Experts slam reversal of tax decisions

Meeting discusses dilly-dallying in implementation of reforms.

ISLAMABAD: A working group, set up to spearhead reforms in the Federal Board of Revenue (FBR), on Monday raised concerns over reversal of important tax decisions under alleged influence of some lobbies.

A meeting of the sub-committee of the Tax Reforms Coordination Group was held at the FBR headquarters to review progress on key reforms. A participant of the meeting said that the panel’s main concern was dilly-dallying on the part of tax authorities in implementing reforms in one of the most crucial federal institutions.

The FBR recently reversed its decision to charge 5% sales tax from commercial importers. It also delayed imposition of a condition requiring submission of computerised national identity card numbers of unregistered buyers until January 2012.

It has been conveyed to the FBR that such decisions were not good for the institution, said former FBR chairman Abdullah Yousaf, who is a member of the group. This does not only dent FBR’s credibility but also become a source of discouragement for honest taxpayers, added Yousaf.

The working group urged the FBR to press ahead with reforms in the areas of automation, data warehouse and audit system.

Tax experts also urged the FBR to establish a core unit at its headquarters to gather and use data on income, expenses and assets of persons from different sources. It emphasised the need for utilising data for ensuring correct filing of income tax returns and tracing non-filers.

The FBR recently introduced a special part, Annexure D, in income tax forms seeking details of expenses and income from the filers. However, the form was amended after mounting pressure from various lobbies. Details of expenses on servants and marriages were excluded while information about expenses on travel and children education was made optional. It further decided to exclude Annexure D from this year’s audit process.

The group recommended to the FBR to systemise the audit process and give a shape to the entire process.

Published in The Express Tribune, November 29^th, 2011.