The Federal Board of Revenue (FBR) has failed to achieve desired results from tax administration reforms which cost Rs 6.0 billion. It has decided to introduce some procedural changes in taxation, which will shift focus presumptive tax regime to return base taxation in the forthcoming budget. It was stated by the FBR Member Inland Revenue Service Khawar Khurshid Butt, while addressing the audience at 37th Specialised Training Program of tax officers here on Thursday.
Addressing to the participants, Khawar Khurshid pointed out that tax administration reforms were introduced to increase tax to GDP ratio, but it was constantly for last five six years. He underlined that tax to GDP ratio could only be improved with better audit system and deterrence, which would improve voluntary compliance and revenue collections. He underscored that the Universal Self Assessment Scheme (USAS) had also affected the tax to GDP ratio in Pakistan as only two to three percent cases were left for audit under this scheme, which had hampered the audit capacity development of tax officials.
He strongly called for an improvement in the audit mechanism and pointed out under the USAS all tax returns were approved automatically without considering the actual income of the taxpayer. He said that under reporting and tax evasion were also due to this scheme while strong audit system could improve the tax to GDP ratio and also helpful in broadening the tax system. He advised the newly passed out young tax officers to focus on audit and boost audit capacity for the betterment of overall tax administration.
Later, talking to the media, Khawar said that it would be premature to state that the government would impose some new taxes in the forthcoming budget. However, he said that the FBR was going to introduce some procedural changes in taxation in forthcoming budget, which would shift focus from presumptive tax regime to return base taxation, he added.
