The National Accountability Bureau (NAB) has forwarded a novel set of recommendations to the prime minister proposing establishment of the Pakistan Revenue Regulatory Authority (PRRA) for imposing taxes while limiting the role of the Federal Board of Revenue (FBR) to tax collection.
The prevention committee on tax evasion recommendations were drafted in meetings held between mid-March and April period to stop the menace of large scale tax evasion in the country. The committee was headed by Deputy Chairman of NAB Rear Admiral (R) Saeed Ahmad Sargana and included representatives from FBR, SBP, FPCCI, ICAP, PTBA, and TIP.
It recommends the PRRA to be fully autonomous in making laws for revenue generation while working directly under the prime minister. The tax appellate authorities should be removed from subordination of FBR and work under the ministry of law. While the members of the appellate tribunals should be appointed and work under the respective high courts.
The committee recommends limiting powers of FBR to just an implementing agency. The tax machinery under the control of the executive is an obvious impediment in providing fair and quick justice to the harassed and bonafide taxpayer. It recommends stress immediate automation of FBR through the implementation of ERP software. It will reconcile all kind of data, sale purchase of shares, property, saving certificates, dividends and registration of vehicles and will help unearth the non- taxpayers.
It calls for withdrawal of Section 111 of the Income Tax Ordinance 2001 related to foreign remittances and assets. The government should draft appropriate laws to seize local assets in equivalent value to levy appropriate taxes if assets outside the country or the source of income could not be established. Bearer certificates and prize bonds worth Rs 7,500 should be issued in name with NIC numbers.
The federal government should work with the provincial governments to create bi-annual or annual real estate market rates to evaluate the property price for taxes and levies. GST should be imposed in VAT mode. Accountability in tax administration should be introduced to reduce the rampart corruption and inefficiency.
The recommendations call for immediate combined audit of all the telecom companies to plug the revenue leakages. All the telecom recharges should be through the prepaid cards, which should be printed at the Pakistan Security Printing Press. The top-up balance recharge should also be through pre-paid cards. The FBR should be given online access to the system of telecom companies.
The committee has only recommended forensic audit for the other sectors, textiles and manufacturing. Unlike the telecom sector, the committee has waded away from castigating the major tax evading sectors like the power companies, sugar mills, cement, and wholesalers.
