Sindh Revenue Board Karachi, 9 th May, 2012 Generating Revenue for - - PowerPoint PPT Presentation

Conference on Sales Tax on Services

Lessons Learnt & Way Forward

Generating Revenue for People

Karachi, 9th May, 2012

Sindh Revenue Board

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Sequence of Presentation Sequence of Presentation

• Part A

: The Road Traveled

• Part B

: Automation

• Part C

: Lessons Learnt

Generating Revenue for People Generating Revenue for People

• Part A

: The Road Traveled

• Part B

: Automation

• Part C

: Lessons Learnt

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Constitutional & Legal Constitutional & Legal

Constitution (1973)- Sales Tax on Services Provincial Jurisdiction (2009-2010) -7th NFC Recommendations dt. 30th Dec. 09 and Constitution of Task Force 19-01-2010. 7th NFC Award President’s Order No. 5 of 10-05- 2010.

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(2000) Sindh Sales tax on Services Ordinance, 2000 Authority was given to the FBR to collect Sales Tax on Services. Some of the services were subjected to FED in Sales Tax mode, by the FBR.

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NFC Recommendations dated: 30-12-2009 NFC Recommendations dated: 30-12-2009

• 12. NFC recognizes that sales tax on services is a provincial subject

under the Constitution of Pakistan, and may be collected by respective provinces, if they so desire.

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Constitutional & Legal Constitutional & Legal

18th Amendment impact and Entry

• 49. Article 142 (c)

(d) and 270 AA (7). April 2010. Sindh Revenue Board Act, 2010 Sindh Sales Tax on Services Act, 2011, applicable on services provided or rendered from 1.7.2011. Tax collection received from August 2011.

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2010-2011 Meetings on VAT/RGST Discussion on Provincial VAT, Bill and Provincial tax Law. SRB notified in Jan 2011

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Establishment of SRB Establishment of SRB

• SRB has autonomy in certain matters, and has also

become a Department, while retaining the status of the “Board”.

• Sindh Rules of Business, 1986 assign functions, inter

alia, as follows :

▫ Exercise Powers under the SRB Act, 2010 and under Sales Tax on Services Act, 2011. ▫ Implement tax administration reforms in Sindh. ▫ Assist other tax organizations and coordinate with Federal Government/FBR in matter collection of taxes and distribution.

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• SRB has autonomy in certain matters, and has also

become a Department, while retaining the status of the “Board”.

• Sindh Rules of Business, 1986 assign functions, inter

alia, as follows :

▫ Exercise Powers under the SRB Act, 2010 and under Sales Tax on Services Act, 2011. ▫ Implement tax administration reforms in Sindh. ▫ Assist other tax organizations and coordinate with Federal Government/FBR in matter collection of taxes and distribution.

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SRB Organogram SRB Organogram

Chairman Member Operation Commissioner I Deputy Commissioner Assistant Commissioner Commissioner II Deputy Commissioner Assistant Commissioner Member Tax Policy Commissioner WH Deputy Commissioner Assistant Commissioner

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Chairman Member Tax Policy Commissioner WH Deputy Commissioner Assistant Commissioner Member Legal & Coord. Commissioner Appeals Member Audit Director IT

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Sindh Sales Tax on Services Act, 2011 Sindh Sales Tax on Services Act, 2011

• Sindh passed Sindh Sales Tax on Services Act, 2011,

applicable on services provided from July 2011 - tax received from August, 2011.

• Law clearly states that only outlets, branches, offices,

business places or Head Offices located in Sindh providing services shall pay tax in Sindh.

• Integration mode is there as input tax adjustments are

allowed.

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• Sindh passed Sindh Sales Tax on Services Act, 2011,

applicable on services provided from July 2011 - tax received from August, 2011.

• Law clearly states that only outlets, branches, offices,

business places or Head Offices located in Sindh providing services shall pay tax in Sindh.

• Integration mode is there as input tax adjustments are

allowed.

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By 1st July, 2011 By 1st July, 2011

• Law, Rules, Procedures and Forms were notified.
• Automation online contract with PRAL was signed.
• Facilitation: Call Center, UAN, Email, Web Portal, Help Desk at

NBP Branches

• Meetings with all the Associations and stake holders held
• Campaign launched for registration, filing of returns and payments
• f tax.
• Internees put to the job initially, followed by some officers taken on

deputation/posting.

