Broadening of tax base: FBR hands 14m records of transactions over to Nadra

ISLAMABAD: A meeting on broadening of tax base was informed that the Federal Board of Revenue (FBR) has provided 14 million records of financial transactions of citizens to the National Database and Registration Authority (NADRA) to compute indicative income and tax liability of non-filers by use of artificial intelligence.

The meeting was presided over by Adviser to the Prime Minister on Finance Shaukat Tarin on Monday. The FBR chairman and his team gave a detailed presentation on the progress on readiness for potential taxpayer outreach initiative to boost the revenue growth and resource mobilisation.

The FBR chairman apprised the adviser that pragmatic steps have been initiated for compilation of data, with the support of the NADRA, which would be available to potential and current taxpayers in a presentable and comprehensible manner through a web portal.

According to the sources, the 14 million financial records included property transactions, vehicle purchases, registration of cars with provincial excise departments, buying/selling of movable and immovable properties, utility bills, foreign travels, and other heavy expenditures.

The NADRA would match this data with its own database and work out the estimated income of the taxpayers and non-filers. On the basis of the FBR’s record of third-party data, the NADRA would finalise the profiles of these persons.

Based on the FBR’s third-party data, the NADRA would compute indicative income and tax liability of any citizen by use of artificial intelligence, mathematical or statistical modelling or any other modern device or calculation method.

The NADRA is allowed to submit proposals and information to the Board with a view to broadening the tax base; identify in relation to any person, whether a taxpayer or not: (a) income, receipts, assets, properties, liabilities, expenditures, or transactions that have escaped assessment or are under-assessed or have been assessed at a low rate, or have been subjected to excessive relief or refund or have been mis-declared or misclassified under a particular head of income or otherwise; (b) the value of anything mentioned in sub-clause (a) of clause (ii), if such value is at variance with the value notified by the Board or the district authorities, as the case may be, or if no such value has been notified the true or market value; and (iii) enter into a memorandum of understanding with the Board for a secure exchange and utilisation of a person’s information.

Under the exercise, the NADRA’s cross matching of data with the FBR’s information would result in a new profile of the taxpayer. The updated profile or information of taxpayers would be available on the FBR’s website. Non-filers would receive SMS to check their profiles at the website using their CNICs and file their returns and pay the due amount of taxes.

In case of non-compliance, strict legal action would be taken against them. The FBR will give these taxpayers ample time to voluntarily file their income tax return to avoid penal action. The FBR will also establish special Call Centres to facilitate these citizens in filing their income tax returns. The FBR will also assist these citizens to timely file their tax returns based on the NADRA’s profiles.

Key challenges to reach out potential and current taxpayers, public awareness and confidence building measures taken by the FBR were also discussed in the meeting. The adviser lauded the steps taken by the FBR and stressed that an efficient and robust communication with the taxpayers should be at the centre of activity undertaken by the FBR to harness public support for its efforts for broadening the tax base and promoting a tax compliant culture in the country.

The adviser also expressed his full support and confidence to the FBR team and advised to redouble their efforts and launch the taxpayer outreach initiative at the earliest to expand the existing tax base and boost the revenue collection.

Copyright Business Recorder, 2021