ISLAMABAD: The Federal Board of Revenue (FBR) on Friday barred its field formations from freezing bank accounts of taxpayers without prior intimation aimed at minimising harassment of taxpayers, particularly at a time of shortfall in tax revenues.
The FBR headquarters has linked the freezing of bank accounts with prior approval of the FBR chairman and intimation to the accountholder at least 24 hours before freezing the bank account.
"No bank account attachment unless the taxpayer's CEO/principal officer/owner is informed at least 24 hours prior to the attachment and the FBR chairman's approval is obtained," said the instructions that the FBR headquarters sent to its 23 field formations.
The instructions were issued by newly appointed FBR Chairman Syed Shabbar Zaidi, who assumed charge on Friday.
The FBR's field formations have long been abusing the laws to meet their monthly revenue collection targets by using coercive measures. The FBR has suffered a revenue shortfall of Rs345 billion in first 10 months of FY19 and has already taken advances from major companies.
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"The tax demand can only be collected once the first independent judicial forum, that is tribunal, passes an order against the taxpayer," said Dr Ikramul Haq, Advocate Supreme Court of Pakistan while welcoming the decision.
Haq said he had long been urging the FBR that there should be transparency and fairness in the FBR's affairs. The FBR had been single-handedly destroying Pakistan's trade and industry by using discretionary powers, withholding undisputed refunds payable to the taxpayers and making excessive tax demands and recovering the same by freezing bank accounts even before the order of the tax tribunal, he said.
Zaidi said his first priority was to give respect to the existing taxpayers and freezing their bank accounts without valid reasons was tantamount to disrespecting them.
He briefly spoke to the media after meeting with the finance secretary in his office on Friday.
The FBR chairman said the word "reforms" was overused in Pakistan, adding that over 30% of Pakistan's economy was undocumented and his task was to bring the undocumented sector under the scope of the tax net.
He did not comment on the proposed revenue collection target for the next fiscal year. It was the prerogative of Prime Minister Imran Khan whether to impose nearly Rs700 billion in additional taxes in the new budget.
The International Monetary Fund (IMF) has asked Pakistan to make additional tax efforts equal to 1.7% of gross domestic product (GDP). However, the government was reluctant to levy additional taxes of more than 1.4% of GDP.
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Zaidi addressed the FBR officers soon after taking charge. He shared his vision to revamp the tax system and tax machinery and discussed broader problem areas affecting the institution.
He stressed the need for shifting from the manual to a complete automated system to facilitate the taxpayers. Zaidi also emphasised the need for documenting all the economic transactions, which could be a great source of revenue generation for the country.
The chairman took the FBR officers into confidence and assured them that the issues being confronted by the FBR employees would be addressed under his leadership. He sought the support of all the officers to work as a team for the betterment of the institution and country.
The FBR's senior management has opposed Zaidi's appointment, who has been brought from the private sector.
"The FBR officers asked questions which were answered by the new chairman in a very candid manner," said a statement issued by the FBR after Zaidi's meeting with the officers.
The government has appointed Younus Dagha as the Revenue Division secretary. Earlier, both the Revenue Division secretary and the FBR chairman used to be the same person.