Chief commissioners’ conference: FBR officials against ‘amnesty’ proposal

Govt to go for prosecutions, shuns out-of-court settlement idea.

ISLAMABAD:

The tax authorities, it seems, want no compromise. Federal Board of Revenue Chairman Salman Siddique was unable to develop a consensus amongst the senior levels of the FBR hierarchy to offer an amnesty to people accused of illegally obtaining tax adjustments, forcing the government to instead go for prosecutions.

The decision was taken after the chief commissioners’ conference in Islamabad – a gathering of all of the regional heads of the FBR – where most of the commissioners failed to back the amnesty plan originally proposed by the Tax Reforms Core Group, a collection of cabinet ministers and senior civil servants led by Finance Minister Abdul Hafeez Shaikh.

The core group’s proposal came after discussions and deliberations with business lobbies and chambers of commerce throughout the country, who had been proposing the amnesty as a quick way to resolve the issue. The plan had called for the government offering out-of-court settlements and payment plans to those accused of having obtained tax adjustments and deductions illegally.

With the chief commissioners’ failing to support the idea, however, it seems the government now has no choice but to proceed with full-fledged prosecutions.

The FBR chairman confirmed to The Express Tribune that prosecutions would now be the way the tax authorities would handle the issue, ruling out any out-of-court settlements. “A committee has been constituted and it would follow the course of law,” said Siddique.

The rejection of the amnesty plan comes as somewhat of a surprise, since the FBR has been operating under the assumption that the illegal adjustments could not be possible without the collaboration of FBR officials. It is unclear whether the prosecutions would go after the FBR officials who were allegedly involved in helping individuals and companies cheat on their taxes.

The FBR has so far been prosecuting cases involving about Rs38 billion worth of tax fraud. Siddique said that a further Rs54 billion worth of fraud has been detected and would now be prosecuted by the FBR over the next ten days.

The core group also strategised on how to achieve the Rs1,952 billion revenue collection target, of which the government still needs to collect Rs1,111 billion over the next six months. The FBR has so far met its targets for the first six months – raising revenues by 27% compared to the same period last year – but the latter half of the fiscal year ending June 30, 2012 will likely be more challenging.

Meanwhile, the central audit wing of the FBR will now be performing all audits of companies that submit their returns to the Large Taxpayers Units in Karachi, Lahore and Islamabad, said Siddique. They have also been directed to identify those who have not paid the 15% flood surcharge nor claimed adjustments. Siddique added that the LTUs have been directed to submit audit plans for withholding taxes within five days.

Published in The Express Tribune, January 10^th, 2012.