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• Law, Rules, Procedures and Forms were notified.
• Automation online contract with PRAL was signed.
• Facilitation: Call Center, UAN, Email, Web Portal, Help Desk at

NBP Branches

• Meetings with all the Associations and stake holders held
• Campaign launched for registration, filing of returns and payments
• f tax.
• Internees put to the job initially, followed by some officers taken on

deputation/posting.

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Sales Tax Structure as on 30-06-2011 (Services subject matter of taxation) Applicable Sales Tax Structure as on 30-06-2011 (Services subject matter of taxation) Applicable

Services that were levied to Provincial Sales Tax Services that were levied to FED up to June 2011

• Sindh Sales Tax Ordinance, 2000

Collection by the Federal Government Service covered

• Hotels/Clubs

Caterers Advertisement on TV and Radio (excluding some specific advertisement) Customs agents Ship Chandlers Stevedores Courier Services

• Federal Excise Act, 2005 Services covered
• Advertisement on closed circuit TV and

cable TV networks

• Shipping agents

Telecommunication services Insurance Banking services Franchise services Stock Brokers Freight Forwarders Port and terminal operators etc. Promoters and Developers.

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Sindh Sales Tax Ordinance, 2000 Collection by the Federal Government Service covered Hotels/Clubs

• Caterers
• Advertisement on TV and Radio

(excluding some specific advertisement)

• Customs agents
• Ship Chandlers
• Stevedores
• Courier Services

Federal Excise Act, 2005 Services covered Advertisement on closed circuit TV and cable TV networks

• Shipping agents
• Telecommunication services
• Insurance
• Banking services
• Franchise services
• Stock Brokers
• Freight Forwarders
• Port and terminal operators etc.
• Promoters and Developers.

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Registration Trend Registration Trend

2418 2708 2898 3013 3149 3308 3489 3661 3781 3820 2500 3000 3500 4000 4500

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572 2418 500 1000 1500 2000 2500 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12

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Some Comparative registration increases Sindh Some Comparative registration increases Sindh

3000 3500 4000 3820

All Service Sectors

50 100 150 200 Current 2010-11 Diff 194 129 65

Hotels + Restaurants

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500 1000 1500 2000 2500 Current 2010-11 Diff 2100 1683 500 1000 1500 2000 2500 Current 2010-11 Diff 2191 1482 709

Port related services

2010-11 Diff

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Collection Trend (Rs. Billion) Collection Trend (Rs. Billion)

16.53 19.021 21.331 23.641 16.53 23.331 25.641 20 25 30 2011-12 2011-12 (+1.8 Bn from FBR) 2010-11

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1.474 3.767 5.631 7.709 9.783 12.099 14.412 16.53 1.474 3.767 5.631 7.709 9.783 12.099 14.412 16.53 4.2 4.2 4.2 8.3 8.3 12.8 12.8 15.3 5 10 15 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12

Quarterly payments v/s Daily collection

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Budgeted Collection target 2011-12

• Rs. 60 Billion

Budgeted Collection target 2011-12

• Rs. 60 Billion

Provincial Excise 3 5% CVT 2.7 4% Electricity Duty 1.3 2% Transfer of Property (Registration) 1.3 2% Others 1.7 3%

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Sindh Sales Tax

• n Services

25 42%

S.D & M of infrastructure 15 25% Stamp Duty 6 10% Motor Vehicles 4 7%

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Revenue & Taxpayers Base in India Revenue & Taxpayers Base in India

Financial Year Number of Services Taxed Number of Taxpayers

2000-01 26 122326 2001-02 41 187577 2004-05 75 774988

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2004-05 75 774988

2010-2011 116 Over 1.5 Million

India Revenue Rs 950 Billion in 2011-2012 Pakistan 15 group services

• Rs. 65 Billion collection

Estimates for 2012-13 Over Rs. 1240 Billion 2 Million taxpayers Pakistan based taxpayers 9000. Provinces have potential.

