FBR in doldrums: Plan to catch tax evaders falters

Drastic drop seen in tax evasion notices; FBR yet to draft rules to access bank accounts.

ISLAMABAD:

The federal government’s campaign to broaden the tax base is fast losing steam despite parliamentary backing for steps to access bank account details of tax evaders.

Several major initiatives against tax evaders have hit a wall of resistance in the absence of regulations on accessing bank account details and back-pedalling by the authorities on issuing notices to tax evaders.

A senior Federal Board of Revenue (FBR) official revealed that the government’s revenue collection department had been unable to frame the rules necessary to seek information from banks about the bank account holders.

“In the last four months the rules could not be framed, as there was a pressure to withdraw the amendments made in the Income Tax Ordinance, which were introduced for obtaining access to the bank accounts”, said Dr Muhammad Iqbal, special assistant to FBR chairman.



Iqbal, who is also commissioner for Broadening of Tax Base (BTB) was addressing a group of journalists to clarify the FBR’s position on the tax broadening campaign after serious questions were raised about the fate of the drive.

In June this year, parliament had approved amendments in the income tax law for allowing FBR online access to central database of the banks for obtaining information of the account holders. However, in absence of the political will the FBR decided not to frame the rules and did not avail the facility.

“So far, the FBR has not accessed any bank account,” said Iqbal, adding that the FBR was considering making the rules, but ruling out a deadline for when the FBR should be expected to access bank details of tax evaders.

Iqbal also disclosed that process of sending notices to identified tax evaders has drastically slowed down because the FBR was “fixing issues” that arose during the process of sending over 30,000 notices between July and September this year.

Earlier, the FBR had disclosed that out of 30,333 notices served to the tax evaders only one-third reached their destination, one-third were returned and the fate of the remaining one-third was unknown.

He said the selected courier did not have the capacity to deliver all the notices, which is why the FBR had decided to hire services of other firms.

Admitting a lapse in information provision, Iqbal said that problems were faced in tracing addresses and that the FBR did not use NADRA’s data for sending notices, as earlier claimed by FBR’s spokesperson Riffat Shaheen Qazi.

The FBR on Tuesday removed Qazi due to the controversy and appointed Shahid Asad in his place.

Under the $6.7 billion IMF programme, Pakistan is bound to send 100,000 tax notices to identified tax evaders during the current fiscal year.

While insisting that the FBR has not completely halted the process of sending notices, Iqbal refused to divulge the actual number of notices sent in October alone. However, according to FBR documents, in the first three months FBR had served 30,333 notices. This showed that FBR actually served about 1,600 notices in October – far less than the 10,000 monthly notices sent from July to September.

Despite a dismal performance, Iqbal insisted that it was a good beginning but in the same breath admitted that the FBR may not be able to bring 100,000 new taxpayers in the net during the current fiscal year.

Published in The Express Tribune, October 30^th, 2013.