The promulgation of Value Added Tax (VAT) law should be deferred for an indefinite period and business community should be taken into confidence before levying VAT, President Faisalabad Cambers Commerce and Industry (FCCI) Abdul Qayyum sad during a meeting with Member Policy (Direct Tax) FBR Asrar Raouf.
He further said that industrial sector which was already on the verge of collapse and the business community was under a lot of inflationary pressure due to the multiplicity of the problems like the shortage of electricity and gas, high banks mark up and numerous taxes. The business community was striving hard to keep their businesses in operation.
Under these circumstances it was not understandable that why government was levying VAT. While expressing his reservations on behalf of business community of Faisalabad he demanded of the FBR authorities to defer the proposed VAT law in the best interest of the business community of Pakistan.
He said that almost all the Chambers of the country had opposed imposition of VAT. While briefing the audience, Raouf disclosed that the government is fully aware of the prevalent economic downturn. The main object of levying the VAT is to broaden the tax base and the ratio of 15 percent across the board. He assured that the VAT would be levied after taking business community of the country into confidence.
Furthermore, the VAT would replace the existing regimes of sales tax and excise on services with proper in-built facility for smooth transition. Federal excise duty would be abolished on all services. There would be no fixed tax, reduced tax, enhanced tax, retail price-based tax or special tax scheme under VAT so that business are indoctrinated towards uniform tax compliance.
The zero-rating has been confined to exports only. All exports would be zero rated in that the tax, if any, paid on the previous stage of their supply (input tax) would be refunded. No zero-rating has been allowed on any commercial form of domestic supply of goods. The exemptions have been restricted to basic food items, charities, public sector education/health and international or sovereign commitments. The FBR Chief, Iftikhar Qutab briefed the VAT provisions in detail to the audience wherein large number of businessmen, industrialists and local Inland Revenue Officials were also present on the occasion.