In the first two months of the current fiscal year, revenue collection stood Rs16 billion below the target. ILLUSTRATION: JAMAL KHURSHID/FILE
The ballot held at the Federal Board of Revenue (FBR) headquarters here on Friday was distinct from the past on at least two accounts, which may give hope for some success this time.
First, the government has committed to the International Monetary Fund that it will increase audit of taxpayers from existing 2.2% of total returns filed to 4.2% this year.
Second, the FBR claims that it has performed this time the task of choosing people in an objective manner unlike the past when certain predetermined parameters were challenged in courts by taxpayers.
The audit move comes at a time when the FBR is finding it hard to meet monthly tax targets. In the first two months of the current fiscal year, revenue collection stood Rs16 billion below the target.
The cases selected cover both corporate and non-corporate taxpayers, including individuals, for the audit of income tax, sales tax and federal excise duty for fiscal year 2011-12. The ballot picked 5% or 41,727 out of total 834,563 returns filed for income tax, sales tax and federal excise duty.
The figure of 834,563 speaks volume about the corruption, tax evasion and inefficiency of the FBR that has not been able to expand the tax base, in part due to lack of political will to promote tax culture.
Of the total, income tax filers from both corporate and non-corporate sectors were 735,188. Of these, 1,163 corporate cases and 35,595 non-corporate cases have been selected for audit.
In the area of sales tax, the number of filers stood at just 98,966, of which 570 companies and 4,381 non-corporate cases will be audited. In federal excise duty, a total of 409 returns were filed and the FBR has selected 18 cases for audit.
FBR Chairman Tariq Bajwa stressed that tax authorities had decided to take certain steps to increase sales tax registration in the country.
He clarified that the random selection of those who filed tax returns did not mean all these people and companies had evaded taxes. Those who would receive audit notices should not panic as the FBR wanted to confirm whether they had honestly declared their income and sales details in the returns, he said.
Bajwa pointed out that computer-generated notices would be served that would carry a bar code, but the taxpayers should not take the notice seriously that did not have the bar code.
“We are mindful that the taxpayers may again take the FBR to court, but this time we have devised a mechanism to defend ourselves in any court of law,” said Bajwa, referring to challenges filed by the taxpayers in courts in the past.
He said the FBR was following a self-assessment policy, believing the taxpayers would honestly declare their assets and liabilities, but a robust audit was essential to remind them that they could be caught for giving misleading and incorrect information.
In addition to the selected cases, the FBR will also conduct a desk audit in cases where commissioners believe that return filers have under-stated their income and sales.
Saying that there was a significant gap between tax collection and tax potential, he stressed that they had planned three types of intervention to narrow down the gap.
In addition to the audit, the FBR is sending notices to potential taxpayers and those who are paying taxes but do not declare their actual income. He was hopeful that these interventions would increase revenues by at least 13%.
Published in The Express Tribune, September 14th, 2013.
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Tax should be paid by every one who earn tax able amount. However the tax amount is collected but not spend according to international tax law. The best way to increase the tax payer in country with education standard and understanding the complicated method of SRO/Notification issued every day / or every week on the same matter sometime.
The tax expert who can be helpful to tax payer in filing the tax returns are sometime become headache and been blackmail first and after by Tax officers.
The mistrust between taxpayer/tax officers/tax consultant become problems for tax payers.
To increase the numbers of tax return fillers, the Government /FBR should divide the tax payer according to market location and the business type and activity.
General stores for e.g in POSH area are selling the same product with much higher profit and the same product sells by the General stores in very remote areas with very less margin of profit, according to the location they are doing business.
Government should bring under tax net \ all those wholesale markets with hundred's of small shop in every city of Pakistan, paying NO TAX at All, doing every day 20 to 30 thousand Rs per day sale.
But important is to impose FIXED TAX according to location and size of Shop, with ONE PAGE TAX RETURN FORM, in UIRDU and English Print/ believe me at lease 20 Billions can be recovered from them by educating them the benefit to pay tax.
Control the Border smuggling of goods, in some area is Very hard to control the Smuggling, as this type of business is carried by the AREA people since Generation.
Impose normal tax on Weight of the Goods they carry on trucks etc.
Finally The Government should use Tax money on the benefit of the tax payer, people will pay happily.
NOT TO USE TAX MONEY ON LUXURY LAND CRUISE FOUR WHEELER / LUXURY LIVING ON GOVERMENT MONEY / AND MONEY DRAINED ON PROJECTS WHICH ARE BUILD ON PAPPERS AND NOT IN REALITY< IF IN REALITY SOME EXISTS IS OF POOR QUALITY>
Sadly, there is the view among large sections of businessmen that if one can get away with using benefits others pay for without one's own contribution, this is clever business. The tax department is as corrupt as people allow them to be. Businessmen who should pay large taxes gain the most by corrupting tax collectors, and bribes become the expectation of such corrupted officials from all tax payers. The next step is collectors abusing their powers to coerce smaller tax payers to pay them bribes. The FTO is very helpful to honest tax payers, and those who really wish to be honourable citizens can rely on his support within his terms of reference, but going this route requires character, something generally lacking in the Islamic Republic.
Day by day I hate this country and majority of its people.
Good job. Three pats on the back...and you will obviously start by first asking all the FBR officials conducting these audits how they manage to live beyond their means :)...and once you get their response you can ask them howcome all of them have these rich uncles/aunts/dads/friends who they have inherited millions from :)...oh and if they do not have such rich relatives their wives always do :) :D :D
Enjoy the audits and the sand you Pakistani ostriches!!
Issue audit notices to exsisting taxpayers and have the officials harrass honest businesses for own pocket money. how shameful