Investment in assets: 'majority of rich may not be able to defend their source'

The Federal Board of Revenue Member Inland Revenue (IR) Khawar Khurshid Butt said on Thursday that a large number of wealthy people might not be able to legally defend their source of investment in assets which would make them part of the documented regime under the national exercise to broaden the tax base.
Briefing the special committee of Public Accounts Committee (PAC) on broadening the tax base, FBR Member IR stated that if a wealthy person who own assets but is not on the tax roll of the FBR has to give source of investment in terms of foreign remittances or agricultural income, the tax department will treat the case as per law. However, most of the wealthy persons, to whom notices have been served to explain source of investment in purchase of assets, would not be in a position to defend their cases. All such persons would be brought into the tax net, who have purchased assets but neither obtained National Tax Number (NTN) nor filing their income tax returns.
The FBR Member IR explained the committee that the FBR has established a new directorate ie Director General of Broadening of Tax Base to be headed by a senior tax official Shahid Hussain Asad. The FBR has started disseminating data in a focused manner to the Regional Tax Office (RTOs) to issue notices to the undocumented persons based on authentic data. The FBR has launched the exercise of broadening the tax-base in a systematic manner to ensure documentation of persons liable to registration with the tax department. The pilot project of the exercise has been launched on national level taking into account most potential cases.
The FBR has started asking the wealth persons to explain their source of investment used for purchasing assets. Initially, big un-registered units engaged in business and own property would be targeted and source of investment would be asked from them. If these persons prove that they have purchased the property from the foreign remittances or agricultural income, such cases would not be pursued. However, the concert evidence in this regard would be required to substantiate the source of income. It is expected that in most of the cases, the people might be unable to prove that they have purchased assets from exempt income.
The FBR want to gradually conduct the exercise for documentation of the economy. The Board would not suddenly disseminate all the data to the field formations for issuance of notices to the asset holders, who are operating out of the tax net. The Board would gradually expand the exercise to broadening the tax-base by initialling focusing on potential persons.
Khawar Khurshid Butt informed that the directorate has the mandate of broadening the tax base aiming at netting potential taxpayers. The FBR has created Units for broadening the tax base at the Regional Tax Office (RTO) would be supervised by senior tax officials. The Units would report to the Director General BTB Shahid Hussain Asad.
Responding to a query on the misplacement of tax records, FBR Member IR responded that the FBR is in the restructuring phase under which transfers and postings have also been done. During the restructuring exercise, the files of the registered persons have been transferred from one RTO to another having jurisdiction. There are cases of change of jurisdiction during the on-going phase of restructuring of the tax machinery. The department is making all out efforts for proper functioning of the revamped units.