PESHAWAR: The Consortium for Development Policy Research (CDPR) in collaboration with the International Growth Centre (IGC), Sustainable Energy and Economic Development (Seed) and government of Khyber Pakhtunkhwa (GoKP) launched a policy note on ‘Reforming Sales Tax on Services in Khyber Pakhtunkhwa’ through a webinar.

This note presents a framework for reforming sales tax on services (STS) in the province through the Khyber Pakhtunkhwa Revenue Authority (KPRA).

This policy note was driven by Seed’s strategic priority to provide technical assistance to the provincial government, funded by Foreign, Commonwealth and Development Office (FCDO).

One of the main agendas of Seed, a multi-sectorial seven-year program, is to support the government in achieving economic development and undertake sustainable energy reforms in the Khyber Pakhtunkhwa.

Minister hopeful about high revenue collection

As a first ever note of its kind produced for the KPRA, it provides a structure of key reforms for STS in KP and has been drafted in consultation with Seed’s partners, CDPR and IGC Pakistan.

The guest of honour at the webinar was finance minister Taimur Jhagra.

Also in attendance were senior academicians, policymakers, businessmen, and representatives of the KP Revenue Authority, KP Chamber of Commerce and Industry and KP Information Technology Board.

SEED team leader Hassan Khawar said that in the last few years there has been a growing realization that provinces needed to generate own-source revenue and how this policy notes paves the way forward to realize this.

Faisal Rashid explained that KPRA made significant progress by increasing the scope of taxes from 13 services to 46 categories of services. He said that collection increased from Rs 6 billion in FY14 to Rs 17 billion in financial year 2020. He suggested that bringing in IT reforms for improved compliance such as Data Integration and Data Scraping,

Hassan Daud said the KPRA was working on building its capacity by bringing novelty in the overall framework through new technologies and ideas.

Dr Ijaz Nabi said it was important to use the opportunity to identify additional services that needed to be taxed, and find better ways of generating more revenue through property taxes.

“This could be done by enhancing the legal environment of tax enforcement through relevant training schemes,” he said.

Mr Jhagra said the KPRA reform had been a top priority for the government and highlighted some successes of the recent reforms, such as increasing revenue by 65 per cent from the last year.

He said he was hopeful that the government would collect at least Rs20 billion revenue despite Covid-19 challenges.

Published in Dawn, December 22nd, 2020

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