Karachi, November 11, 2023 – The State Bank of Pakistan (SBP) has shed light on pivotal tax measures unveiled in the fiscal year 2022-23, emphasizing the transformative impact of these initiatives on the economic landscape.
The annual report on the Economy of Pakistan in Fiscal Year 2022-23 presented by the central bank outlines the strategic moves made by the Federal Board of Revenue (FBR) to foster a more business-friendly environment.
ADR Mechanism Overhaul for Enhanced Business Facilitation
One of the standout measures highlighted in the report is the revamping of the Alternative Dispute Resolution (ADR) mechanism through the Finance Act 2022. ADR, being an out-of-court dispute resolution system, underwent significant modifications to boost efficiency and effectiveness. The key improvement includes extending the scope of dispute resolution to cover both questions of fact and law, a departure from the previous focus solely on factual issues. This alteration is poised to expedite dispute resolution and contribute to a more conducive business environment.
SWAPS Automation for Streamlined Withholding Tax Processes
The Finance Act 2022 also ushered in the synchronized Withholding Administration and Payment System (SWAPS), a technologically advanced approach to the collection and deduction of withholding taxes. This automated system aims to streamline the entire process, ensuring seamless collection, deduction, and payment of withholding taxes to the FBR by the withholding agents. SWAPS is expected to enhance accuracy, reduce manual errors, and expedite the overall tax compliance process.
Discontinuance of Gas and Electricity Connections for Non-Compliant Entities
In a move to strengthen tax compliance, the SBP report underscores the Finance Act 2022’s provision for discontinuing gas and electricity connections for sales tax agents and Tier-1 retailers who fail to register for sales tax purposes. Additionally, Tier-1 retailers who are registered but not integrated with the FBR’s computerized system face similar consequences. This compliance-focused measure aims to incentivize businesses to align with regulatory requirements, ultimately contributing to a more transparent and accountable business ecosystem.
National Sales Tax Return (NSTR) Introduces Simplified Filing Process
January 2022 witnessed the introduction of the National Sales Tax Return (NSTR), a significant stride towards simplifying and consolidating the sales tax return filing process. NSTR replaces the older system where sales tax agents were required to file separate returns monthly with different sales tax collecting authorities. The streamlined approach is designed to facilitate ease of doing business, reducing bureaucratic hurdles and administrative burdens for businesses engaged in sales tax transactions.
The SBP’s emphasis on these key tax measures reflects a concerted effort to enhance economic efficiency, foster a business-friendly environment, and promote tax compliance. These strategic initiatives are aligned with the broader goal of positioning Pakistan as an attractive destination for businesses, both domestic and international, by reducing red tape and encouraging transparent financial practices.
