The Federal Board of Revenue (FBR) has decided to harmonise different provisions of taxation laws to provide uniform tax procedures in all tax laws to foreign investors as well as local business community.
Sources told Business Recorder on Thursday that the FBR had constituted a task force under the Legal Wing to submit necessary amendments to the Sales Tax Act, 1990; Federal Excise Act 2005; Customs Act 1969 and Income Tax Ordinance 2001 for the harmonisation of different tax provisions. Task force would conduct a study, analysing the technical and legal aspects of tax laws, for incorporation of necessary amendments in next budget.
This is a first of its kind of exercise where similarity would be brought in the tax provisions relating to additional tax, surcharge etc to simplify procedures for the foreign investors. Under the harmonisation concept, there should be similar tax laws to deal with the procedural matters of income tax and sales tax for the taxpayers.
By harmonising relevant laws of sales tax, Federal excise, income and customs duty, the issues related to appeals, litigation, recovery, prosecution, refunds and filing of documents could be similarly treated in all taxes to facilitate the business community.
According to the sources, tax laws should be simple, particularly for the foreign investors and harmonisation of tax laws would play an important role to deal with the taxation of non-resident companies. There should be some similarity in different tax laws so that the taxpayer or investor should go through minimum provisions of different tax laws.
For example, the tax laws related to Alternative Dispute Resolution (ARD), mechanism is almost the same in Sales Tax Act, Customs Act and Income Tax Ordinance 2001. Secondly, the provision of "advance rulings" for foreign investors should be same in all tax laws. The similarity in tax laws should also be available in case of adjudication and prosecution related tax provisions in different tax laws.
Sources said that if a taxpayer goes through 2-3 taxation laws, there should be similar provisions in certain circumstances. Tax harmonisation refers to the process of making taxes identical or at least similar in a particular region. The FBR has identified the following taxation areas and provisions in fiscal laws for harmonisation:
-- Additional tax/surcharge rates; time for finalisation of the matter/assessment; time for appeals/decisions on appeals; time for remand-stay-recovery; mode of service/limitation counting for day of announcement or day of judgement; ADRC provisions; advance ruling concept; harmonisational issues of taxpayers; audit/taxpayers audit; time limit for payment of tax demanded; charge of additional taxes/duties rate; prosecution of offences; proceedings for coercive measures; tax issues relating to foreigners; issuance of refund; filing of documents; business processes; exemptions/zero-rating and zero duty materials; functional structure; creation of two streams in FBR ie Inland Taxes, Federal Excise and Customs Duties and not less than BPS-16 officer for any main decision, whether by Deputy Superintendent or Principal Appraiser.
The task force would obtain the viewpoint from Member (Customs), Member, Sales Tax/Federal Excise) and Member, Direct Taxes, during the first meeting to be convened on October 18. It is important to mention that a similar, though not identical, legal framework has already been designed and incorporated for the enforcement and collection functions of direct taxes and sales tax by harmonising the relevant laws of both these taxes.
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