Wednesday, 28 February 2024
Single Tax Law Book

Government decided to harmonise all tax laws by merging them into one law book

The federal government has decided to harmonise all four tax laws by merging them into one law book, ‘single rules book’, to promote automation and digitisation in order to ensure taxpayers’ facilitation.

As per the details, the Federal Board of Revenue (FBR) has constituted a high level committee consisting of eminent tax professionals from the public sector and legal experts from ICAP to continuously oversee and review the draft legislation to ensure quality and correctness. 

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The said committee would monitor the drafting of harmonised Inland Revenue Code, 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, 2022 for promulgation. 

The new Inland Revenue Code will be enforced with effect from July 1, 2022, the FBR states in its Press release issued on Friday.

In addition, this high value policy intervention is organically embedded in the larger vision of FBR to promote a culture of automation and digitization in order to ensure taxpayers’ facilitation.

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It stated that the Advisor on Finance & Revenue has directed Chairman FBR to personally review the progress of this immensely important draft law and update him on a regular basis subsequently, this exercise was started.

FBR said, this was the vision of Advisor to PM on Finance & Revenue Shaukat Tarin, who wanted to launch the formulation of Inland Revenue Code in a bid to harmonize all inland taxation laws and maximize facilitation of taxpayers.

It promises to ensure ease of doing business by removing multiplicity of taxing statutes and a plethora of rules & regulations devised to operationalize them. 

It is important to mention that FBR, on domestic side, implements and enforces four major tax laws such as the Income Tax Ordinance, 2001, the Sales Tax Act, 1990, the Federal Excise, 2005, & the Islamabad Capital Territory (Sales Tax on Services) Ordinance, 2001.

These four tax laws are then supported by an 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. 

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This has long been demanded by the 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 complex and even un-implementable. However, previous governments have not been brave enough to embrace this challenge. 

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