Siskin for consensus between federation and provinces on the harmonization of sales taxes

ISLAMABAD – The National Tax Council (CNT) on Thursday decided that the sales tax on contract manufacturing would belong to the Federation, while the tax rights on transport companies would devolve to the provinces.

Federal Minister of Finance and Revenue, Shaukat Tarin chaired the meeting of the National Tax Council (CNT) at the Finance Division. Provincial finance ministers, the secretary of the finance division, the chairman of the RBF, the chairman of the Sindh Revenue Council and other senior officials also attended the meeting. In his opening speech, the Minister of Finance welcomed the participants and underlined the need for an evolving consensus between the federation and the provinces on the harmonization of sales taxes. He insisted on the need to resolve tax issues in a spirit of cooperation between the federation and the federating units.

The RBF Chair gave a detailed presentation and outlined areas for further deliberation to collaboratively work out an arrangement regarding the harmonization of the GST between the federal government and the provinces. FBR and provincial finance ministers set out their respective positions on the taxation of transportation, restaurants, toll manufacturing and construction.

Different proposals have also been considered by the NTC for the implementation of a single portal for filing sales tax returns, which is under development and is expected to be launched by the first week of October 2021. The launch of the single portal for filing returns will reduce compliance costs for taxpayers and help raise Pakistan’s rating on the Ease of Filing Index. It was decided that detailed contributions will be solicited from Provincial Tax Authorities (PRAs) for the development of a single sales tax portal acceptable to all. Likewise, FBR must also develop a standardized tax return format, in consultation with provincial governments.

After due deliberation with all relevant stakeholders, the National Tax Council decided that the sales tax on contract manufacturing would belong to the Federation, while the tax rights on transport companies would devolve. to the provinces. Regarding the taxation of construction companies, it was decided that the right to tax would be shared according to the constitutional provisions, and a technical committee composed of all the tax authorities would decide on the modalities of operation. Regarding the taxation of restaurants, the Minister of Finance, in his capacity as head of the National Tax Council (CNT) and after having had opinions on the RBF and the provinces, decided that the provinces would continue to tax restaurants. However, a referral drafted in consultation with the provinces will be sent to the Law Division for advice on the decision. All stakeholders agreed to move forward in the spirit of greater national interest and greater harmony under the aegis of the National Tax Council (NTC).


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