In consequence of IMF package: FBR increases revenue target

Tight conditions of International Monetary Fund (IMF) for bailout package to Pakistan have been reflected in the policy of Federal Board of Revenue (FBR) as over Rs 100 billion was added in revenue collection target for the current fiscal year.
Sources in Karachi Regional Tax Office (RTO) told Business Recorder on Tuesday that the target of direct taxes for current fiscal year has been increased by around Rs 50 billion to Rs 127 billion. With the view to meet the revised revenue collection target, the RTO is evolving audit strategy, which will be presented to Irfan Nadeem, Member, Direct Taxes, on his visit to Karachi on December 1, they said.
They said the FBR audit strategy would generally be implemented at all regional offices but it would not fulfil all requirements. For the purpose, RTO is also developing its own strategy to cover its whole tax region, effectively. They criticised the decision of reform process, saying that IMF and World Bank (WB) had earlier persuaded FBR for reforming taxation mechanism, which still lacked to provide fruits after spending some $400 million.
The FBR has given up 'Circle Base System' (CBS) and adopted 'Function Base System' (FBS) as integral part of reform process to secure taxation mechanism, besides broadening tax net, they said. Despite all facts, tax system has presently become more vulnerable as numerous tax frauds have been unearthed after adopting FBS, they said. Sources said all functionaries of FBR including withholding, audit, legal, refunds and arrears, etc are working separately in FBS and termed it as a major flaw in the system. However, in CBS, all of them work collectively, which makes the system more secure than FBS.
They said that tax laws have been amended to conceal failure of FBS, and added that salaried taxpayers, who were earlier entertained on account of employers, are presently being treated as separate taxpayers aimed at artificially broadening the tax net.
A large number of taxpayers are facing hardships in dealing all functionaries separately, which was not practised in CBS, raising disenchantment among taxpayers, they said.
Regarding lack of co-ordination among all functionaries and improper record keeping system, the department has recently issued audit notices to taxpayers without identifying proper reasons for audit, creating immense difficulties for taxpayers. Refunds department is integral part of assessment process but in FBS both are working separately providing lucrative opportunities to evade taxes, besides getting bogus and fake tax refunds, they said.