"The IMF depends on the WB reports to review progress on the tax administration reforms including implementation of the VAT,” Mr Sohail said.

The WB team, headed by Carlos Silvani an international VAT expert, had assisted the FBR in drafting the new VAT rules and regulations last week.

Mr Sohail dispelled the impression that the FBR was not prepared to implement the VAT, and they were looking at a plan B that was to introduce the improved version of GST.

“As far as FBR is concerned, all rules and regulations have been finalised which would be made public for comments after the law is passed,” the FBR chief said.

He added that on the basis of feedback from the stakeholders, minor adjustments would be made in the rules and regulations.

“VAT would be implemented from July 1, 2010,” he announced and said that the IMF Executive Board is scheduled to review Pakistan's economic performance, especially approval of VAT legislation from parliament.

These events would decide the release of $1.2 billion 5th tranche under Stand-By-Arrangement, he said.

The FBR has established VAT implementation team while the amendments to the VAT bill and VAT regulations have been drafted. The draft VAT registration form has been designed along with the VAT return form.

“The expeditious refund system (ERS) has been implemented in Lahore and will be extended to the other Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs) between now and July 2010,” the FBR chairman said.

The VAT implementation plan has also been prepared and some actions have been taken in the area of publicity and taxpayer education, including the publication of frequently asked questions at the FBR website.

At the same time, a qualified group of FBR staff has been appointed to design VAT businesses procedures.

The VAT operations (assuming the draft VAT bill and regulations are approved) will be very similar to those of the current sales tax. Most of the VAT payers will be former sales taxpayers, which are already familiar with Sales Tax procedures.