FBR sends inspectors to a firm for ‘advance tax receipt’

Suspects tax evasion; inspectors will monitor production and inventory levels

ISLAMABAD: The Federal Board of Revenue (FBR) has deputed tax officers in the premises of Pakistan Packages Limited on suspicion that the company is evading taxes by understating its actual production, a move that has once again raised concerns of highhandedness.

The FBR took the step on Wednesday when it sent inspectors for monitoring the production of goods and counting the inventory, according to officials in the FBR headquarters.

However, FBR’s field officers insisted that it was a routine exercise, which would be completed in a few days.

People having knowledge of the development claimed that tax authorities were illegally demanding advance taxes to meet the target and on refusal they took the step.

FBR spokesman Dr Mohammad Iqbal declined to comment on the development. A business family owns the factory. Its comments could not be obtained as most of the family members were abroad.

The FBR has deputed inspectors by exercising powers under Section 38 of the Sales Tax Act 1990. It gives officers free access to business and manufacturing premises, registered office or any other place where any stocks, business records or documents are kept.



Packages Limited is in the business of manufacturing printed cartons and flexible packaging materials. It is listed on the Pakistan Stock Exchange. In the first nine months of 2016, the company recorded net sales of Rs12.8 billion against sales of Rs12.1 billion in the corresponding period of previous year, a growth of 5%. Its after-tax earnings stood at Rs4.15 billion during the July-September quarter.

The chief commissioner of Large Taxpayer Unit Karachi initiated the action, which was implemented by the Regional Tax Office-II, Lahore.

Tax returns

The FBR is struggling to increase the number of income tax return filers besides meeting its tax targets.

The fourth deadline to file income tax returns for tax year 2016 ended on Thursday. Only 732,341 people filed tax returns against the target of 1.2 million. The number was even less than last year’s 1.074 million.

However, the FBR was of the view that till December 15 last year, only 631,292 people had filed their returns. The number increased to 1.074 million by March 2016.

The FBR spokesman said the government would not give any further extension for filing the tax returns. There were unconfirmed reports that the FBR may have to extend the date till December 31 due to poor results.

The original date for filing the returns is September 30 every year, which the government extends due to multiple reasons including technological hiccups and delay in finalising the return forms.

In the first half of December, the FBR collected about Rs100 billion in taxes, which were about 24% less than the corresponding period of last year.

For the current fiscal year, parliament had approved a Rs3.621-trillion annual target and the FBR was aiming to collect one-third of it in the first five months.

It has blamed government’s taxation policies for the shortfall of Rs127 billion in revenue collection for July-November 2016. Tax authorities informed the finance minister last week that government’s decision to keep petroleum product prices unchanged in the first five months, fiasco on the property tax front, weakening exports and low interest rates were the key reasons behind the shortfall in tax collection.

They argued that there were no major lapses on the operational side, the sources said.

Published in The Express Tribune, December 16^th, 2016.

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