The government has decided to reorganize the entire tax machine with a big shake and to intensively introduce Central Sales Tax (GST) on services and goods. The proposed measure was already approved by PM Imran Khan on October 3 as a restructuring plan to convert the existing Federal Board of Revenue (FBR) to the Pakistan Import Authority (PRA) in June 2020.
Inland Revenue Service
However, the proposed timeline did not go as planned as the chairman of the Inland Revenue Service (IRS) objected at a meeting held on Monday. A source at the meeting told us that IRS officials will hold another meeting with the FBR president on Tuesday to evaluate his concerns. If the government did not change the proposed plan, the tax group (IRS and tariffs) also warned of a pen-down strike.
According to me, the Treasury will prepare a comprehensive framework for centralized GST collection of PRA and its services according to this proposal. These reforms are part of the Pakistan Monetization Project, funded by the World Bank. Board to be replaced by Pakistan IRS; PM completes plans by June 2020.
On the issue of GST's centralized collection of services, it was decided to conclude a proposal by forming a joint committee of representatives from the Treasury, FBR and local tax authorities. The Treasury will develop a mechanism to transfer GST tax revenues for services to the province.
The decision to collect GST at the centralized level was based on the petition that the collection potential was not fully realized due to jurisdiction issues between the FBR and local authorities. Local jurisdiction and conflict of interest issues also limit GST collection of services.
This measure is likely to face strict resistance from the province, based on a violation of the Constitution. At present, sales tax on the service is collected by local tax authorities after the 18th amendment.
FBR headquarters
Meanwhile, it decided to restructure the FBR headquarters in a functional line that separates the IRS and tariffs north and south. By November 30, two vice chairmen are expected to be appointed to each IRS and tariff. In accordance with the proposed functional hierarchy, the chair of the FBR will lead the tax authority along with two vice chairmen of the IRS and customs.
In addition, a separate secretary of the tax department with four additional secretaries will be appointed to deal with policy issues such as tax policy, income tax policy, sales tax and federal consumption tax and international agreements, financial measures. In addition, the PRA will have an additional 12 members, including customs member operations in North and South, and two additional members for transportation and export.
Law and Account
For the IRS, the PRA will place an IR operator in the south and north of the taxpayer audit. Legal and accounting, the other four employees are responsible for human resource management and management, strategic planning, promotion and taxpayer training, and chief information officer. BS-21 will have 18 DGs in the reformed PRA.
In accordance with the proposed plan, six DGs will support custom member operations while the other six will expand support for IRS member operations. In addition, six DGs are responsible for management, auditing, automation, vigilance, alternative disputes, and revenue coordination. It also decided to restructure regional tax offices (RTOs), large taxpayer units (LTUs), and customs collectors and local tax promotion measures.
The deadline for this reform was set on 31 December. Each RTO / LTU constitutes a tax unit based on the number or category of taxpayers with tax assessment wings and legal wings. The legal wing operates directly under the order of a law based on FBR.
At the same time, the model customs collector will have collector customs in BS-21 and collector tax law in BS-21. Customs collectors are currently in BS-20.
In addition, to minimize the human interface of tax management and collection, it was decided to appoint a chief information officer in charge by November 30 to automate the income tax structure of the customs line. It also decided to appoint the chief executive officer of the PRA to facilitate the automation process.
International Monetary Fund
On Monday, the visiting staff mission of Pakistan and the International Monetary Fund (IMF) undertook a policy on secondary institutional spending of about $ 433 million early next month under the $ 6 billion Extended Fund Facility (EFF), which was finalized in May this year. The level discussion started.
A senior government official told us that the Minister of Finance told Kamran Baloch and Dr. Reza Baqir, governor of the State Bank of Pakistan (SBP), that the mission minister of Pakistan has begun a policy discussion with a fund led by Pakistan's mission minister to Ernesto Ramirez-Rigo. Finance Minister Governor Abdul Hafiz Shaikh added that he will participate in negotiations to conclude on Wednesday, November 6.
Sources said that
The place of negotiations has been moved to the local hotel where the mission members are staying due to prior advice from the Treasury about staff missions. The two sides did not say that they would contact the media in talks with the media. Sources said the authorities were confident that the first quarterly review of the fund program would be completed successfully and that a second transaction took place in December.
They said that while current repairs responded more than expected to the steps introduced by the Treasury and the central bank, they also met their first-quarter financial accounting goals. Strict checks on additional subsidies have reported budget savings of about 50 billion rupees achieved in the first quarter of the fiscal year, and about 9 billion rupees are saved by controlling current spending.
Sources say that savings and better recovery from non-tax revenues have resulted in a partial loss of about 110 billion rupees in terms of revenue. There was concern about the shortage of imports, and the authorities hinted that additional and corrective measures will be taken to meet the targets by the end of December. Reconciliation in terms of revenue was also discussed.
The IMF paid about $ 919 million if all precautions committed by Pakistan were completed before signing the funding program in July this year. Both sides have been at the technical level of discussions since October 28 to exchange up-to-date data on all economic ministries and their entities.
The government last week recommended that
The IMF team strengthen federal and local coordination for financial and economic coordination, and called on federal and local authorities to make the most of development allocation to maximize growth allocation.
Islamabad officials said a shortfall in revenues higher than expected, beyond the tax-exempt income supported by license fees provided by the telecommunications companies, was comfortable with the overall progress on the funding program in the first quarter.
Under the fund program, the government must provide six performance criteria: net international reserves, net assets of central banks, net foreign currency swaps and futures positions of the SBP, primary budget deficits, and no borrowing from central banks. Prohibition on Government Guarantee.
In addition, there are two ongoing performance criteria, including new zero credit for governments by the SBP and the accumulation of external public payment arrears. In addition, the agency's performance reviews five goals: expenditure under the BISP, government expenditure on health and education, tax collection, tax refunds, and freezing of the power sector circular debt.
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