KARACHI: The provinces must cooperate with each other to sort out issues regarding sales tax (ST) on services as the current tax regime is the bane of taxpayers, a seminar was told on Wednesday.

Addressing the seminar on ‘Sales Tax on Services under Provincial Laws’ organised by the Karachi Tax Bar Association (KTBA), tax experts and consultants agreed that irritants could not be ironed out without an inter-provincial treaty, and suggested referring the issue to the Council of Common Interests (CCI).

The current provincial laws on services sales tax lack clarity as there are differences between provinces over jurisdiction, origination and consumption, as well as overlapping of sales tax and federal excise duty (FED) between provinces and the federal government.

Citing examples, the speakers at the seminar mentioned services such as contractual work for furnishing supplies, for building and repairs, business support services, management services, commission agents, etc.

It was also pointed out that the Sindh Revenue Board (SRB) is not accepting pleas against sales tax on services whereas Punjab Revenue Authority (PRA) is obliging taxpayers. They added that all the provincial sales tax laws differ on applicable rates, and advised simple laws for better implementation.

The key speaker of the seminar, Mazhar Saleem Shah, highlighted the issues and conflicting clauses in the provincial sales tax laws and rules on sales tax on services, particularly related to the SRB and the PRA.

“The situation is so bad that in many cases taxpayers are suspended or blacklisted by a provincial sales tax authority/board for not paying sales tax despite the fact that the taxpayers have already paid the same in other province,” he said.

KTBA President Muhammad Zubair said the PRA has framed sales tax laws on services where all imports are to be taxed at destination/consumption, whereas SRB has laws and rules which impose sales tax on the basis of origin.

There is a lack of coordination between provincial tax collection bodies and the Federal Board of Revenue which create a lot of problems for taxpayers, he said.

Published in Dawn, July 30th, 2015

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