The World Bank review mission has directed the Federal Board of Revenue to issue a customs notification disallowing imports of registered persons being excluded form the list of "Active Taxpayers List" to ensure compliance by the business and trade community.
Sources told Business Recorder here on Thursday that the WB review mission has given FBR a priority list of administrative measures under the Tax Administration Reform Project (TARP). The actions have to be taken by the FBR before the closure of the TARP project ie December 31, 2011. According to the priority actions submitted by the WB, the FBR should disallow imports by non-Active Taxpayers.
The non-Active Taxpayers covered those non-compliant persons who have been excluded from the list of the 'Active Taxpayers'. The legislation requires a person to be a registered sales taxpayer to be able to import. The non-Active Taxpayer's registration would be considered to be suspended. This requires an SRO/Customs notification. The FBR should issue the SRO and Customs Notification in this regard.
The WB further suggested that the FBR should implement the extension of "Active Taxpayers List" to income taxpayers and withholding taxpayers. Finalise the draft SRO for issuance. The FBR responded that the action has already been taken. The rules pertaining to the 'Active Taxpayer List' are applicable to income taxpayers and withholding income taxpayers though rules notified on April 27, 2011.
The WB has asked the FBR to evaluate the reason for the high rate of appeals allowed in taxpayers' favour and suggested specific measures to resolve the problem. A joint Member (Audit) and Member (Legal) evaluation report to be produced. In this regard, the FBR has to issue an Internal Administrative Order.
The WB has asked the FBR to establish a centralised selection for desk and field audits based on risk profiling. Power of selection and notification should be given to the Board, which may delegate this power. The FBR should prepare the amendments for the budget as needed. The FBR responded that the action is in progress. No amendments were needed to be introduced in the Finance Bill 2011 since the power of audit selection exists at the Board level.
The WB has further directed the FBR that banks be audited exclusively by Large Taxpayer Units (LTUs) and file withholding statements for the LTUs. The FBR responded that the action has already been taken in this regard.
The FBR should also enforce mandatory use of the Tax Audit Monitoring System (TAMS) in field formations. The non-compliance of this order should reflect on Chief Commissioner's performance evaluation, WB said. Responding to this action, the FBR said that it has been made mandatory in the National Audit Plan 2011-12 to ensure use of the TAMS in the field formations.
The WB further suggested the FBR to establish a plan for rolling out training in the Integrated Tax Management System (ITMS) with a view of having full implementation in Karachi, Lahore, Rawalpindi and Islamabad. The FBR responded that the action is in progress. Training module has been prepared and manuals developed. Training is in process and to be completed in the last quarter of current fiscal.
The FBR should also finalise the specification of the taxpayer ledger project and the automation of the recovery officers' tasks to be approved by Chairman FBR. Develop the system of the taxpayer ledger and the automation of the recovery officer's tasks and include it in the FBR action plan, the WB said. The FBR said that the action is pending. It has been approved by FBR Chairman and specifications under discussion between Core Business Domain Team (CBDT) and Pakistan Revenue Automation Limited (Pral).
The FBR said that the FBR should also complete job descriptions of positions and the staff assignment to them as required by the new organisational structure in field formations. The Board should accelerate the procurement process for selection of training providers with resources of TARP. Prepare the calendar of training activities for short-term. The FBR should also prepare a training plan and execute it, including selection of participants, for the second semester 2011. The FBR has responded that action has already been taken in the areas of procurements and training plan, sources added.
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