ISLAMABAD: The Federal Bureau of Revenue (FBR) may set an annual tax collection target for the upcoming budget that ranges from Rs11.2 to Rs 11.5 trillion. To harmonise the tax system, the International Monetary Fund (IMF) has provided two options for implementing an Australian or Indian taxation model.
The International Monetary Fund (IMF) has repeatedly advised Pakistan’s tax authorities to take into account the two alternatives for reforming the General Sales Tax (GST). These options include adopting a strict revenue-sharing formula that is independently designed and enforced, as well as moving toward the Australian model of centralized administration and rate-setting.
The second choice is to implement an interstate tax system and an India-style Cash Value Accumulation Test (CVAT), in which federal and provincial governments share administrative and taxing authority.
The FBR has been requested by the IMF to set a uniform turnover-based registration requirement for all enterprises at Rs8.5 million, or $30,000.
A number of significant flaws and structural deficiencies plague the sales tax, chief among them being: (1) the division of the tax base between the federal and provincial levels results in significant gaps in taxation and gives rise to concerns regarding trade neutrality; (2) within the narrow tax base of goods, the federal
