ISLAMABAD:
Federal Board of Revenue (FBR) Chairman Mumtaz Haider Rizvi has said that the corporate sector is evading Rs415 billion in taxes annually in connivance with chartered accountants.
He was speaking at a pre-budget seminar organised by the Association of Chartered Certified Accountants (ACCA) of Pakistan here on Friday.
Out of the Rs800 billion annual tax gap, the income tax gap was 79% and 65% of that gap (Rs415 billion) came from the corporate sector, which avoided paying taxes in connivance with the chartered accountants, said Rizvi.
He also asked the “country’s rich” to sweep their own doors first, before asking for sweeping the doors of FBR. “If you give a bribe of Rs10 to a tax official, you also steal Rs990,” said Rizvi, who admitted the existence of loopholes in the tax collection system.
Almost all multinational companies were evading taxes, he said. He countered their claim that they were paying taxes, saying they paid sales tax and that too after recovering from consumers.
Rizvi said these big firms were showing losses on their investments and cited the example of cement manufacturers, who have been showing losses for the last four years and same is the case with most of the oil companies.
Speaking about budget priorities, Rizvi said from July 1 the government would withdraw most of the statutory regulatory orders (SROs) in a bid to simplify the complicated tax codes. He said the slabs of customs duties would be reduced to either five or six from the current nine slabs to simplify the tax codes.
However, the government will not withdraw four SROs to protect some industries, including the automobile industry.
This is contrary to what Planning Commission Deputy Chairman Dr Nadeemul Haque has claimed. According to him, the government will withdraw the four SROs.
Rizvi announced that the tax system would be simplified further and made transparent and predictable. “The next budget will be investment, employment and growth-oriented.”
He said tax rates would not be increased, certain duties would be reduced and some tax brackets would be slashed. “One who earns more should pay more,” he remarked.
Tax exemption for IPPs
In a case of double standards, former FBR chairman Abdullah Yousaf gave a lecture on paying taxes for the welfare of the nation, but when asked whether he would advise the government to withdraw the income tax exemption granted to the independent power producers (IPPs), he replied “this is not the option”.
Yousaf is the chairman of IPPs Advisory Committee and also a lead adviser to the government on increasing the tax base. The government has exempted IPPs income from tax that costs billions of rupees in lost revenues.
Published in The Express Tribune, April 28th, 2012.
COMMENTS (9)
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I always wondered whether I could ask a chartered account for help on avoiding taxes.
There are benefits which people should get by paying taxes. People and companies should pay taxes and governements spends billions of rupees in extra spending expense and corruption.... In foreign countries government takes taxes but give gives benefits...... Not that millions and billions of rupees spend by the presidents,prime minister and all politicial............. FIRST GOVERNMENT SHOULD MAKE ITS SPENDING TRANSPARENT...... THEN they should tell the people and corporates to pay taxes...........
FBR should black-list such CA firms. This amount can do miracles for poor Pakistanis
A prominent textile tycoon once said ' I and my father before me have never paid any tax because the law / rules allow me to do so. All you need is a good munshi ( C.A. - apologies to the CA fratinity ) and some legal advice. ' For the chairman of the FBR to shed crocodile tears is simply wrong.
The desi (Pakistani and Indian) mentality is like the Greek and Italian mentality of the european southern countries. Nobody will pay tax, they want everything free. Get your money which ever way you can and don't pay anyone especially the tax department. Just tax foreign companies who are foreign anyway.
So the FBR Chairman is blaming Chartered Accountants. Is that the reason FBR Officials are evasive to attend the Budget Seminars organized by ICAP ?
Am not sure if I should link the statement to the organizers of the seminar !
why don't you hire a few chartered accountants if that's what it takes?
If Rs 415 Billion taxes are being evaded by corporate sector,where is FBR and it's officers.They should be held responsible for in-efficiency