FBR considering formation of IR intelligence department

The Federal Board of Revenue (FBR) is contemplating to establish Inland Revenue Intelligence department to conduct scientific research on tax related issues. Sources told Business Recorder on Monday that it is now well settled through studies that bigger the tax base is the less the rates of tax can be. And, in order to bring more people into tax base, further efforts must be made.
Therefore, the board is considering to establish intelligence department in collaboration with business community, professionals, tax advisors and other stakeholders to conduct research on taxation issues such as undocumented economy, e-commerce, and contribution by different sectors according to percentage of GDP, sources said.
They said that it was proposed by the Large Taxpayers Unit (LTU), Karachi in its budget proposal 2010, which also suggested to the board not to restrict the intelligence department for detection of evasion cases but only for conducting research on taxation issues. They said the Karachi LTU has offered valuable recommendations, which could help board to achieve desired results.
According to its budget proposals, it has been suggested to the board to establish a centralised databank for collecting online information from customs, SBP, Pemra, motor registration authorities, trade bodies, etc.
It further recommended to the board to include private educational institutions, hospitals, clinics, and maternity homes, professional and foreign representative offices in the list of withholding agents. The proposals added that the scope of unexplained income and assets as laid down in section 111 of Income Tax Ordinance, 2001 is very limited, which should be revisited to have an all-encompassing definition of concealment.
It said that insurance companies have been contesting that their receipts on account of premium do not fall in the ambit of "turnover"; so they are not liable to minimum tax on turnover. Therefore, it is proposed to add: "the gross receipts of an insurance company derived from rendering of services or giving benefits to the insured persons" as the sub-clause of section 113. The Karachi LTU has further asked the board in its budget proposals to grant special powers to the commissioner to withhold refund in certain cases.