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Tax Contribution in Port Cities Tax Contribution in Port Cities

• Karachi

48%

• Mumbai

38%

• Istanbul

42%

 Pakistan Taxpayers 9000  Sindh about 4000

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• Karachi

48%

• Mumbai

38%

• Istanbul

42%

 Pakistan Taxpayers 9000  Sindh about 4000

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Steps SRB has already taken Steps SRB has already taken

Goals Achieved:

• Collected 19 Billion by April, 2012, Plus 1.5 Billion of July collected by the FBR, besides
• Rs. 0.8 Billion deposited by Sindh taxpayers in FBR during August 2011 up to date. Target

is Rs. 25 billion by June 2012.

• Additional Rs. 2.93 billion relating to 2010-11 short paid by Federal Finance received by

Sindh in December 2011.

• Assisted in introducing CVT, drafting Agriculture I. Tax Law, WWF (SRB will collect)

draft laws.

• Total Automation , R&D and Desk Audit based on computer applications.
• Maintaining transparency and excellent tax management
• Punjab & KPK secretaries, WB, E.U., CSF, Federal Finance Secretary, Chairman FBR and
• thers visited.
• Meetings, seminars, & workshops held.
• Taxpayers are satisfied with the facilitation.
• Proactive website, already visited by more than 120,000 persons.

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Goals Achieved:

• Collected 19 Billion by April, 2012, Plus 1.5 Billion of July collected by the FBR, besides
• Rs. 0.8 Billion deposited by Sindh taxpayers in FBR during August 2011 up to date. Target

is Rs. 25 billion by June 2012.

• Additional Rs. 2.93 billion relating to 2010-11 short paid by Federal Finance received by

Sindh in December 2011.

• Assisted in introducing CVT, drafting Agriculture I. Tax Law, WWF (SRB will collect)

draft laws.

• Total Automation , R&D and Desk Audit based on computer applications.
• Maintaining transparency and excellent tax management
• Punjab & KPK secretaries, WB, E.U., CSF, Federal Finance Secretary, Chairman FBR and
• thers visited.
• Meetings, seminars, & workshops held.
• Taxpayers are satisfied with the facilitation.
• Proactive website, already visited by more than 120,000 persons.

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• AUTOMATION VIDEO

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Relations with FBR Relations with FBR

• Issues Resolved:

 Data sharing, input adjustment  Deputation of officers.  Certification of Sindh tax collection by the FBR

• Issues Pending:

 Federal Excise Duty withdrawal  Coordination, training, harmonization in tax reforms & procedures related matters

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• Issues Resolved:

 Data sharing, input adjustment  Deputation of officers.  Certification of Sindh tax collection by the FBR

• Issues Pending:

 Federal Excise Duty withdrawal  Coordination, training, harmonization in tax reforms & procedures related matters

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Lessons Learnt Lessons Learnt

 There is increase in tax base and tax collection contributing to improvement in tax to GDP ratio. Other provinces may follow, as potential is there.  Taxpayers appreciate flawless automated system for data analysis.  Have the best team. Train employees as a priority. Give incentives.  Pay them suitably. “If peanuts are offered, be prepared to hire monkeys”, as they say.

Generating Revenue for People Generating Revenue for People

 There is increase in tax base and tax collection contributing to improvement in tax to GDP ratio. Other provinces may follow, as potential is there.  Taxpayers appreciate flawless automated system for data analysis.  Have the best team. Train employees as a priority. Give incentives.  Pay them suitably. “If peanuts are offered, be prepared to hire monkeys”, as they say.

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Lessons Learnt Lessons Learnt

 Successful transition needs political support and a dedicated team.  Transparency, fairness & accessibility; awareness and tax education; simple tax laws and procedures; and automation, delivery of service significantly improve tax payers’ compliance.  Tax jurisdictions must not impinge on others’ jurisdiction.  Strong legal and procedural support is sine quo non of the success of the tax reforms.

Generating Revenue for People Generating Revenue for People

 Successful transition needs political support and a dedicated team.  Transparency, fairness & accessibility; awareness and tax education; simple tax laws and procedures; and automation, delivery of service significantly improve tax payers’ compliance.  Tax jurisdictions must not impinge on others’ jurisdiction.  Strong legal and procedural support is sine quo non of the success of the tax reforms.

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Thanks You Thanks You

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Thanks You Thanks You