FBR says national tax authority needs political consensus

KARACHI: All the federating units should agree on establishment of single tax authority to collect and manage taxes across the country, a top official of the Federal Board of Revenue (FBR) said on Wednesday.

Inland Revenue Member Operations Ashfaq Ahmad said establishment of a single tax authority is still part of reform agenda and authorities are engaged to evolve political consensus on the issue.

“National tax authority is part of tax reform but it needs political consensus,” said Ahmed.

While talking to media during his visit to Large Taxpayers Unit Karachi, he said major reforms have been initiated in the taxation system. “However, structural issues are at the backend for the time being,” he added.

The establishment of single tax authority is part of tax reforms program funded by the World Bank. Under the program the single tax authority would be empowered to collect all taxes including sales tax on services and disburse provinces. Besides, the taxpayers must be facilitated by allowing single return for both federal and provincial taxes.

The member said at present the tax machinery is focusing on reforms which are directly linked with revenue generation.

Talking about withholding tax collection on motor vehicle registration / transfer, the member hoped that the issue would be resolved in a meeting of Sindh Chief Minister and Prime Minister’s Adviser on Finance and Revenue. A day earlier a meeting was held between the minister and FBR chairman but it remained inconclusive.

The FBR last month constituted a committee to iron out differences with Sindh tax authority over revenue collection from motor vehicles in the province. The provincial motor vehicle authority collects tax as withholding agent on registration of new motor vehicles and transfer of registration. It collects withholding tax under the Income Tax Ordinance 2001.

Sindh excise, taxation and narcotics control department discontinued the collection of withholding tax from July 1 in line with a decision of Sindh cabinet last year. The FBR said the obligation to withhold or collect taxes has no relation with Article 146 of the constitution, which could have applied if power to legislate or to administer tax law was delegated to the provinces.

On a question on tax relief to low cost housing, the FBR official said a comprehensive package has already been announced by the government. People engaged in construction sector could benefit from the tax concessions under the relief package.

Under the package, a fixed tax regime for builders and developers has been introduced besides one time exemption from questioning from source of investment has also been allowed under the package.