities for the development of a single sales tax portal acceptable to all, besides also developing a standardized income tax return format, in consultation with the business community.
There is an urgent need of reforming and simplifying the taxation system with the consultation of real stakeholders, besides addressing the issue of double taxation through the integration of provincial and federal government laws and harmonization of FBR and Punjab Revenue Authority.
The BMP Chairman suggested that taxes should be charged one time by any provincial or federal government, as provinces levy the same kind of tax that the federal government has already imposed, escalating the cost of production and discouraging the registered manufacturers. He called for harmonization of Sales Tax and Income Tax laws, getting rid of conflicting provisions, suggesting enhancing the tax base by automation. He demanded the government to improve tax structure so that business and investment could flourish in the country, as the existing tax structure discourages investment. He requested the government to focus on reducing tax rates and expanding the tax base by bringing all exempted sectors into the tax net.
FPCCI former president said that the high tariff of utilities and RD’s on raw materials are also the factors discouraging exports. He said that coordination between the government and the private sector was vital for economic growth, proposing the government develop policies that could provide a conducive business environment in the country. He called for strict measures to stop illegal trade, as the smuggling is not only causing a massive shortfall in revenue collection but also discouraging the legal businesses and documented economy. The majority of the people don’t want to get them registered and preferred purchasing smuggled goods mainly due to high duties on legal import.
Mian Anjum Nisar said that only direct taxes can improve tax collection, as the existing tax system is heavily skewed toward indirect taxation. He said the sustainable solution to Pakistan’s problems lies in the structural reforms, as we can see very large inefficiencies in tax collection, which needs to be removed. So, the tax compliance must be improved and the tax base should be broadened, which cannot be achieved with a single policy change, but by a systemic approach.
The FPCCI has already submitted its proposals to meet the challenges being faced by trade and industry. “We have been asking the Federal Board of Revenue to reduce the tax rates to help increase the competitive edge of indigenous products in both local and global markets, as high tax rates provide incentives for tax evasion and corruption and result in high cost of doing business.”
He said heavy reliance on withholding taxes is affecting the enforcement capabilities of the FBR administration since the majority of tax collections is through the withholding tax regimes and not through enforcement measures. He said that the National Tax Council needs further deliberation to work out an arrangement in a collaborative manner relating to the harmonization of GST between the federal government and the provinces.