Businessmen oppose FBR’s registration drive

Small-scale industries fear the move is aimed at harassing them.


Imran Rana September 13, 2011

FAISALABAD:


The Federal Board of Revenue (FBR) has met with opposition in its drive to document unregistered industries in Faisalabad as small-scale businessmen fear that the move may provide a free hand to tax officers to harass and prosecute them.


The FBR has sought national tax numbers (NTN) or computerised national identity card numbers (CNIC) of unregistered traders at the time of purchase of goods from registered sellers.

Businessmen said the FBR’s initiative was meant to net small businesses, which did not fall in the sales tax bracket and the move would not only ruin their businesses but would also lead to increase in prices of commodities.

Waheed Ramy, a loom owner, said the FBR had recently notified the unregistered firms and buyers to declare their CNIC numbers or NTNs at the time of buying products from registered sellers. However, he said “90 per cent of the wholesale business in Faisalabad is unregistered and this industry is not willing to declare its stock and other data to the FBR.”

Ramy said the power loom industry was undocumented and it only paid income tax, that too through electricity and gas bills.

He said the FBR made it compulsory for the registered persons to produce stock statement while claiming refunds and as a result they were pressuring unregistered buyers to produce NTN or CNIC for sale and purchase invoices.

High officials of the FBR in the Faisalabad region argued the step had been taken to stop flying and fake invoices. Importers, exporters and manufacturers, both small and large, were bound to register and provide invoice details to the FBR, they said.

An FBR source said due to the fake invoices mostly buyers and manufacturers avoided paying sales tax. “This is the best mechanism to prevent fake entries and tax defaults,” he claimed.

According to the sales tax law, businesses having annual sales of over Rs5 million should pay sales tax.

Mahmood Alam, another loom owner, feared that with the help of CNIC and NTN, the FBR would be able to trace the record of unregistered businesses and impose sales tax on them.

“Small industry owners and small-scale buyers are worried that this condition will leave them at the mercy of tax officials,” said Shahid Razzaq, Chief Executive of Happilac Paints.

Former income tax deputy commissioner Umer Farooq said 60 per cent of the businesses in Faisalabad were unregistered which dealt in fake invoices. He suggested that if the government wanted to effectively enforce this new policy, it should offer zero tax rates and introduce an amnesty scheme before taking any harsh step.

Published in The Express Tribune, September 14th,  2011.

COMMENTS (1)

Sheeraz Khan | 12 years ago | Reply

Such fear is common when FBR comes to knock at their door.

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