Fresh calls for introduction of Value Added Tax (VAT) in Pakistan

Wed 22nd May 2013

The influential Pakistan Business Council has called for proposals to replace the current Goods & Services Tax with VAT to be accelerated.  It pointed that there are many holes in the current tax regime, and the tax authorities should consider widening the tax base.

Its report discussed the implications for business of the current GST regime, warning that it hampered growth, and over taxed companies compared to many competitor countries.  The black economy is also thriving under the lose terms of the current income tax regime.  A tax at the point of consumption, such as VAT, would reduce the opportunities for tax fraud.  It highlighted the construction sector as a big culprit.

India, one of Pakistan’s largest competitors, is in the process of overhauling its Indian VAT system, with plans to introduce GST in the next year.

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