Sources told Business Recorder here on Wednesday that the IMF Technical Assistance mission held meetings with the tax authorities at the FBR Headquarters during the last two days. The international experts of the IMF belonging to Canada, Latin America and Spain will assist Pakistan in improving country's tax system, which is highly complex. The IMF Technical Assistance mission came to Pakistan on the request of the FBR and it is not a review of FBR's performance, the FBR officials said.

They said the structural changes in the tax policy being recommended by the IMF mission would be incorporated in the next year's tax policy in June 2020. The FBR will learn from the international experience of these experts to simplify complex tax system and reduce cost of compliance of the taxpayers.

During the meetings with the tax authorities, the IMF team discussed harmonization of taxes which, according to the FBR officials, can be achieved within the existing arrangement of having separate tax collection mechanism at the federal and provincial levels.

The idea of establishing a National Tax Collection Agency for the purpose of filing and collection of all taxes of federal and provincial authorities was also discussed, sources said.

The officials said the FBR is studying the Canadian model to resolve taxation related issues between federal and provincial revenue authorities/boards. In this regard, the meeting is also expected between the IMF team and Punjab Revenue Authority (PRA) next week. The issue of single portal for all taxpayers registered with the FBR as well as provincial authorities and integration was also discussed.

The IMF experts underscored the need for utilising 90 percent FBR workforce on large taxpayers and big corporate entities registered with the Large Taxpayer Units (LTUs).

The IMF technical team will also hold meetings with Ministry of Climate Change to explore possibility of imposing any pollution related tax in future.

The FBR officials and the IMF experts also discussed in detail the contribution of services sector, agriculture sector, services sector and wholesale and retail sector in the GDP and their actual contribution in tax collection.

Asked whether the IMF experts recommended any increase in sales tax rate, the FBR officials said that Pakistan has 17 percent sales tax rate as compared to 18 percent in India. "We will bring down the standard rate of sales tax in the next 2-3 years," said the officials.

The officials added that the IMF technical team would finalize its recommendations in next one to two months, which would be shared with the FBR.

Copyright Business Recorder, 2019