ISLAMABAD: Finance Minister Shaukat Tarin will launch the Federal Board of Revenue (FBR) National Sales Tax Statement (NSTR) on Friday in a bid to bolster the government’s current campaign for digitization to facilitate taxpayers, promote ease of doing business (EODB) and lower compliance costs.
“This has been one of the main recommendations of international agencies such as the World Bank and the IMF,” said a statement issued by the RBF.
The system was developed after discussions with provincial governments and their tax authorities, after which comments from other stakeholders, including taxpayers and tax practitioners, were incorporated. The digital installation will simplify the tax filing procedures and thus save the costs of compliance.
The tax department’s statement added: NSTR will minimize data entry, which will solve common issues of data and calculation errors. The system will automatically distribute the input tax adjustment as well as tax payments among sales tax authorities, eliminating the need for reconciliations and payment transfers. Through this system, officers of all tax authorities will be able to make more informed decisions about the affairs of taxpayers. It will allow tax collectors to improve revenue potential and tax compliance without audits.
Likewise, another advantage of this system is that it will promote the harmonization of procedures, definitions and fiscal principles between the federal government and the provinces, which ensures cohesion.
In Pakistan, the sales tax on goods is collected by the RBF while the sales tax on services is collected by each of the four provinces in their respective territory. Sales tax on services in the federal capital is also collected by the FBR, while Azad Jammu and Kashmir (AJK) and Gilgit Baltistan (GB) have their own tax authorities.
For this reason, taxpayers were required to file separate sales tax returns each month with each of the different collecting authorities where they operated, causing them difficulties and increasing the costs of compliance.
For example, a telecommunications service provider operating throughout Pakistan was required to file monthly returns with the FBR, Sindh Revenue Board, Punjab Revenue Authority, Khyber Pakhtunkhwa Revenue Authority, Balochistan Revenue Authority, ‘AJK Council Board of Revenue and the Gilgit-Baltistan Revenue Authority. It was a very tedious and cumbersome task, which often resulted in errors and disputes.
In view of the above, this landmark initiative will significantly help not only to maximize revenue potential, but also to eliminate the culture of false invoicing and suppression of sales, thereby ensuring tax compliance throughout Pakistan. .