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FBR forms body to draw up plan for levy of VAT at retail stage

10
Jul '09
Federal Board of Revenue (FBR) has constituted a team of senior officials to draw up a plan for the enforcement of VAT (value added tax) at retail stage from the next fiscal year.

The five-member committee comprising senior Customs officials, including Strategic Planning & Statistics Member Mr. Zafar-ul-Majeed and ST&FE Chief Mr. Abrar Ahmad Khan, has been directed by FBR Chairman Mr. Sohail Ahmad to “come up with a comprehensive plan to fully enforce the VAT at retail stage by July 2010,” says a press release issued.

The decision to constitute the process re-engineering team that also includes Collector Sales Tax RTO Lahore, Additional Collector LTU Islamabad and Deputy Director Customs Evaluation Karachi has been taken in view of the importance of extending VAT to the entire retail stage, allowing adjustment of tax paid at earlier stages.

The decision comes in the wake of a growing realization of the fact that a large number of transactions in the economy take place at retail place. While existing legislation provides for levy of VAT at retail stage, its practical enforcement and collection has faced enormous problems for more than a decade and currently only retailers with threshold of Rs 5 million are required to be registered.

It may be added that the 3rd Schedule of the Sales Tax Act, 1990 provides for levy of VAT on the retail process of certain specified supplies, including e.g., cigarettes. Sales Tax Act, 1990 that was enforced in November 1996, is designed for a classical VAT Model. At present, VAT is being collected on imports and supplies by manufacturers, wholesalers, distributors and big retailers.

Federal Board of Revenue


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