Conference on Sales Tax on Services Lessons Learnt & Way Forward Sindh Revenue Board Karachi, 9 th May, 2012 Generating Revenue for People
2 Sequence of Presentation Sequence of Presentation • Part A • Part A : The Road Traveled : The Road Traveled • Part B • Part B : Automation : Automation • Part C • Part C : Lessons Learnt : Lessons Learnt Generating Revenue for People Generating Revenue for People
3 Generating Revenue for People Generating Revenue for People
4 Constitutional & Legal Constitutional & Legal (2009-2010) -7 th NFC Recommendations dt. 30 th Dec. 09 and Constitution of Task Force 19-01-2010. 7 th NFC Award Constitution (1973)- President’s Order No. 5 of 10 -05- Sales Tax on Services 2010. Provincial Jurisdiction (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. Generating Revenue for People Generating Revenue for People
5 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. Generating Revenue for People Generating Revenue for People
6 Constitutional & Legal Constitutional & Legal Sindh Sales Tax on Services Act, 2011, 18 th Amendment Sindh applicable on services Revenue impact and Entry provided or rendered Board Act, 49. Article 142 (c) from 1.7.2011. Tax 2010 (d) and 270 AA collection received from (7). April 2010. August 2011. 2010-2011 SRB notified Meetings on in Jan 2011 VAT/RGST Discussion on Provincial VAT, Bill and Provincial tax Law. Generating Revenue for People Generating Revenue for People
7 Establishment of SRB Establishment of SRB SRB has autonomy in certain matters, and has also SRB has autonomy in certain matters, and has also become a Department, while retaining the status of become a Department, while retaining the status of the “Board”. the “Board”. Sindh Rules of Business, 1986 assign functions, inter Sindh Rules of Business, 1986 assign functions, inter alia, as follows : alia, as follows : ▫ Exercise Powers under the SRB Act, 2010 and under Sales Tax on ▫ Exercise Powers under the SRB Act, 2010 and under Sales Tax on Services Act, 2011. Services Act, 2011. ▫ Implement tax administration reforms in Sindh. ▫ Implement tax administration reforms in Sindh. ▫ Assist other tax organizations and coordinate with Federal ▫ Assist other tax organizations and coordinate with Federal Government/FBR in matter collection of taxes and distribution. Government/FBR in matter collection of taxes and distribution. Generating Revenue for People Generating Revenue for People
8 SRB Organogram SRB Organogram Commissioner Deputy Assistant I Commissioner Commissioner Member Operation Commissioner Deputy Assistant II Commissioner Commissioner Member Tax Member Tax Commissioner Commissioner Deputy Deputy Assistant Assistant Chairman Chairman Policy Policy WH WH Commissioner Commissioner Commissioner Commissioner Member Legal Commissioner & Coord. Appeals Member Director IT Audit Generating Revenue for People Generating Revenue for People
9 Sindh Sales Tax on Services Act, 2011 Sindh Sales Tax on Services Act, 2011 Sindh passed Sindh Sales Tax on Services Act, 2011, Sindh passed Sindh Sales Tax on Services Act, 2011, applicable on services provided from July 2011 - tax applicable on services provided from July 2011 - tax received from August, 2011. received from August, 2011. Law clearly states that only outlets, branches, offices, Law clearly states that only outlets, branches, offices, business places or Head Offices business places or Head Offices located in Sindh located in Sindh providing services shall pay tax in Sindh. providing services shall pay tax in Sindh. Integration mode is there as input tax adjustments are Integration mode is there as input tax adjustments are allowed. allowed. Generating Revenue for People Generating Revenue for People
10 By 1 st July, 2011 By 1 st July, 2011 Law, Rules, Procedures and Forms were notified. Law, Rules, Procedures and Forms were notified. Automation online contract with PRAL was signed. Automation online contract with PRAL was signed. Facilitation: Call Center, UAN, Email, Web Portal, Help Desk at Facilitation: Call Center, UAN, Email, Web Portal, Help Desk at NBP Branches NBP Branches Meetings with all the Associations and stake holders held Meetings with all the Associations and stake holders held Campaign launched for registration, filing of returns and payments Campaign launched for registration, filing of returns and payments of tax. of tax. Internees put to the job initially, followed by some officers taken on Internees put to the job initially, followed by some officers taken on deputation/posting. deputation/posting. Generating Revenue for People Generating Revenue for People
