ISLAMABAD: With the aim to settle cross-border input tax adjustment, the Finance Ministry, Federal Board of Revenue (FBR) and Khyber Pakhtunkhawa Revenue Authority (KPRA) are going to sign a memorandum of understanding (MoU) on Wednesday (today).
Sources said that the draft of the MoU has been finalised under the KPRA laws/rules. The senior officials of Finance Division, FBR chairman and KPRA chairman would sign the MoU on the mechanism of bilateral sales tax adjustment between the federation and province in a ceremony at the FBR House.
The federal revenue authority has already signed the MoU with other provinces on input tax adjustment. As a result of cross-adjustment of input tax, there are certain situations, where the federation has to give refund on the behalf of provinces, whereas provinces will do the same in case of federation.
Under Finance Act 2016, the government had disallowed facility of input tax adjustment. The facility was later restored by the government, sources added. The FBR had also sought authorisation from provincial revenue authorities and boards to have full access to their monthly returns data with the objective of preventing cross-jurisdiction input tax frauds and false declarations through verification of input tax claims. In the past, the FBR had circulated the draft of the ‘Authorisation of Data Sharing’ with the provincial authorities/Board.
