Big players have to pay 15% flood surcharge

FBR team in Karachi to catch tax dodgers.


Shahbaz Rana June 01, 2011

ISLAMABAD:


The government has rectified a major mistake in the Income Tax Ordinance promulgated on March 15 this year that let big firms avoid being hit with the 15 per cent flood surcharge, as tax officials struggle to cope with revenue shortfall.


In a desperate attempt to catch tax evaders and corrupt tax officials, authorities have already sent a team to Karachi, led by Additional Secretary Asrar Rauf. It has so far unearthed Rs24 billion in tax evasion, mainly in the banking sector.

The government has published a corrigendum regarding the Flood Surcharge Ordinance by replacing the year “2010” with “2011”, said sources in the Federal Board of Revenue (FBR).

In the original ordinance, tax year was mentioned as “2010” that provided an excuse to big corporations and banks to avoid the levy on the pretext that for them the financial year 2010 closed on December 2010.

These companies refused to pay the flood surcharge due on March 20, creating panic in the FBR. According to estimates, Rs20 billion is expected to be collected under this account in three and a half months.

Officially, the FBR has denied the promulgation of the ordinance or issuing the corrigendum. “No new ordinance has been issued,” reads a brief official statement. Sources said the issuance of the ordinance was necessary, as the FBR was unable to correct the mistake on its own.

FBR has to collect Rs300b in one month

The FBR is also taking various administrative measures to achieve the tax collection target. Sources said the FBR has collected Rs131.7 billion in May against the target of Rs157 billion. In 11 months, total collection has come to Rs1,287 billion, which is 81 per cent of the annual target.

The FBR has to collect another Rs300 billion in the remaining 31 days of the current fiscal year to achieve the revised target of Rs1,588 billion. Any shortfall in the yearly target will not only increase the budget deficit, but will also affect the base for next year’s revenue target of Rs1,952 billion.

Out of Rs131.7 billion netted in May, Rs34.3 billion was collected on account of income tax, which was only 26 per cent of the monthly collection. Sales tax collection stood at Rs67.9 billion and customs duties brought in Rs15.3 billion.

Leakages unearthed

In a major development, the FBR team in Karachi has caught various banks that collected Rs19.1 billion from clients and employees but did not deposit the amount in the national kitty. The amount is almost equivalent to what the FBR is expecting to collect through the 15 per cent flood surcharge. Sources said the FBR has asked banks to deposit the money before June 30.

In another important development, FBR officials have registered a First Information Report (FIR) against a state-owned bank for withholding Rs285 million collected on account of road tax. Sources said bank employees have been arrested and the FBR has also found clues that this was not an isolated incident and that such practice was also going on in other branches.

The FBR team has also unearthed a nexus between customs officials and commercial importers, causing a loss of Rs4.5 billion to the kitty, sources said. The customs officials cleared commercial imports at the tax rate of raw imports, which is 60 per cent less than the tax on commercial consignments.

In a drive to net 700,600 rich tax dodgers, the government has so far issued 55,000 notices. Of these, 17,416 individuals are from Karachi. Sources said so far tax demand of Rs671 million has been made against 214 individuals.



Published in The Express Tribune, June 1st, 2011.

COMMENTS (4)

moise | 12 years ago | Reply In 2009 foreign bankers received $1,001,834,000 in usury payments from hard working Pakistanis. Is it fair someone else borrows and we pay?
Fahmid | 12 years ago | Reply At Aamir Burki, National Bank of Pakistan. And tax officers are never corrupt alone, they are offered bribes by us. Unfortunately, our tax consultants are found at the feet of tax officials, seeking for illegal ways. Good steps by tax authorities.
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