ISLAMABAD, Sept 2: The Central Board of Revenue has proposed new two-stream structure for taxes -– Inland Revenue Service (IRS) and Pakistan Customs Service (PSS) -- by reducing the number of federal tax authorities as part of tax reforms.
Sources told Dawn on Saturday that the proposal had been submitted to the establishment division and the Federal Public Service Commission (FPSC) for consideration. They said the board-in-council -- an apex boy of the CBR -- had already approved the two streams to bring the taxation system on a par with the international taxation system.
Income tax, federal excise and sales tax will be merged into the IRS, while customs-related responsibilities will be assigned to the PSS.
CBR Chairman M. Abdullah Yousuf told Dawn that the proposal was finalised for the future recruitment in the taxation system. He said the new stream structure for taxes was aimed at bringing the Pakistani taxation system on a par with the international taxation regime.
The sources said the Dr Ishrat Husain Commission was also considering the proposal among others to bring changes in the existing taxation cadre. They said the customs officials, however, were not ready to accept the proposed merger of sales tax and federal excise into the IRS, fearing that the move would affect their promotion.
According to the sources, initially it was planned that the FPSC would consider the fresh intake of officers in 2007 through the CSS exam in these new services.
Mohammad Talha, member of the Human Resource Management, told Dawn that before the finalisation of new two streams of taxes, it was necessary to convert the CBR into the Federal Bureau of Revenue (FBR). Once finalised, the new system would be adopted for the recruitment of new inductees in these new services, he added.
Till the year 1981, sales tax was collected by the income tax officers. During that period sales tax was chargeable on manufactures and import stage. As the customs officers collected excise duty from the manufactures and import duty on importable goods, the government decided to also assign the task of collection of sales tax to the customs officers.
A senior official in the CBR reforms wing said it had been decided that except for enforcement of tax matters all other functions of sales tax and income tax, including audit, facilitation, registration, human resource management and return filing would to be merged.
It was agreed with the World Bank that the enforcement and audit functions of the two bodies would be carried out separately, while all other functions would be merged to avoid overlapping of the functions.
