The Federal Board of Revenue has finally decided to fully enforce Value Added Tax (VAT) regime at the entire retail stage including big retailers, retail outlets, manufacturers, wholesalers, distributors, suppliers and shopkeepers from July 1, 2010.
In this connection, the FBR has constituted a new team of top sales tax officials having vast experience in VAT related issues to bring the entire retail sector within the VAT mode.
According to the FBR instructions issued to the field formations on Friday, Sales Tax Act 1990 was enforced from November 1996. The Sales Tax Act is designed for a classical Value Added Tax (VAT) model. At present VAT is being collected on imports and supplies by manufactures, wholesalers, distributors and big retailers.
The Third Schedule of the Sales Tax Act 1990 also provides for levy of VAT on retail stage of certain specified supplies including eg cigarettes. The FBR is mindful of the fact that a large number of transactions in the economy taking place at the retail stage.
While existing legislation enables for levy of VAT at retail stage, its practical enforcement and collection has faced enormous problems for last more than a decade. Presently, retailers with a threshold of Rs 5 million are required to be registered.
The need to extend VAT to the entire retail stage, allowing adjustment of tax paid at earlier stage, can hardly be over-emphasised. Foregoing in view, the existing process re-engineering team of Sales Tax Wing is directed to come up with a comprehensive plan to fully enforce the VAT at retail stage by July 2010.
The process re-engineering team has been re-constituted: Zafar-ul-Majeed Member FBR, Abrar Ahmed Khan Chief Sales Tax, Shafqat Mehmood Collector Sales Tax RTO, Lahore, Abdul Hameed Memon Additional Collector, LTU, Islamabad and Dr Iftikhar Ahmed, Deputy Collector, Customs Valuation, Karachi.
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