KARACHI: Federal Board of Revenue Chairman Suhail Ahmed said on Saturday that the draft of the Value Added Tax (VAT) is ready and will be presented in the parliament before the next budget for approval so that it could be enforced from 2010.
Witnessing stiff resistance against the VAT from the FPCCI members he said that consultative meetings will be held to solicit view point of trade and industry and their input will be taken in account.
Sohail Ahmed further said that before passing the VAT bill the parliament will refer it to respective committees to gather stakeholders” suggestions and recommendations.
Therefore, he said, the business community will be given full chance to go through the draft proposal prior to its approval by the National Assembly. He further said even after the VAT law is approved it will take one full year to implement it.
Besides, services of legal advisers had been hired for drafting the VAT document.
Responding to a point raised by the acting president FPCCI Mansha Churra that frequent changes in tax policy create uncertainty, the chairman said that even today the FBR was strictly following the self-assessment scheme, which should not disturb the taxpayers.
He further said that the enforcement and broadening of tax net is emphasised internationally and the finance minister has also stressed the need to bring new taxpayers under the tax net.
The FBR chairman assured the business community that no discrimination would be made while selecting cases for audit on random basis because these were picked through computer.
He said that unfortunately, the country had to beg for around Rs200 to 300 billion and if this amount is generated or collected through taxes internally the need for seeking foreign or world donors help would not arise.
Mansha Churra pointed out that in recent years industrial production declined and business activity reduced with the result there was flight of capital from the country. He said that Pakistani invested in Dubai and other countries as there was better environment and law and order situation.
He complained that the refund system always invoked corruption and tax collectors harass trade and industry and in many cases payments are not made without giving illegal gratifications, which goes up to 40 per cent of the due amount.
Iftikhar Qutub, a senior official of FBR, said that once the VAT was imposed it will reduce the cost of doing business and the federal government will collect on goods and provinces on services.
FBR Member Tax Policy Asrar Raouf said that VAT was presently vogue in 150 countries. An IMF and World Bank study disclosed that there was a gap of around Rs600 billion in revenue collection which could be easily bridged through VAT collections.
He assured the business community that the VAT draft had been prepared after taking into account international best practices.
Former president FPCCI Tariq Sayeed said that even today a very large number of small business and industrial establishments were out of the ambit of GST and if the government only brings such taxpayers under the net it will improve the tax-to-GDP ratio.
Each time the government comes up with new tax policy or system it is only the organised sector, which bears the brunt and that is why that tax rates in the country were high.
Tariq Sayeed asked when the government failed to bring the GST at retail stage then why it plans to bring another mode of VAT, which may slow down economic activity for some time if not for ever.
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