The Central Board of Revenue (CBR) will shortly issue Standard Operating Procedure (SOP) for implementing a new law--Missing Traders Fraud--under which all partners in the supply chain would be jointly liable to deposit the unpaid amount of tax not paid at any of the stages of supply.
Official sources told Business Recorder on Tuesday that the SOP would be finalised in consultation with the business community. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce and Industry (KCCI) are actively in touch with the Board to frame the most viable rules.
Sources said that the concept of the 'Missing Traders Fraud' has been made part of the Finance Act, 2006, but the SOP is yet to be chalked out keeping in view reservations of the taxpayers. All issues pertaining to the practical difficulties being faced by the taxpayers would be taken into account prior to issuance of the procedure.
In the 2006-07 budget, the Board has introduced several strict provisions in Sales Tax Act, 1990 to reject the fraudulent refund claims where the amount has not been actually deposited by the supplier in the national exchequer. Section 8 of Sales Tax Act was amended through Finance Bill 2006 to disallow refund or 'input tax adjustment' in case the tax claimed has not been deposited by the respective supplier.
Similarly, the Board has introduced a new system for checking the refunds claimed by persons whose suppliers have collected tax from them, but not deposited in the treasury. Officials said that the new law is in place, but it cannot be implemented till the finalisation of the SOP on the basis of traders' recommendations. Once the SOP is finalised, the Board would issue instructions to all collectors of sales tax for its enforcement.
When asked about demands of certain chambers to scrap the proposed law, sources said that the 'Missing Traders Fraud' law would not be abolished in toto but would accommodate the viewpoint of maximum number of traders and industrialists.
About the availability of online data of blacklisted units and fake companies, sources said that the list of such units is already available at the CBR website. The Board will ensure that updated data of blacklisted companies is made available to the registered units, they added.
Under the 'Missing Traders Fraud', both the buyer and the seller would be responsible for depositing the amount of due tax, if not deposited. Prior to this, the buyer was not held responsible, even if his supplier had not deposited the tax recovered from him.
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