Broadening tax base: KCCI urges FBR to expand scope of audit

Karachi-based, consistent taxpayers facing burden, says chamber chief.

KARACHI: Karachi Chamber of Commerce and Industry (KCCI) President Iftikhar Ahmed Vohra has asked the Federal Board of Revenue (FBR) to provide details of the total number of Karachi-based taxpayers (Sales Tax and Income Tax) selected for audit in order to evaluate its impact on the overall report.

In a communique issued to FBR Chairman Tariq Bajwa, the KCCI chief further sought details of total amount and percentage of Income Tax, Sales Tax and FED recovered from taxpayers in Karachi in financial year 2013-14.

Vohra, while expressing concerns over the selection of 77,500 taxpayers for audit through computer balloting, urged the FBR chief to hold off any further action such as issuance of audit notices or initiation of audit proceedings until the issue is resolved in consultation with KCCI and other chambers.

Vohra was of the view that FBR is taking the easy way out to enhance revenues by squeezing the same set of taxpayers who are already paying their taxes on regular basis, instead of making intensive efforts for broadening tax base by identifying new taxpayers and getting them into the tax net.

“KCCI takes exception to the arbitrary decision by the FBR to increase the percentage of the number of cases selected for audit to 15%,” he added.

He said that FBR is avoiding the more challenging task of laying its hands on those who are leading the lifestyles well beyond their declared income and assets.

The KCCI chief feared that majority of taxpayers selected for audit might be Karachi-based, who will bear the brunt of audit notices, harassment and extortion by field officers.

“Taxpayers in Karachi were contributing nearly 65% of total tax revenue of Pakistan, and do not have the capacity to further increase the quantum of Income Tax and Sales Tax due to adverse conditions and unfavourable business environment in Karachi,” he said.

He further noted that despite contributing a major percentage of the total tax revenue, very little is spent on restoration and development of Karachi’s crumbling infrastructure, security and provision of utilities to the large number of industries and businesses located in the mega city.

It would be appropriate for FBR to publicise the relevant data and collection figures for each region to correct this perception, he stressed, adding that KCCI will not accept any discriminatory and arbitrary increase in the number of cases selected for audit in respect of registered people from Karachi.

Published in The Express Tribune, October 11^th, 2014.

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