The Sindh Revenue Board (SRB) held a conference on Wednesday for sharing the lessons learnt and the way forward regarding the Sindh Sales Tax on Services in Karachi.
The conference comprised two sessions – the first on lessons learnt and the second on the way forward – chaired by Dr Ishrat Hussain and Dr Kaiser Bengali respectively.
The event was largely attended by all stakeholders including sales tax payers, chartered accountants, sales tax practitioners and SRB officers and staff.
Papers on lessons learnt were presented by SRB member Mumtaz Shaikh (Legal and Coordination); Saqib Masood, Senior Partner, KPMG Taseer Hadi & Co and Adnan Mufti, Managing Partner, Adnan Mufti & Co.
Shaikh spoke in detail about the constitutional position on the collection of sales tax on services in light of the 18th Amendment and the 7th NFC Award and subsequent establishment of the SRB by the Sindh government.
He elaborated upon the details of the eligible services on which sales tax is payable and spoke of registration trends of taxpaying firms along with the sales tax services collection trends for different services while comparing their collection against the amount collected in 2010-11. Masood commended the performance of SRB in its first year of operation and informed the conference participants that SRB had collected Rs 21 billion until April 2012 and was expected to surpass the target of Rs 25 billion by the end of the current fiscal year.
He suggested that sales tax rate of 16% appeared to be high particularly for the small segments of service industry and not conducive for investments and the Sindh government should consider lowering the tax rate to a single digit number to attract domestic and foreign investment in Sindh.
Mufti lauded that there was no case of corruption, harassment or nepotism witnessed during the first year of SRB operation; access was available to all with no bureaucratic red tape involved.
The SRB had made excellent use of automation, information technology and websites besides having an excellent liaison and relationship with all the trade associations, PRAL and FBR database.
He particularly praised the effective enforcement and administration vis a vis recordkeeping; return filing, voluntary registration and collection of arrears by SRB.
The second session on the “Way Forward” had papers from Shabbar Zaidi, Partner A.F. Ferguson & Co; Munawwar H. Shaikh, President Karachi Tax Bar Association and Syed Mushtaque Kazimi, Member (Tax Policy) SRB.
Zaidi dealt with the historical perspective and ground realities of collection of sales tax on services and suggested the decomposition of the provincial revenue structure under a single organisation that is the SRB.
Shaikh gave recommendations regarding adjustment of input tax, determination of tax liability, refund and immunity.
Kazimi said that the there were three major areas where SRB’s performance has been more than satisfactory: revenue collection, taxpayer facilitation and automation. SRB had done well to match the targets assigned and was well-positioned to achieve the target assigned to it. Taxpayer facilitation had been appreciable and the taxpayer queries had been addressed with remarkable swiftness. Efforts at automation of SRB have matched with those of its only peer FBR, despite it being at the stage of infancy.
He further said that while entering into second year of operations, SRB is determined to develop its traditions keeping the best international practices as its model. Towards that end it is guided by its vision, which is to develop as a modern, credible, efficient, effective and transparent tax administration.
He informed the conference participants that the first ingredient of being a modern organization is to have in place a proper IT framework. Presently, SRB had enabled its taxpayers to obtain registration electronically, e-file returns and various periodical statements. But the objective was to move much beyond and provide a frictionless interface between SRB and taxpayers. All taxpayers issues including their queries, various permissions and correspondence including notices, observations and audit reports, and deregistration would in the future be processed electronically. Not only the external interface would be electronic, but the internal working would also be fully automated. This would enable tax officers to keep a proper and transparent log of their activities and also to attend to their work in time because of system-based reminders of pending activities. This level of automation had been a long cherished dream of various public dealing departments in Pakistan but is still far from realization particularly in respect of domestic taxes.
The concluding session was chaired by the Chief Guest, Qaim Ali Shah, Chief Minister Sindh.
Nazar Mahar, Chairman SRB welcoming the chief guest, informed the audience that the SRB was well poised to achieve its targets. He said that after the decisions taken in the 18th Amendment and the 7th NFC, Sindh had taken a strong stand for collection of Sales Tax on Services under the leadership of the chief minister and once the provinces were empowered to collect it, the Sindh government decided to establish the SRB in June 2010 to develop as a modern, credible, efficient, effective and transparent tax administration organisation for collection of sales tax through adoption of modern techniques, knowledge and information systems to promote a tax culture based on justice, equity, fairness and mutually respectful interaction with the taxpayers and other besides assisting the tax organizations in Sindh to create a common provincial tax data base through a web-based Sindh Tax and Revenue System to bring transparency in tax collection system to generate more resources for people, so that basic and infrastructure needs of the people for development are met and quality of basic services and human resource is improved.
He informed that to achieve its vision and mission SRB undertook the task of automation which was its most important assignment because the importance of use of cutting edge automation and information technology had been recognized from the inception of SRB.
It was obvious to all stakeholders that the success of the new systems and procedures would rest upon making full use of the available potential in the fields of automation both in terms of technology as well as technically proficient human resource.
Before July’11, the provinces did not have the capacity to collect the Sales Tax on Services but since SRB came into existence it had made progress in achieving revenue target and the SRB has also made tremendous progress to enhance its capacity in information technology and the SRB could help the province collect all provincial taxes from one online platform as its automated had resulted in transparency in tax collection because the inter face between tax authorities and taxpayers had almost been eliminated on account of online application and procedures.
The SRB will also facilitate and support other provinces such as Punjab and Khyber Pakhtunkhwa which had decided to start collecting Sales Tax on Services from next year in setting up similar systems as that of SRB.
Bengali lauded the efforts of SRB which it had made during its first year of operation and specially mentioned that throughout the conference all the speakers had specifically praised SRB for non-corruption and non-litigation. Its setting up had only been possible because of the vision, efforts and ownership by the Sindh chief minister and it was necessary that political support to SRB also continues in the future.
Shah was appreciative of the work done by the SRB staff and said that it was commendable to see that an organisation manned by such a small number of dedicated and committed staff had managed to achieve outstanding revenue generation.
He assured the SRB of his continued support and ownership and hoped that the collection trends would continue to grow and help the Sindh government in further generating revenue which could be utilised for the development of both urban and rural Sindh.