SATURDAY MARCH 23: Combating tax frauds: IT system will brook no interference: FBR

ISLAMABAD: Federal Board of Revenue (FBR) Chairman Ali Arshad Hakeem has said any IT system, to combat tax frauds, should not have discretionary powers or physical interference in its smooth functioning, eliminating possibility of tax officials' manual discretion.
Sources told Business Recorder here on Friday that Chairman FBR said this while addressing an exclusive meeting on 'combating tax frauds' held at the office of the Pakistan Revenue Automation Limited (PRAL). This was one of the new FBR's initiatives in consultation with all leading experts having experience of checking frauds to collectively form national strategy for checking these frauds preventing revenue leakage.
Ali Arshad Hakeem stated that the IT system designed to combat tax frauds should not have any discretionary powers of the tax officials. For example, powers to manually overrule objections raised by the system should not be allowed. The officers' discretion to physically interfere in the IT system should be eliminated and this aspect must be kept in mind while devising any system to combat tax frauds. IT system will have no physical interference, eliminating chances of fraud.
Responding to a proposal to merge two intelligence departments of FBR into a single agency, the FBR Chairman said that the FBR is fully committed to meet assigned revenue collection target in the remaining period of 2012-13. Therefore, administrative changes cannot be made at this stage as we have to maximise efforts for revenue collection by the end of June 2013.
The meeting highly appreciated the presentations by Khawaja Tanveer Ahmed Chief Commissioner Regional Tax Office-II (RTO) Karachi and Ashir Azeem Director Customs Intelligence Karachi on tax frauds. During the day-long meeting on 'combating tax frauds', one of the proposals was to improve process of the sales tax registration to combat frauds. It was pointed out that one of the root causes of the sales tax distortion is the bogus or suspicious sales tax registrations. In future, a foolproof registration mechanism should be put in place to check frauds. The authenticity of the genuine sales tax registrations would prevent sales tax frauds through physical verifications and other particulars of the applicants.
The meeting also discussed role of Computerised Risk-Based Evaluation of Sales Tax (Crest) for checking tax frauds within the supply chain. The effective use of Crest would play an important role in controlling tax frauds on the basis of fake/flying sales tax invoices. There was a general consensus among the experts of FBR and PRAL that the IT system can eliminate tax frauds in the sales tax regime by allowing system to operate independently without any physical interference of the tax officials.
Another proposal was to merge Customs Intelligence and Inland Revenue Intelligence into a single intelligence agency of the FBR. It was also discussed to curtail tax officials' powers to manually overrule objections raised by the Sales Tax Automated Refund Repository computer system' (STARR). Experts and senior officials of FBR, PRAL and National and Database Registration Authority (Nadra) also participated in the meeting.