FBR asks field officers to toughen up act

Authority issues guidelines to increase tax net.

ISLAMABAD: The tax authorities have asked the field formations to form vigilance cells and introduce post refunds monitoring mechanisms for blocking issuance of bogus refunds, after Rs82 billion in illegal sales tax refunds have been unearthed in sales tax alone.

The Federal Board of Revenue has also issued new guidelines to bring 700,000 potential taxpayers in the collection by conducting field surveys and using real estate and motors registration data after it admitted that so far the desired results could not be achieved.

The Federal Board of Revenue has circulated, among its field offices, the Standard Operating Procedure to block suspicious refunds. It has instructed to form formation of vigilance cells, pre-refund analysis mechanism, post-refund monitoring and centralised refund monitoring mechanisms.

The instructions given to chief commissioners of all Large Taxpayers Units and Regional Tax Offices explain in detail the cause of failure of internal system of checks and balance, facing and addressing these challenges, ideal and fool-proof refund monitoring mechanism further elaborating the steps of the refund monitoring mechanism, and enforcement of the aforesaid monitoring mechanism, said an official handout of the FBR.

The authorities have found at least Rs82 billion illegal sales tax refunds have already been issues in connivance of the FBR officials. It has initiated inquiries in Rs26 billion refund cases.

The FBR also circulated guidelines and objectives for Broadening of Tax Base (BTB) to all its Chief Commissioners of Regional Tax Offices approximately a year after it launched the campaign. The FBR claims that it has identified 2.3 million potential taxpayers and would bring 700,000 in the tax net this year. So far, it has remained unable to make any significant progress towards the goal.

In a letter sent to all field offices, FBR said that BTB campaign was not getting its due importance due to poor logistic support to the BTB units, lack of ownership of the initiative and incomplete regional databases. Furthermore, human resource weaknesses and inadequate IT infrastructure crucial to achieve their full potential are other obstacles.

The FBR asked the chief commissioners to own the BTB initiative and to shoulder the responsibility of this key objective.

Keeping in view the on-ground situation, new BTB targets of nabbing over 700,000 new taxpayers have also been assigned though the letter, along with the recommended steps to achieve these targets. The steps include using withholding tax regimes as a BTB tool, taxpayers’ mapping, field surveys, tapping real estate and motor vehicle registration and other possible potential areas for BTB.

A quarterly BTB review of performance of all RTOs is also sought so as to review and modify the regional and national BTB strategy, said the FBR. The Chief Commissioners will be required to furnish their Quarterly Review Reports in the first weeks of January, April and July and the performance of the Chief Commissioners would mainly be based on Regional BTB performance, it added.

Published in The Express Tribune, November 4^th,  2011.