The implication of the value added tax in Pakistan: administration, experiences and fears

Since its first imposition in France, the value added taxation has become so popular that except USA there is no other country left that does not have VAT in use. Pakistan has fulfilled its international obligation to replace its sales tax with VAT by the year 2010. This paper examines the available literature and reflects as to how successfully the country has implemented the new taxation, what has it experienced in its efforts in the replacement of sales tax and the fear relating to VAT that still remain unaddressed. It was found that the country has, as a whole, very successfully implemented the new taxation in terms of economic gains and costs to the government. Nonetheless, it is feared that the social aspects relating thereto are altogether ignored and thus this replacement is not socially optimal.