Lack of consistency in govt policies and announcements

The Federal Finance and Revenue Minister Shaukat Tarin last week assured the businessmen that no notices will be issued by the Federal Board of Revenue (FBR) from 01 July as the taxpayers will be able to carry out self-assessment, whereas only 4 to 5 percent of the cases shall be sent for audit which will not be done by FBR but by a third party.

"I want to end the harassment by FBR. Although there are good people at FBR, there are also some troublemakers. Hence, we have agreed upon Universal Tax Self-Assessment and the audits by third party only," Tarin said, adding that if any wrongdoing is found after the audit by third party, it will result in initiation of investigation and punitive action and that laws will be devised to put such persons behind found bars responsible for wilful default.

This assurance that is 'too good to hold ground and digested by FBR' was on its face value welcomed by the business community as it was their longstanding demand that they want to pay taxes and held accountable ,but, do not want any interaction with the tax men.

Unfortunately, the jubilation of businessmen proved short-lived. The FBR, just two weeks short of 01 July deadline set by the Minister for a 'notice-free FBR', has sent out over 50,000 notices to registered real estate agents, jewelers, money changers and other professionals under ' Designated Non-Financial Businesses and Professions (DNFBPs)' for failing to comply with FATF condition with regard to Suspicious Transaction Reports (STRs).

The real estate sector, which has been hit hard by the pandemic, was the first to react and has warned of a serious setback to investments in Prime Minister Imran Khan's priority construction sector due to planned inspections of offices of the property dealers, developers and investors by authorities.

Muhammad Ahsan Malik, The convener of FPCCI committee on Real Estate sector, said the director-general of DNFBPs has planned to inspect the offices of developers, builders and jewellers soon after the passage of budget (2021-22), which would create harassment and panic in the market.

The notices issued, presumably in haste, show that the questionnaires to the developers, builders and other multiple businesses are identical even though the nature of their businesses are different from each other. Many of the recipients of these notices lack competence on laws and legal frameworks to comply with or respond to these questions without the assistance of outside consultants.

With the automation of FBR and links to NADRA and banks, who register all transactions, one wonders what better information can be dug out from the files and interrogation of real estate agents or developers or others. In case FBR/DNFBP needs to extend its scope of investigation, the requirement can be better fulfilled by seeking authentic information directly from the transaction transferring and registration authorities and societies like CDA, LDA, KDA, DHAs and revenue.

It is noteworthy that to motivate the real estate developers and builders out of their self-imposed hibernation driven by fear of harassment by taxmen and investigating agencies, the prime minister had announced an amnesty scheme for the construction sector along with an incentive package to trigger activities in 40 industries associated with the construction industry.

The businesses need stable and consistent policies to move towards a stable economy. This is not happening. Multiple government entities are having their own ways, often in conflict with each other thereby compromising the credentials of the country's leadership. Wonder who is calling the shots?

(The writer is a former President, Overseas Investors Chambers of Commerce and Industry)

Copyright Business Recorder, 2021