ISLAMABAD: Minister for Finance, Economic Affairs and Revenues Shaukat Tarin said that tax to GDP ratio could be enhanced from six to eight per cent by removing zero rating and tax exemptions.

However, the tax exemptions be continued for food items and medicines, Tarin remarked while talking to media persons after inaugurating the two-day International conference on Value Added Taxes (VAT) here on Thursday.

The conference has been organized by Federal Board of Revenue (FBR) with an aim to get feedback from experts on the issue of Value Added Tax (VAT) to help with formulating policies.

He was of the view that once implemented properly, the Value Added Tax mode of taxation could generate additional amount of Rs600 billion for the country.

Tarin said Pakistan was facing a budget deficit of Rs722 billion and this could be checked by revamping the taxation system and removing distortions in the Value Added Taxes in the country.

He stressed the need for bringing those into the tax net who were not paying their due taxes or evading taxes in the country. To achieve this objective, he said, all small and big businesses would be documented.

Shaukat Tarin on the occasion stressed the need for revamping refund system instead of zero rating taxation system.

In his detailed presentation Michael Keen, from Fiscal Affairs Department of International Monetary fund, said that VAT was a broad-based commodity tax with systematic crediting of input tax against out put tax.

He was of the view that the brilliance of VAT was in taxing consumptions in such a way that revenue is protected by being collected through chain of production and investment and other production decisions unaffected.—APP