ISLAMABAD: Finance and Revenue Adviser Shaukat Tarin has launched the formulation of Inland Revenue Code (IRC) in a bid to harmonise all inland taxation laws and maximise facilitation of taxpayers as part of government initiative on simplification of tax laws.

It is positively hoped that the IRC will be enforced from July 1, 2022.

The proposed reforms are in line with government promises to ensure ease of doing business by removing multiplicity of taxing statutes and a plethora of rules and regulations devised to operationalise them.

In a major development, the FBR has constituted a high-level committee consisting of eminent tax professionals from public sector and legal experts from ICAP to continuously oversee and review the draft legislation to ensure quality and correctness. The committee is tasked to harmonise all the four tax laws by merging them into one law book supplemented by single rules book. The Asian Development Bank (ADB ) will assist the FBR in carrying out the simplification of tax laws.

Committee tasked to merge all four tax laws into one book

On domestic side, the FBR implements and enforces four major tax laws -- the Income Tax Ordinance 2001, the Sales Tax Act 1990, the Federal Excise 2005, and the Islamabad Capital Territory (Sales Tax on Services) Ordinance 2001.

These four tax statutes are then supported by equal number of rules compiled in voluminous books comprising the Income Tax Rules 2002, the Sales Tax Rules 2006, the Federal Excise Rules 2005 and the Islamabad Capital Territory (Sales Tax on Services) Rules 2001.

Resultantly, a taxpayer has to consult practically eight law books in order to engage with the tax system and pay off his/her tax liability.

The committee would monitor the drafting of the harmonised IRC, covering all tax laws by the end of March 2022.

After consultation with all key stakeholders including chambers of commerce, trade bodies, tax practitioners and field formations over April and May 2022, it will be available for presentation before the parliament in the budget session for promulgation.

An official announcement of the FBR said that it goes beyond saying that the tax laws needed harmonisation and simplification. This has long been demanded by World Bank, IMF, ADB and other bilateral and multilateral donors. Similarly, there have been pressing demands by the civil society, lawyers’ community and also superior courts who have found the above laws to be very complexed and even unimplementable.

This high value policy intervention is organically embedded in the larger vision of FBR to promote a culture of automation and digitisation in order to ensure taxpayers’ facilitation.

In order to ensure that the IRC is thoroughly discussed with all major stakeholders and finally developed within the given timelines, Mr Tarin has directed the FBR chairman to personally review the progress of this immensely important draft law and update him on regular basis, added the announcement.

Published in Dawn, November 13th, 2021