FBR to Replace the GST With VAT: Report

The Federal Board of Revenue (FBR) has decided to replace the existing General Sales Tax (GST) with Value Added Tax (VAT) across the board for all sectors under World Bank’s funded loan conditions.

According to a report by a local news website, the implementation of the proposed reform plan was deferred until the establishment of the Pakistan Revenue Authority (PRA) and consultation with all stakeholders. It has been decided that the FBR will gradually replace the existing GST and come up with VAT for all sectors to ensure effective collection of taxes.

The report quoted the sources saying:

In this regard, the FBR will conduct assessment surveys of different industrial/business segments under the proposed reform plan.

FBR Chairman Shabbar Zaidi said that the board will ultimately move towards full implementation of VAT in order to ensure all sectors contribute to the country’s taxation system. He said that the CNIC condition was a move towards implementing the VAT and FBR stood firm on it, said the report.

He said that the establishment of PRA has been deferred for now but all other reforms including moving towards VAT was part of the reform agenda of the FBR.

The report further said that the proposed reform plan envisages that VAT will replace GST within 2 to 4 years to enhance revenues, broaden the tax-base and assist in the documentation of the economy. FBR plans full implementation on the VAT regime for all business segments over the next 2-4 years under the WB funded loan project, added the official.

It is pertinent to mention here that the efforts made by FBR in the past to implement VAT had failed and once it had resulted in the suspension of the IMF sponsored programme during the PPP-led regime in 2011.

FBR will also finalize stages and complexities in each product value chain, in addition to VAT assessment surveys of individual industrial/business segments.

  • Please go ahead and make all our lives more miserable. Thank you FBR, PM-IK and others.

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