The Federal Board of Revenue (FBR) has the capacity to upgrade Sales Tax Automated Refund Repository Computer System' (Starr) system for speedy payment of value added tax (VAT) refund from July 1, 2010 instead of spending time and resources on developing an entirely new "Expeditious Refund System".
Sources told Business Recorder on Monday that all the key features of new Expeditious Refund System, a key component of the VAT regime, for prompt payment of refunds, could easily be incorporated in the existing Starr system. If this is possible, then what is the logic of implementing a new system along with VAT from July 1 2010.
The issue was discussed in a meeting of the Task Force on implementation of the new IT systems. The FBR has developed expeditious refund system to ensure prompt refund payment after implementation of the Federal and Provincial VAT Laws from July 1, 2010. The system has been designed to pay refund without 100 percent verification of documents in cases of low risk taxpayers under VAT. The prompt refund payment is necessary for implementing Federal VAT Act 2010.
On the other hand, the Starr system is primarily responsible to check and verify sales tax refund data during processing of refund claims. It has been utilised by the FBR for the last many years. The Starr is an authentic system, which has been amended in the past in view of different cases of tax frauds and fraudulent claims etc.
It has been pointed out during the meeting that all features of Expeditious Refund System can be easily customised in the existing Starr System, which is a more mature and acceptable. During the meeting, Pakistan Revenue Automation Limited (PRAL) informed that the Tax Intelligence System has been brought from Chilli and customised according to FBR's needs.
The system from Chilli has been implemented in Pakistan for compiling a comprehensive taxpayers' data verification system. The system extracts, transfers and loads data from the core systems like Starr, STMS, 'Mahasil' etc, and provides a platform for Data Warehousing, that is then improvised to run multiple modules, including Expeditions Refund System, being piloted at Large Taxpayer Unit (LTU) Islamabad.
The Expeditious Refund System helps the users to identify risky, semi-risky and non-risky taxpayers and determines a Trust Co-efficient in respect of each taxpayer that is helpful in expeditious process of refund cases. However, some tax officials have made very serious observations on the new systems. Firstly, Tax Intelligence System is solely dependant on data from core transactional systems.
Since these systems have not been fully implemented, the practicality of implementation of Tax Intelligence System is akin to putting the cart before the horse. Secondly, risk-based processing of refunds, in the event of incomplete/incorrect Extract/Transfer/Load (ETL) from core systems, may be rather more risky.
This means risky processing of refund would not be possible in the absence of authentic processing of data. Thirdly, the concept of Tax Accounting System in the Tax Intelligence System is not property conceived as it takes into account only the payments side of taxpayers' ledgers.
The liabilities side of taxpayers' ledgers accounts is populated only if all the business processes are carried out through the transactional systems; the absence of which gives a skewed vision of taxpayers' ledger. "Blind faith in this skewed version of taxpayers' ledger may not be warranted", sources added.
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