Islamabad, Pakistan – The Pakistan Business Council (PBC) has urged the National Tax Council (NTC) to resolve a dispute between the federal and provincial governments regarding the application of sales tax on distribution services.
The PBC raised concerns about overlapping sales tax on economic activities undertaken by distributors. The PBC believes that this issue falls within the purview of the NTC and requires collaboration among federal and provincial tax authorities. Business Recorder
The PBC has sought clarification from the Federal Board of Revenue (FBR) and Sindh Revenue Board (SRB) regarding the Sindh Sales Tax on Supply Chain Management or Distribution Services. The PBC highlighted the potential implications of recent judgments on distribution arrangements for tax revenues at both the federal and provincial levels.
The PBC advocated for comprehensive guidelines to address the following questions:
- Segregation of the price of goods received by the manufacturer.
- Imposition of sales tax on distributor’s margins or income.
- Harmonization of input and output tax adjustments between manufacturers and distributors.
- Differentiation between third schedule and non-third schedule items.
- Clarification on scenarios where a sale is not considered to have occurred upon the delivery of goods.
The PBC emphasized the need for collaboration between federal and provincial tax regulators to develop consensus-based guidelines and ensure consistent tax regulations across regions.
The PBC’s recommendations aim to address the complexities and challenges faced by distributors in complying with sales tax laws and promote a more favorable business environment.
