ISLAMABAD: The government has decided to implement full-fledged Value Added Tax (VAT) by eliminating General Sales Tax (GST) in next two to four years.
This has been decided at a meeting under the chairmanship of the prime minister held last month.
According to the minutes of the meeting, it was considered that VAT regime instead of GST needs to be gradually implemented within 2-4 years to enhance revenues, broaden tax base and assist in documentation of economy.
It is decided that the Federal Board of Revenue (FBR) will fully implement VAT regime for all business segments over next 2-4 years.
According to the roadmap for VAT implementation, the mechanism would be:
— Member Inland Revenue (Operations); focal steward for implementation of VAT Regime over next 2-4 years.
— Director General Input – Output Coefficient Organization (IOCO – IR) should be redesignated as DG IOCO & VAT Compliance – Functional lead for VAT Implementation.
— Commissioner Broadening of Tax Base (BTB) at each Regional Tax Office (RTO)/ Large Taxpayer Unit (LTU) would be responsible for business level implementation – Assistant Commissioner of respective RTO/LTU for Value Chain Evaluation and VAT Implementation.
— VAT would be progressively implemented across various segments commencing with 3rd Schedule products and gradually absorbing complex value chain products.
The meeting considered the implementation of VAT and decided enactment of VAT related legislation, rules and regulation if required.
For the purpose capacity building of FBR for absorption of VAT Regime would be undertaken.
It is also decided that time and resources for VAT assessment surveys of particular industrial/business segment. In order to implement the scheme successfully, the revenue potential of particular industrial segments would be assessed.