ISLAMABAD: Prime Minister Imran Khan Friday directed the Federal Board of Revenue (FBR) to focus on seven major areas, ie, reforms in tax regime; simplification of tax codes (federal tax laws); plugging existing loopholes; reduction in discretionary powers of tax collectors; automation to bring transparency in tax system and tackling the issue of flying invoices.
The prime minister issued these directives to the FBR during the high-level meeting on tax reforms held at the PM House.
The prime minister stated that the objective of tax reform is to make tax code simple; plug existing loopholes in the system; reduce discretionary powers of tax collectors and tax practitioners and introduce automation to ensure transparency of tax system.
Tax regime should be reformed and structured in such a way that it facilitates businesses and help economy to grow, the PM added.
During the meeting, PM has specifically issued directions to the focus on the issue of flying invoices.
Tax authorities informed the PM that the revenue collection target of the Federal Board of Revenue (FBR) has been revised downward from budgetary projection of Rs4.9 trillion to Rs4.7 trillion for 2020-21, reflecting a decrease of Rs246 billion. Tax machinery is trying its level best to meet the assigned target of Rs4.7 trillion by the end of current fiscal year.
FBR team headed by Chairman FBR Javed Ghani informed the PM that so far the net revenue collection of the FBR stood at Rs 2916 billion during Jul-Feb (2020-21) against the target of Rs 2898 billion, reflecting an increase of Rs 18 billion.
During March-June 2021, it is expected that this revenue performance would be improved substantially compared to 2020 when economic activities were disrupted.
The net collection for the month of February was Rs.343 billion against a required target of Rs.325 billion, representing an increase of 8% over last February and 106% of the target.
The amount of refunds disbursed was Rs.152 billion compared to Rs.79 billion paid last year, showing an increase of 97%. This is reflective of FBR’s resolve to fast-track refunds to prevent liquidity shortages in the industry.
About the broadening the tax-base, the FBR informed the PM that income tax returns for tax year 2020 have reached 2.62 million compared to 2.43 million last year, showing an increase of 8%. The tax deposited with returns was Rs.49.6 billion compared to only Rs.31.0 billion, showing an increase of 60%. It may be recalled that last year the final date for submission to returns was 28th February.
Moreover, the FBR has issued notices to nearly 2.1 million taxpayers who were supposed to file return, or have filed a nil return, or misdeclared their assets or have not been filing return for sales tax to comply with their legal obligations. Around 9952 sales points of Tier-I retailers have been integrated with Point of Sales Linked Invoicing System.
Under the reforms, the FBR has already abolished/merged three positions of the FBR Members and brought down the total strength of FBR Members from 13 to 10. The tax policy unit has been created under the administrative control of the Finance Division. The FBR had created Integrity Management Cell and Regional Integrity Committees (RICs) for investigating complaints of corruption against the tax officials.
As per tax reforms, the government would abolish 40 withholding taxes in the next two fiscal years, so the total number of withholding taxes would be brought down from 65 to 25 taxes, starting from the upcoming budget for 2021-22.
Tax authorities are focusing on policy measures including harmonisation of sales tax between the federation and the provinces; transformation of sales tax regime into a broad-based VAT and strengthening taxation on real estate. The meeting was attended by Federal Ministers Makhdoom Khusro Bakhtyar, Dr. Abdul Hafeez Sheikh, Asad Umar, Hammad Azhar; Advisers Abdul Razzak Dawood and Dr. Ishrat Hussain; Special Assistants Dr. Waqar Masood, Tabish Gohar, and Nadeem Babar, Chairman Board of Investment and other senior officials.
Copyright Business Recorder, 2021
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