Islamabad: The federal and provincial governments have agreed to establish the National Tax Council (NTC) for devising uniform taxation policies, a news source reported. This initiative, following its launch, is expected to facilitate the approval of two World Bank (WB) budgetary support loans worth USD 750 million.
Advisor to the Prime Minister (PM) on Finance Dr Hafeez Shaikh recently provided his approval to the establishment of the NTC during a meeting of the National Finance Commission (NFC)’s Monitoring Committee. The attendees also sanctioned the terms of reference (TORs) of the NTC.
According to reports, the WB has delayed the approval of the budgetary loans due to lack of consensus between the federal and provincial governments on the matter of sales tax rate in the country.
The finance ministry revealed that NTC would have representation from all provinces. This will allow them to determine the rate of sales tax for goods and services. With one meeting held in each financial quarter, the council will express its recommendations in majority and present it to the NFC Monitoring Committee.
The approved TORs state that the council will be responsible for:
- Sales tax harmonisation
- Agreeing on uniform General Sales Tax (GST) rate for goods and services
- Settling on the definition of goods and services
- Setting up a uniform tax portal
- Devising a uniform tax returns form
The NTC will also decode the sales tax exemption policies and thresholds. The federal government and the provinces are expected to finalise an agreement for setting up a harmonised GST regime in the country before the next budget in order to make legal changes in the next finance bill.