FBR wins battle against tax evasion, firm to pay Rs96.2m
Officials say Digital Links concealed its taxable supplies valuing Rs229.5m
PHOTO: AFP
ISLAMABAD:
Digital Links, a supplier of surveillance equipment, has admitted to evading taxes, and agreed to make payments to avoid criminal proceedings, as investigators plan to further expand scope of the investigation to suppliers and buyers of the entity.
Directorate General Intelligence & Investigation-Inland Revenue started the inquiry against the entity about a year ago and finally, Digital Links agreed to pay Rs96.2 million, according to the Directorate of I&I officials.
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They said that during the course of investigations, one of the partners of the business concern attended the Lahore Directorate and voluntarily agreed to deposit the total sales tax liability to avoid criminal proceedings. In this regard, the entity deposited Rs7.6 million and submitted postdated cheques for the remaining amount.
The total recoverable tax amount is Rs96.2 million, said FBR officials. The amount includes a default surcharge of Rs19.6 million besides penalty of Rs38.3 million, which is equal to 100% of the principal tax liability. The authorities are now planning to expand the investigation to Digital Links suppliers and buyers in the hope of recovering taxes from them as well.
Contradictory goals
Meanwhile, while the FBR is rightly penalising companies evading taxes, it is also working on a tax amnesty scheme for those who have created assets abroad by evading taxes. Now the authorities are planning to regularise offshore assets by charging nominal tax and waiving off all other penalties and default surcharges.
Khawaja Tanveer Ahmed, the Director General of the I&I wing of the FBR has appreciated the efforts of the Lahore directorate.
The directorate has undertaken a drive against tax evasion and unearthed Rs76 billion worth of cases in the last fiscal year. However, it faces challenges in recovering most of the amount due to some legal lacunas.
The FBR officials said that the business concerned had concealed its taxable supplies valuing Rs229.5 million and willfully and fraudulently evaded sales tax amounting to Rs38.3 million by committing tax fraud.
Digital Links case
Digital Links was required to be registered in 2013 with the tax authorities for sales tax purposes since its sales were more than Rs5 million a year. However, they deliberately did not register for sales tax but supplied taxable goods without payment of due taxes.
The entity is a supplier of close circuit cameras, IT equipment and related accessories and is located in Lahore. It evaded taxes by suppressing sales and income and making taxable supplies without getting sales tax registration.
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The supplies are subject to normal regime of sales tax under section 3 of the Sales Tax Act, 1990. The investigations revealed that the supplier was registered with Income Tax Department in 2014 as a retailer and supplier and filed tax returns for tax years 2012 to 2015 wherein turnover/sales of greater than Rs5 million for each tax year was declared.
It transpired that seemingly, in order to avoid payment of due sales tax on its taxable supplies, the business concern remained un-registered with sales tax during the above referred tax years.
Published in The Express Tribune, May 6th, 2017.
Digital Links, a supplier of surveillance equipment, has admitted to evading taxes, and agreed to make payments to avoid criminal proceedings, as investigators plan to further expand scope of the investigation to suppliers and buyers of the entity.
Directorate General Intelligence & Investigation-Inland Revenue started the inquiry against the entity about a year ago and finally, Digital Links agreed to pay Rs96.2 million, according to the Directorate of I&I officials.
Federal Board of Revenue: Panama cases older than 5 years not to be opened
They said that during the course of investigations, one of the partners of the business concern attended the Lahore Directorate and voluntarily agreed to deposit the total sales tax liability to avoid criminal proceedings. In this regard, the entity deposited Rs7.6 million and submitted postdated cheques for the remaining amount.
The total recoverable tax amount is Rs96.2 million, said FBR officials. The amount includes a default surcharge of Rs19.6 million besides penalty of Rs38.3 million, which is equal to 100% of the principal tax liability. The authorities are now planning to expand the investigation to Digital Links suppliers and buyers in the hope of recovering taxes from them as well.
Contradictory goals
Meanwhile, while the FBR is rightly penalising companies evading taxes, it is also working on a tax amnesty scheme for those who have created assets abroad by evading taxes. Now the authorities are planning to regularise offshore assets by charging nominal tax and waiving off all other penalties and default surcharges.
Khawaja Tanveer Ahmed, the Director General of the I&I wing of the FBR has appreciated the efforts of the Lahore directorate.
The directorate has undertaken a drive against tax evasion and unearthed Rs76 billion worth of cases in the last fiscal year. However, it faces challenges in recovering most of the amount due to some legal lacunas.
The FBR officials said that the business concerned had concealed its taxable supplies valuing Rs229.5 million and willfully and fraudulently evaded sales tax amounting to Rs38.3 million by committing tax fraud.
Digital Links case
Digital Links was required to be registered in 2013 with the tax authorities for sales tax purposes since its sales were more than Rs5 million a year. However, they deliberately did not register for sales tax but supplied taxable goods without payment of due taxes.
The entity is a supplier of close circuit cameras, IT equipment and related accessories and is located in Lahore. It evaded taxes by suppressing sales and income and making taxable supplies without getting sales tax registration.
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The supplies are subject to normal regime of sales tax under section 3 of the Sales Tax Act, 1990. The investigations revealed that the supplier was registered with Income Tax Department in 2014 as a retailer and supplier and filed tax returns for tax years 2012 to 2015 wherein turnover/sales of greater than Rs5 million for each tax year was declared.
It transpired that seemingly, in order to avoid payment of due sales tax on its taxable supplies, the business concern remained un-registered with sales tax during the above referred tax years.
Published in The Express Tribune, May 6th, 2017.