11 Sales Tax Structure as on 30-06-2011 Sales Tax Structure as on 30-06-2011 (Services subject matter of taxation) Applicable (Services subject matter of taxation) Applicable Services that were levied to Services that were levied to Provincial Sales Tax FED up to June 2011 o Sindh Sales Tax Ordinance, 2000 Sindh Sales Tax Ordinance, 2000 o Federal Excise Act, 2005 Services covered Federal Excise Act, 2005 Services covered Collection by the Federal Government Collection by the Federal Government Service covered Service covered • Advertisement on closed circuit TV and Advertisement on closed circuit TV and cable TV networks cable TV networks • Hotels/Clubs Hotels/Clubs • Shipping agents • Shipping agents • Caterers Caterers • Telecommunication services Telecommunication services • Advertisement on TV and Radio Advertisement on TV and Radio • Insurance Insurance (excluding some specific advertisement) (excluding some specific advertisement) • Banking services Banking services • Customs agents Customs agents • Franchise services Franchise services • Ship Chandlers Ship Chandlers • Stock Brokers Stock Brokers • Stevedores Stevedores • Freight Forwarders Freight Forwarders • Courier Services Courier Services • Port and terminal operators etc. Port and terminal operators etc. • Promoters and Developers. Promoters and Developers. Generating Revenue for People Generating Revenue for People
12 Registration Trend Registration Trend 4500 4000 3781 3661 3820 3489 3500 3308 3149 3013 2898 3000 2708 2418 2418 2500 2500 2000 1500 1000 572 500 0 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Generating Revenue for People Generating Revenue for People
13 Some Comparative registration increases Sindh Some Comparative registration increases Sindh Hotels + Restaurants All Service Sectors 194 200 150 129 3820 100 4000 65 50 3500 0 Current 3000 2010-11 2010-11 Diff Diff 2500 2100 2000 Port related services 1683 1500 2500 2000 1000 1500 2191 500 1000 1482 709 500 0 0 Current 2010-11 Diff Current 2010-11 Diff Generating Revenue for People Generating Revenue for People
14 Collection Trend (Rs. Billion) Collection Trend (Rs. Billion) 30 25.641 25 2011-12 2011-12 (+1.8 Bn from FBR) 2010-11 23.331 23.641 21.331 20 19.021 16.53 16.53 16.53 16.53 15.3 15 14.412 14.412 12.8 12.8 12.099 12.099 10 9.783 9.783 8.3 8.3 7.709 7.709 5.631 5.631 5 4.2 4.2 4.2 3.767 3.767 1.474 1.474 0 0 0 0 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 Generating Revenue for People Generating Revenue for People
15 Budgeted Collection target 2011-12 Budgeted Collection target 2011-12 Rs. 60 Billion Rs. 60 Billion Transfer of Property Electricity Duty (Registration) 1.3 1.3 2% 2% Others 1.7 CVT 3% Provincial Excise 2.7 3 4% 5% Motor Vehicles 4 Sindh Sales Tax 7% on Services 25 Stamp Duty 42% 6 10% S.D & M of infrastructure 15 25% Generating Revenue for People Generating Revenue for People
16 Revenue & Taxpayers Base in India Revenue & Taxpayers Base in India Financial Year Number of Services Number of Taxpayers Taxed 2000-01 26 122326 2001-02 41 187577 2004-05 2004-05 75 75 774988 774988 2010-2011 116 Over 1.5 Million India Revenue Rs 950 Pakistan 15 group services Billion in 2011-2012 Rs. 65 Billion collection Estimates for 2012-13 Over Rs. 1240 Pakistan based taxpayers 9000. Billion Provinces have potential. 2 Million taxpayers Generating Revenue for People Generating Revenue for People
17 Tax Contribution in Port Cities Tax Contribution in Port Cities Karachi Karachi 48% 48% Pakistan Taxpayers 9000 Pakistan Taxpayers 9000 Mumbai Mumbai 38% 38% Sindh about 4000 Sindh about 4000 Istanbul Istanbul 42% 42% Generating Revenue for People Generating Revenue for People
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