KP Government to strengthen legal framework for Sales Tax

Peshawar – Press Release:

Government of Khyber Pakhtunkhwa always had a considerable focus on Public Financial Management (PFM) reforms, and it is increasingly situated in the broader agenda of KP’s Government. Strengthening the legal framework is one of the important areas of KP government reforms agenda, said the Finance Minister KP Taimur Khan Jhagra while addressing a session on KPRA and KPSTS bills.
Mr. Taimur Saleem Jhagra, Minister for Finance, Government of Khyber Pakhtunkhwa chaired a deliberation session to discuss and review the drafts KPRA and Tax on Services Bills. Prior to the 18th Constitutional Amendment, the Federal Board of Revenue (FBR) was responsible to collect sales tax on services on behalf of the provinces but Sales Tax on Services in collected by provincial government under the Finance Act, 2013. Khyber Pakhtunkhwa Revenue Authority (KPRA) was established in 2013 a corporate entity and is mandated for imposition, levy collection and administration of tax on services. Currently there is no separate legal framework which is creating bottlenecks and impacting the ability of the KPRA to collect provincial taxes. KP Govt has been undertaking various measures to meet the provincial needs through the formulation of separate legal framework in the form of a KPRA Act and KP Sales Tax on Services (KPSTS) Act to enable KPRA to function as an autonomous public entity for collection of sale tax on services.
The draft KPRA Law and KPSTS Law has been developed by KP Government with technical assistance of FCDO funded Sub-National Governance (SNG) program. SNG team presented the salient features of the draft of KPRA law and KPSTS Law along with Secretary Finance KP Mr. Atif Rehman. During the deliberation session, certain details and proposals for customization was put forward including but not limited to the nature and functions of the Board and the Authority, nomenclature to be used for the head of the Authority, delegation of the powers, qualification for the head of the Authority etc. The Finance Minister asked the SNG to share the revised draft as soon as possible so that it may be expedited for the vetting by the Law Department.