Tax experts and civil society activists call the amnesty scheme a reward for the tax thieves, which would also impede the drive to broaden the country’s narrow tax base. PHOTO: FILE
The rules, issued by the Federal Board of Revenue (FBR) on Thursday, deal with reporting requirements for banking companies about those account holders who are not taxpayers.
The FBR agreed with the prime minister’s decision that barred the tax authorities from getting access to bank accounts of existing taxpayers.
Describing it as a package that will promote growth and investment, Nawaz Sharif had last week announced incentives for the industrialists – who are called his traditional voters. Experts say the incentives offer the industrialists a chance to legalise their black money by investing in various projects.
He also stopped the FBR from accessing the bank accounts of taxpayers and exempted a category of existing and all new taxpayers from tax audit.
Tax experts and civil society activists call the amnesty scheme a reward for the tax thieves, which would also impede the drive to broaden the country’s narrow tax base.
However, Competition Commission of Pakistan Acting Chairman Dr Joseph Wilson believed that the prime minister’s package was not a violation of the Competition Act of 2010 and would not damage the cause of competitiveness.
He said though the package was not applicable to certain industries like sugar, cement, beverages and cigarettes, these industries were “well entrenched” and would be immune from any adverse competitive implications.
“It is the discretion of the government and the PM to provide any incentive to any industry and there is nothing in the package that raises concerns of competitiveness,” said Wilson at a seminar here on Thursday.
USAID Trade Project’s Regional Trade Adviser Dr Manzoor Ahmad said exemptions granted to certain businesses through Statutory Regulatory Orders (SROs) were providing unfair advantage to large businesses at the expense of small and medium enterprises.
For the first phase of implementation of the PM’s package, the FBR has notified the draft rules for obtaining monthly information from banks about depositors and loan defaulters. The FBR would consider the proposals for seven days since publishing the draft after which the amendments would be considered part of the Income Tax Rules 2001.
As desired by the PM, the FBR allowed the banks not to give any information about monthly transactions and written-off loans of those who either hold the National Tax Number or are active taxpayers.
This came in the backdrop of hue and cry the industrialists and traders were making against the government’s move to give the FBR access to their bank accounts.
According to the banking companies’ reporting requirements, in case a person does not have an NTN and is a non-filer, every banking company will furnish the FBR a monthly account holder deposit statement, credit card payment details and any loan written off.
However, any such information becomes useless when a person decides to file the income tax return and pay a minimum tax of Rs25,000 irrespective of what he owes to the exchequer.
The PM had also announced that those who decide to come in the tax net, their accounts will not be accessed and they will be exempted from the audit.
The decision to exempt people from the audit is seen as a major blow to the government’s drive to broaden the tax net, as those who owe millions can get away by paying just Rs25,000.
Published in The Express Tribune, December 6th, 2013.
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