The tax profiles of the corporate sector have surprised the Federal Board of Revenue (FBR) following incomplete submission of information by the companies and big corporate entities in their income tax returns. Sources told Business Recorder here on Monday that the issue of taxpayers'' profiles was discussed in a recent meeting between Aminullah Khan, FBR Member Enforcement, Accounting and top officials of Pakistan Revenue Automation Limited (PRAL) at the FBR Headquarters.
It was surprising to note that the most documented corporate sector is providing incomplete information in their returns despite all kinds of taxpayer''s facilitation and guidance by the FBR. To tackle the situation, it is necessary that the FBR should not accept incomplete returns filed by the corporate sector.
The status of taxpayers ledger accounts for the previous years was explained by PRAL to the tax authorities. It was noticed that a lot needs to be done on this account as the ledger accounts of even the corporate taxpayers were not complete. The PRAL officials attributed this to furnishing of incomplete particulars and incorporation of incorrect codes regarding categories of taxpayers on the Returns. It was proposed that incomplete returns may not be accepted by the tax department and necessary checks in the system should be applied while receiving the returns for obtaining the requisite information from the taxpayers and subsequent completion of taxpayer ledgers, sources added.
When contacted, a tax expert said that the biggest obstacle in the case of direct taxes is extremely low compliance rate by the corporate sector. Less than 25 percent of declared returns show taxable income; all other companies report either business losses or NIL income. These companies are showing losses for the last many years, but still charring out their businesses. Without complete records of business establishments (big or small) and a reliable automated system to verify records and refund claims it is quite unlikely that the desired results of documentation be achieved.
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