Member, Policy (Direct Tax), of Federal Board of Revenue, Israr Rauf, has said that there will be no need of foreign aid after imposition of value-added tax (VAT), and Pakistan would be 137th country where this tax would be introduced with approval of parliament.
Addressing a meeting of Multan Chamber of Commerce & Industry (MCCI) and PCGA, chaired by Asrar Ahmed Awan, MCCI president, he said that FBR had fixed the target of 3 million tax declarations for the year 2010-11 while 2.2 million declarations were filed in 2009-10. He said he was optimistic that FBR would achieve its revenue targets fixed for the current financial year.
He said that FBR would directly collect income tax from the ginners and textile millers, and the dispute between FBR and ginners, textile millers on the issue of cut in income tax would be resolved on top priority basis.
He said that value-added tax would be realised at the same rate that of general sales tax, and powers of tax collectors to grant any exemption had been abolished. However, the Parliament would be sovereign to grant any exemption to any sector and it would be realised at the uniform rate of 15 percent.
He said that all chambers, trade organisations, trade bodies, associations were being taken into confidence on this issue. He said that only 0.6 million, out of 3.1 million commercial consumers of electricity, were filing declarations. He said that 0.1 million property owners were inducted in the tax net under enforcement plan, while 10,000 owners of luxury vehicles had been asked to file their declarations.
"We have succeeded in taking 2,50,000 fresh tax payers in the net, while a similar number of people would be inducted in the list of tax payers by June 30, 2010. After introduction of VAT, refunds would be made directly from the bank. He claimed that economic condition had improved during last three months. He said that tax payers of Rs 5 million turnover would have to pay tax on Rs 7.5 million turnover from next financial year. "However, we are collecting taxes on the basis of respect and mutual understanding and we have no intention to create a state of harassment through arrests and confiscation of properties."
He admitted that Senate had asked to defer VAT for one year and reducing its rate from 15 percent to 12.5 percent.
He assured that issues like value-added tax, withholding tax, workers welfare fund and refunds raised by PCGA would be resolved on top priority basis and amount of refunds would be transferred to the bank account of the applicant. He said that Pakistan's rate of tax against GDP was less than other countries which is only 8.8 percent. It would be increased to 29 percent after levy of VAT.
He said that Pakistan would get debt of $ 11.3 billion from IMF under standby agreement. "We have so far received $6 billion till March 2010 while another tranche of $1.2 billion would be received in April. PCGA chairman Muhammad Akram said that VAT would directly hit the farmers who were playing a key role in strengthening the national economy while ginners entire investment would be dumped in the tax.