ISLAMABAD: The government is likely to announce withdrawal of Statutory Regulatory Orders (SROs) and allow reduced duty/tax rate across the board for selected sectors or commodities in the federal budget 2014/15.
The committee formed by the Finance Ministry to phase out the SRO culture has recommended the withdrawal of the notifications where about 80 percent of imports of specific sector or commodity are cleared taking advantage of the SROs and if necessary the reduced duty/tax rate across the board would be allowed.
It will also benefit the remaining 20 percent as well.
The sources said the SRO committee also recommended to withdraw those SROs where impact is Rs30 million. With the withdrawal, the number of SROS will come down significantly.
The committee met seven times, which were attended by the finance minister, commerce minister, chairman of the Federal Board of Revenue and concerned secretaries of different ministries, however, no final decisions had been taken so far. However, the phasing out of the SROs would be completed in the next three years.
The exemption and concessions granted under the different SROs irked the donor agencies because of drainage of revenue, which would be helpful for reducing fiscal deficit.
In the latest loan agreement with the International Monetary Fund (IMF), the authorities agreed to eliminate numerous statutory regulator orders.
In the country report issued by the IMF in March 2014, the government informed the Fund that the FBR had completed analysis of the fiscal cost of all SROs and started developing plans to either eliminate or incorporate them into legislation.
The identified SROs for elimination are estimated to help the tax authorities to recover additional revenue equaling to 0.35 percent of gross domestic product.
The authorities also assured to finalise the plan to eliminate the SROs by the end of next month.
The IMF appreciated the authorities’ SRO plan, but stressed the need for more ambitious approach to improving tax administration and eliminating tax loopholes to sustain fiscal consolidation in future years.
