ISLAMABAD: The Federal Board of Revenue (FBR) has sent the draft of the proposed Value Added Tax (VAT) for consideration to the provinces and it would be submitted before the Federal Cabinet for approval by December 31.
This was stated by Chairman FBR Sohail Ahmad here Friday, while addressing the business community at the Islamabad Chamber of Commerce and Industry (ICCI).
He said that the draft of Value Added Tax (VAT) has been drafted and compiled in consultation with foreign and local financial experts, keeping in mind the local tax structure.
He said that VAT draft would also be sent to the Federal Cabinet which would table it before the National Assembly for further debate and its approval as a bill for implementation.
The VAT, he said would replace the existing General Sales Tax (GST) which would be less then 16 per cent and would not be implemented on items used by lower income groups, he said.
He said VAT is not a new thing as it is already enforced in about 130 countries that are enjoying tax-to-GDP ratio of 15-23 per cent.
The FBR chief hoped that with the imposition of VAT in Pakistan, the country’s tax-to-GDP ratio will improve to 12-15 per cent within 3-5 years from the current 9 per cent, which is abysmally low when compared to international standards.
He said that the tax net has to be broadened to increase the expenditures on social sector health, education and poverty alleviation in the country.
Sohail Ahmad said that existing tax payers who were paying taxes honestly would never be harassed but more people would be brought under the tax net who are either evading taxes or not paying proper taxes.
Speaking on the occasion, ICCI President Zahid Maqbool said that before implementing VAT, the FBR should launch a proper awareness campaign about this tax through chambers and associations so that taxpayers could fully understand all aspects of VAT.—APP
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