ISLAMABAD: The government must revisit the rate of 1.5 percent minimum turnover tax on companies as it is payable even if the company is making losses, a tax which is anti-wealth creation, and the Federal Board of Revenue (FBR) must disclose the number of income and sales tax filers on its website on a monthly basis. The former recommendations were made by former Special Assistant to Prime Minister on Revenue Haroon Akhtar and the latter by tax expert Dr Ikramul Haq while speaking as guests on “Paisa Bolta Hai” with Anjum Ibrahim here on Sunday. Elaborating on the 1.5 percent minimum turnover tax Haroon Akhtar Khan stated that “this is enormous, just imagine if net profit of a company is 1.5 percent, our taxation is 100 percent. If the net profit of a company is one percent, our taxation is 150 percent. This minimum turnover is hitting the companies and it needs to be brought down in the coming budget.”
Waheed Shahzad Butt, a tax lawyer, concurred with Haroon Akhtar Khan maintaining that the minimum 1.5 percent turnover tax reflects "inefficiency and incompetence" of the FBR as it becomes part of FBR tax collection without any effort on the part of FBR.
Dr Ikramul Haq urged Finance Minister Shaukat Tarin to direct Waqar Masood Special Assistant to the PM on Finance and Revenue to upload available data of taxpayers on FBR’s website. Under Article 19A, read with Right of Information Act, 2017, the FBR must proactively disclose on its website, on a monthly basis, the number of income and sales tax filers, the incremental number, how much tax was paid, or the refund claimed. The FBR website should also disclose the total refunds due and actually paid, and reasons for not paying the due refunds. This is not happening as of today, he added. Waheed Shahzad Butt said that things are quite different in the field formations as compared to the policy making in the FBR. Taxpayers have to pay costs both in terms of money and time in litigation against the FBR at the level of Commissioner Appeals, tribunals, High Court, and the Supreme Court.
The FBR’s field formations should only raise tax demands, which are recoverable from the taxpayers. There should be accountability of tax officials, who raise frivolous tax demands, he added.
Dr Ikramul Haq stated that the FBR claimed that the total income tax returns received till May 2021 for tax year 2020 were 2.9 million, whereas, the Active Taxpayer's List (ATL) shows 2.6 million. This difference must be explained by the FBR.
He said that the FBR must register all mobile phone users. It will create a National Tax Registry to determine who is liable to pay tax and not filing returns.
Haroon Akhtar stated that the people are whitening their huge money by investing in the construction package. The government should also focus on other import and export-related industries for encouraging investments and capacity enhancement in these industries, he added.
Copyright Business Recorder, 2021
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