Federal Board of Revenue (FBR) has once again decided to take a stick to ensure tax compliance and strict enforcement. The tax administration has pinpointed over 700,000 major tax evaders through cross matching data with third party sources, Pakistan Today has learnt. Official documents made available to Pakistan Today indicate that the FBR has decided to broaden the tax base by levying taxes on all incomes irrespective of their sources to attain sustainable tax revenues. Referring the data of financial year 2008-09, FBR has underlined that Pakistan is suffering a tax gap of 79 percent or Rs 796 billion, of which Rs 557 billion is Corporate Income Tax alone.
As part of the tax reform agenda, the FBR has compiled a list more than 700,000 potential taxpayers, whose credentials have been crossed matched and verified with National Database and Registration Authority (NADRA) database. In addition, FBR has already disseminated information of 54,798 cases to their respective tax collectorates and the verification process of some 534,193 new cases is underway. Federal Board of Revenue in a recent presentation to International Monetary Fund (IMF) pointed out that in broadening of tax base exercise FBR had already created a demand of some Rs 861 million in 1,100 cases assessed.
FBR has pointed out that there is dire need to improve tax compliance through strict monitoring and enforcement. The soft image of tax machinery has resulted in that the rate of non-filers and short-filers crossing 50 percent. Data indicates that the rate of Corporate Income Tax non-filers is around 50 percent. There is a gap of 24 percent between registered sales taxpayers and return filers.
In addition, FBR has underscored the need of strict monitoring of Withholding Tax agents as the rate of non-filers is alarmingly high at 53 percent. Tax machinery has also highlighted the significance of improving audit system.
Data indicates that through Risk Based Audit, which was introduced in October 2010, FBR has created a tax demand of Rs 42 billion of which Rs 3.2 billion has been recovered, while some 3,577 audit cases have been completed. FBR has underlined that smuggling and under invoicing through Afghan Transit Trade (ATT) are major impediments in attaining sustainable tax revenues. It has highlight the need of improving equipment support such as weigh bridges, containers scanners and tracking posts to monitor the movement of containers. In addition, it has recommended that Pakistan should obtain financial guarantees equivalent to taxes, which would be released after cross-matching of data with Afghanistan Customs. The board has also underscored the need to improve valuation system and reshaping duty structures to reduce arbitrage.
Good action by FBR!
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