Tax officers get extensive powers

ISLAMABAD:

The government on Friday expanded the wings of the Federal Board of Revenue (FBR) across almost all districts through the establishment of 145 tax offices and empowered them to disconnect electricity and gas connections as well as block mobile numbers of non-filers of tax returns.

The drastic administrative and legal steps were taken with the objective of bringing 2 million more people to the tax net by June next year, a highly ambitious goal that the FBR would have to achieve to meet its commitments to the Special Investment Facilitation Council (SIFC) and the International Monetary Fund (IMF).

As part of restructuring measures, the finance minister has approved the establishment of 145 District Tax Offices which will focus on bringing 1.5 to 2 million new taxpayers to the tax net till June 2024, according to a statement issued by the FBR on Friday.

On the same day, the finance ministry also issued a notification giving 140% executive allowance to the FBR officers serving in grades 17 to 22 in the FBR headquarters. The allowance would be effective from this month.

The prime minister has stressed the importance of increasing revenue and the number of tax return filers during recent meetings, according to the FBR.

In the last tax year, about 4.9 million people had filed tax returns. During the recently concluded IMF review, Pakistan committed to increase the number of filers to 6.5 million by June next year.

However, till the end of October, the FBR had received less than 3 million returns and increasing them to 6.5 million in the next eight months would require it to add 437,000 people every month. This is not possible without taking coercive action against the chronic non-filers.

Income tax law requires every person earning above Rs600,000 per annum or owning a car of 1,000cc to file tax returns.

The FBR said that in order to broaden the tax base by 2 million people, the newly established tax offices had been given broad powers.

“One of the tools to be utilised will be invoking the recently introduced Section 114B of the Income Tax Ordinance 2001 which authorises the department to disconnect utility connections including electricity and gas connections and block mobile SIMs, if tax return is not filed in response to the notices issued,” said the FBR.

There are about 5.3 million commercial electricity and gas connections across the country but very few of them file returns.

The FBR on Friday notified the offices of 145 district tax officers, a new arrangement that would help broaden the tax base and raise the tax-to-GDP ratio to the desired level.

These offices will be headed by the district tax officers entrusted with the responsibility of forcing non-filers and stop-filers to file tax returns. “The establishment of these offices heralds a new chapter that will expand the tax net and fill a critical gap on the path of bringing all potential taxpayers to the tax net,” it added.

Read: FBR forms body to facilitate taxpayers

Meanwhile, the Ministry of Finance notified the executive allowance for FBR officers equal to 140% of their basic pay. It will end discrimination in the salaries of officers serving in the Pak Secretariat and the FBR headquarters.

However, the finance ministry discontinued the FBR’s performance allowance equal to about 30% of the basic pay and other fixed incentives. Rental payments above approved ceilings have also been discontinued, according to the notification.

The FBR statement said that the new district offices would be headed by the dedicated Inland Revenue officers in BS-17/18 which would obtain and utilise third-party data acquired from multiple departments and agencies that hold critical information regarding investment in assets and huge expenditures by potential taxpayers who till now have managed to escape and stay away from the taxation system including registration and filing of tax returns.

The FBR is receiving information from 84 various departments, commercial banks and power distribution companies.

It said that the federal government was committed to utilising all measures and providing assistance to the FBR. A new Documentation Law is also being introduced to obligate various agencies and departments to provide data to the FBR through an automated common transmission system, it added.

However, the Law Division has already advised against promulgating the Presidential Ordinance and instead recommended the FBR to use the existing legal provisions.

The FBR said that collaboration and assistance from the National Database and Registration Authority (NADRA) had also been sought. NADRA chairman has assured the FBR of its assistance for widening the tax base through data integration.

Sources said that NADRA lacked actionable data, which had also been conveyed to the FBR. NADRA also failed to stop the issuance of fake national identity cards to the Afghan nationals and aliens.

Published in The Express Tribune, November 18^th, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.