The ministry of finance has decided to stop using the term of ‘value added tax’ because of strong opposition to it from various quarters, and instead impose an upgraded version of general sales tax (GST) from Oct 1. Finance Ministry’s Special Secretary Asif Bajwa told journalists here on Wednesday that there was no threat to the IMF programme because of any issue, including VAT. He said the issue had been politicised and some sections had failed to understand that the GST was also a form of VAT. Mr Bajwa said the finance minister had clearly indicated in his budget speech that a reformed GST regime would be introduced. “The message is clear.” The official said the finance ministry would hold consultations with the provinces during the July-September period. He said the GST was already in force in the VAT mode and further improvements would be made in coming months. He said the GST regime had been there for over 20 years and the experience was vital for expanding its scope, “which is actually a VAT”. He said there would not be any serious implication for revenue generation in switching between the VAT and GST modes. “The International Monetary Fund has not refused to hold further negotiations with Pakistan,” he said. He said there was not even a remote chance that the release of next instalment under the standby arrangement with the fund would be withheld. He said IMF teams would visit the country soon to hold routine discussions and prepare a report for their executive board. “The IMF cannot refuse to hold negotiations after the new developments on VAT. It is expected that the government will try to convince the IMF authorities on the issue and final decisions will be taken by the IMF executive board in August.” Answering a question, the special secretary said an integrated VAT on goods and services with an option of allowing a province to tax some services and giving collection rights to the federal government on some would create complications. Another senior official of the Federal Board of Revenue also said that the present GST regime was in fact ‘VAT’, but added hat exemptions given to various sectors would be withdrawn. “The government will incorporate all the documentation requirements of VAT in the reformed GST regime at the uniform rate of 15 per cent,” he said. Non–registered persons would have to pay an additional three per cent, he said.
By: Dawn News

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