Jolted by tax raids, industrialists warn of business closure

They may also stage protests in front of FBR offices

LAHORE: Industrialists and traders of Lahore have once again lodged a strong protest against raids on business premises and alleged misuse of discretionary powers by tax officials despite restrictions from the Senate Standing Committee on Finance and Federal Board of Revenue (FBR) chairman.

In a desperate move, they announced that they would exercise all options, including closure of businesses and protests in front of FBR offices, to make their voice heard.

The businessmen and traders, who participated in a protest meeting, said FBR staff had torn into pieces orders of the Senate Standing Committee as well as the FBR chief and were raiding business premises without taking the Lahore Chamber of Commerce and Industry (LCCI) and other trade bodies on board.

They alleged that Sections 40 and 38-B of the income tax ordinance were being badly misused by the FBR staff, who not only made illegal tax demands without any supporting document, but also took the available record along with them.

They suggested that teams of tax departments should visit the markets, if indispensable, but they should immediately stop harassing the business community.

If there was an urgent need for stock-taking and ascertaining the sales tax liability of a business unit, the FBR officials should take the trade association concerned or the LCCI on board, they said.

The meeting participants pointed out that indirect taxes were being removed gradually throughout the world, but in Pakistan these were contributing around 60% to the revenues, despite the fact that expenses in the system were higher than the collections.

They asked the FBR to stop harassing filers of tax returns as non-filers and those outside the tax net were not pursued at all, which discouraged businesses from coming into the tax net.

Registered businesses were required to comply with requirements of various departments involving a lot of financial and time resources whereas the unregistered ones were free from all such hassle, they said.

In Pakistan, 3.5 million people are registered taxpayers, of which only around 1 million file tax returns. The businessmen pressed the government to take all measures to ensure the filing of returns by the remaining 2.5 million individuals and businesses.

They opposed the freezing of bank accounts for the recovery of outstanding tax liabilities, saying it was hampering business growth and tarnishing business-friendly image of the government.

If the FBR initiates a recovery case, the taxpayer is not allowed to defend himself as the FBR itself is the complainant and the judge. Instead of controlling under-invoicing, curbing smuggling and expanding the tax net, the FBR is pressurising the registered taxpayers who are already reeling from the high tax rates.

Published in The Express Tribune, June 11^th, 2017.

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