TAX NEWS - JUNE 2010

Pakistan Tax: Centre, Sindh still at odds over Value-Added Tax (VAT)

Finance Secretary Salman Siddique on Sunday warned that if Sindh unilaterally imposed Value Added Tax (VAT) on services from July 1, 2010, it would increase the cost of carrying out business activities in the country.

The finance secretary told reporters after the post-budget media briefing that differences with Sindh on the issue of VAT (Value-Added Tax) still persisted and the province had tabled its final proposal in the last meeting. However, he added that the federal government disagreed with the proposals.

The finance secretary also denied any agreement with Sindh on VAT. He said the Ministry of Finance had plans to start consultations with other provinces after the National Assembly approved the budget.

Siddique said other provinces also have reservations on VAT (Value-Added Tax) and the federal government would also try to satisfy them so that a national consensus was developed. He said the Sindh government claimed that an understanding on VAT had been reached with the federal government. However, he said differences still persisted, adding that that was the reason VAT had not been announced in the budget.