ISLAMABAD: The World Bank (WB) has expressed concerns that the single returns portal has not yet become fully functional for provincial general sales tax (GST) authorities and is pending agreement on the GST harmonisation agenda.
This has been stated in the latest WB report on the implementation status and results of Pakistan Raises Revenue (PRR) relating to the Federal Board of Revenue (FBR). The report has revealed that the Federal Board of Revenue (FBR) has harmonised the definitions of economic activities subject to GST harmonisation with all the four provinces. Some progress has also been made on harmonised definitions of goods and services subject to GST by federal and provincial governments.
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The Mid-Term Review (MTR) conducted from October 17 to November 11, 2022 noted satisfactory progress towards the achievement of project objectives, and implementation of its results-based component.
There is encouraging progress also vis-a-vis implementation of the Track and Trace, with monitoring mechanism of the production systems having been installed in the sugar and fertiliser sectors and underway in the cement and tobacco sectors.
The FBR has added 462,677 new taxpayers, identified through automated data-sharing and ICT-based business intelligence tools. There is improved performance in several Disbursement Linked Indicators (DLIs). There is a reduction in withholding tax lines from 58 in FY19 to 31 in FY22 and the Finance Division has published the detailed tax expenditure for FY21 and evidence-based revenue forecasts for FY22. The tax gap analysis report has also been published.
The FBR has established a Compliance Unit and put in place the Audit Management Information System (AMIS). In FY22, FBR completed 67 comprehensive field audits of large taxpayers for cases selected by the risk-based selection tool and monitored by the Compliance Unit through AMIS.
However, the single returns portal has not yet become functional for provincial GST authorities and is pending agreement on the GST harmonisation agenda. There is improved performance on Customs processing with the reduction in the frequency of physical inspections at the border — from a baseline of 60 percent goods declared through the red and yellow channels in FY19 to about 34 percent in FY22.
Simplification of the FBR’s core business processes is proceeding and to date the bureau has completed the review, redesign or simplification and automation of 12 out of 16 business processes — that is 36 out of 48 steps (DLI 9).
Finally, the FBR has continued to track the Key Performance Indicators (KPIs) and published the bi-annual and annual results reports on its website.
Following the MTR, a restructuring of outcome and intermediate indicators is proposed in early 2023 to support improvements in project performance.
The Customs Act has been updated in line with the latest requirements of Kyoto Convention’s Article 3.25. “National Legislation shall make provision for the lodging and registering or checking of the goods declaration and supporting documents prior to arrival of goods.”
Customs law has also been aligned with the Kyoto and TIR conventions. Pre-arrival/ pre-clearance system was introduced in FY21 (which has allowed for conformity with Article No 7 of Trade Facilitation Agreement). The e-TIR module is being developed in coordination with the United Nations Economic Commission for Europe.
Development of a single IRS Code (by merging administrative provisions of all taxes administered by IRS, i.e. Income Tax, Sales Tax, Federal Excise Tax, and Capital Value Tax) is in process, added the report.
Copyright Business Recorder, 2023