WTO tariff heading proposed for sales tax on services

WTO tariff heading proposed for sales tax on services

KARACHI: Tax practitioners have urged the Federal Board of Revenue (FBR) to adopt tariff headings of World Trade Organizations (WTO) for effectively impose sales tax services.

Tax practitioners under the umbrella of Karachi Tax Bar Association (KTBA) held a pre-budget 2021/2022 conference and discussed issues of sales tax on services.

It is discussed that all the service sales tax laws contain their own list of taxable services, which are couched in such a way that there are many entries with overlapping scope which lead to interpretational issues.

Further all the provincial laws envisage origin as well as destination principle for levying tax on service- double taxation Proposal.

It is recommended that the government should co-ordinate to promulgate negative list approach and specify place of supply rules at earliest.

It is suggested: “WTO tariff heading for services may also be adopted.”

It is discussed that despite lapse over ten years, since promulgation of 18th Constitutional Amendment, disputes regarding jurisdiction and basis for levying the sales tax are still unresolved.

A lot of unnecessary litigation on such issues has piled up.

National Tax Council has been announced to resolve such issues, however, no tangible results till date.

It is proposed that the governments should resolve jurisdictional disputes at earliest.