Page 41 - Pakistan-Accountant-April-Jun 2018

These boards/authorities were established and are functioning A national neutral body is required to be established with under their separate rules and regulations. The lack of uniform responsibility and authority to settle inter-governmental dues provincial tax laws has provoked rifts to be evolved among employing this mechanism. The body may be called as National provinces, peculiarly between SRB and other provincial bodies. Tax Authority (NTA). NTA may be structured through formation of a Board of Directors consisting of five directors, one representing An example of mismatch among provincial tax laws is that Punjab federation and the rest representing each province and all and Khyber Pakhtunkhwa are of the outlook that services received stakeholders must subscribe its equity equally. or consumed in their jurisdiction should be subjected to Sales Tax. But Sindh argues that services originating in its territory should be subjected to Sales Tax even if they are delivered or consumed in National Tax Authority other provinces. Currently, there are a number of different types of taxes imposed Board of Directors in Pakistan operating both under federal and provincial regimes. Some of them are listed below: 1. Income Taxes; 2. Workers Profit Participation Fund (WPPF); Federal Balochistan Khyber Pakhtunkhwa Sindh Punjab 3. Workers Welfare Fund (WWF); 4. Goods and Sales Tax (VAT); Representative Representative Representative Representative Representative 5. Provincial Sales Taxes on Services; 6. Professional Tax; 7. Stamp Duty; 8. Sindh Employees Social Security Institution (SESSI); 9. Employees Old-Age Benefits Institution (EOBI); 10. Sindh Development and Maintenance of Infrastructure (SDMI); 11. Petroleum Development Levy; 12. Marking Fee; National Tax and Levy Clearing Company 13. Custom Duty; 14. Federal Excise Duty (FED); 15. Property Tax; 16. Motor Vehicle Tax; 17. Capital Value Tax (CVT); 18. Hotel Tax; A National Tax and Levy Clearing Company (NTLCC) may be 19. Entertainment Duty; 20. Advertisement (Visibility) Tax; formed under the NTA to clear and settle the inter-governmental 21. Market Committee Act 1948; 22. Education Cess; and 23. Fuel Tax. dues. The lessons learned and experiences gained through working with Pakistan Revenue Automation (Pvt.) Ltd. (PRAL). The presences of assorted types of taxes under different NTLCC would act as a hub for collection and disbursement of authorities also evince the presence of complexities in the inter- taxes and levies to and from governments. The taxes and levies governmental revenue transfers and settlements besides causing which relate directly to provinces like stamp duty, motor vehicle grave catastrophe to genuine taxpayers. This country is virtually tax, etc. would be directly disbursed to provinces and the revenues being supported by an insignificant number of tax payers and which are part of federal pool would be settled on monthly basis these rifts are also dissuading them to operate and grow. after incorporating inter-governmental adjustments forthwith. The issues relating to inter-governmental transfers arise time and again due to lack of concrete revenue entitlement determination National Tax All mechanism. This causes piling of taxes paid on services pending Types of and Levies Taxes Related to Provinces Provinces to be adjusted against federal taxes or refund claims. These Taxes Clearing growth impediments are attenuating the growth of economy and Company wherefore resulting into ‘dead weight loss.’ Revenue To address the anomalies amid provinces and between Related provinces and federation, there needs to be a way forward. The to representatives of the provinces, at highest forum, will have Federal to discuss and agree on the basis of provincial taxes, that is, whether the tax should be charged on services on the basis of area of origination or consumption. Also, a thorough study would be required to be undertaken to evaluate and harmonise the provincial and federal tax laws, especially for services. Probable Adjustments way forwards should include: 1. Harmonised Tax Code The lack of harmony over provincial tax laws for services amidst provinces causes the incompatibility between taxes charged Federation and their adjustments for the taxpayers operating in multiple provinces. Therefore, the tax codes should be harmonised and any disagreements should be discussed and removed. The tariff codes for services in each province should also be revised. The establishment of NTLCC will smooth the flow of revenue and would pace up the economic activities. 2. National Tax Authority and Clearing Company A structure through which dues of provinces to each other and The writer is a chartered accountant and ICAP Council member to federation and vice versa are settled should also be defined. working as president of Tola Associates. April - June 2018 The Pakistan Accountant 39