The Federal Board of Revenue (FBR) and experts of International Monetary Fund (IMF) are planning to meet at Dubai to discuss the crucial tax reforms of indirect taxes including Single Stage Sales Tax (SSST) and examine possibility to replace SSST with existing standard rate of 17 percent sales tax.
Sources told Business Recorder here on Sunday that a delegation of FBR headed by FBR Chairman Tariq Bajwa is expected to meet International Monetary Fund (IMF) at Dubai from July 21-23 2015 to discuss Value Added Tax (VAT) mode of taxation and Single Stage Sales Tax. The tax authorities will seek guidance of the IMF experts in implementation of the Single Stage Sales Tax in Pakistan. The FBR is exploring possibility of replacing the existing standard rate of 17 percent sales tax with Single Stage Sales Tax as recommended by the Tax Reform Commission.
According to sources, during Pakistani government officials visit to Washington DC in April 2015 for spring meetings with IMF, certain crucial taxation issues were discussed with Fiscal Affairs Division (FAD) of the IMF and possibilities were explored for FAD's co-operation in some key tax areas particularly general sales tax (GST) structure.
Sources said that the FAD has rich and world-wide experience in studying VAT mode of taxation. The Tax Policy Division of the FAD, IMF has shown willingness to send its mission to Dubai for talks with FBR team of tax managers from July 21-23 to discuss the issues relating to the VAT mode of taxation and Single Stage Sales Tax. The issue of Single Stage Sales Tax is also one of the important terms of reference before the Tax Reform Commission formed with a view to reform the tax structure and policy keeping in view the importance of the issue, discussions with the Tax Policy Division of the FAD, IMF will greatly improve the understanding of the FBR on the issue and provide a guidance for future strategic decisions.
Ashfaq Tola, a leading sales tax expert, played a key role in drafting TRC proposals, particularly a single-stage levy of sales tax. One of the key recommendations of the TRC is that the federal and provincial sales tax Authorities should form a fully empowered commission to bring harmony in the sales tax laws dealing with services.
According to the TRC last report, the proposal of 'Single Stage Tax' is still at deliberation stage with different stakeholders.
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