ISLAMABAD: Some of the tax reforms awaiting implementation include registration of high-net worth individuals through the NADRA's tax profiling, third-party audit, simplification of tax codes (federal tax laws); harmonisation of sales tax between the federation/provinces, single sales tax portal for the FBR/provinces, procurement of IT equipment, and automation to bring transparency in the tax system.
The Federal Board of Revenue (FBR) has also deferred some key reform/documentation initiatives including extension in the corporate sector to switch over to the digital mode of payments, up to December 31, 2021; delayed enforcing new property valuation rates up to January 16, 2022, and registration of traders’ community under the Tax Laws (Third Amendment) Ordinance, 2021.
The FBR has also not implemented the transformation of sales tax regime into a broad-based VAT and strengthening taxation on real estate.
Sources told Business Recorder here on Saturday that the FBR is taking tax policy measures to generate the expected revenues and need to step up tax administration reforms and enforcement.
To this end, the FBR will focus on: (i) introducing a centralised, risk-based compliance function; (ii) modernising the IT system and further advancing automation; (iii) actively using third-party data, strengthening data cross-checking, and analysis; (iv) simplifying registration and filing processes; (v) modernising audit practices and taking a more targeted audit approach; and (vi) further strengthening the large taxpayer approach and expanding the activities of the Large Taxpayer Office (LTO).
Additionally, the FBR will continue the process of sales tax harmonisation, implement the single return and taxpayer portal.
Tax Laws (Fourth) Amendment Bill, 2021: Nearly Rs350bn sales tax to be imposed, FBR tells Tarin
According to the sources, to broaden the tax base, the FBR has provided 14 million records of financial transactions of citizens to the NADRA to compute indicative income and tax liability of non-filers by use of artificial intelligence.
A deadline of December 15 had been given for launching of the exercise. So far, there is no final outcome of the exercise. The process of selecting audit firms for third-party audit is still under process. The computer ballot for selection of cases audit has yet not been conducted for tax year 2019.
The issue of the harmonisation of sales tax on the definition of goods and services is not fully resolved between the federation and provinces. The FBR is repeatedly delaying launching of a new “Single Sales Tax Portal” for filing of single sales tax returns by all federal and provincial sales taxpayers. Now, it is expected that the prime minister will launch the portal by the end of the current month.
The FBR has started the process of formulation of Inland Revenue Code in a bid to harmonise all inland taxation laws and maximise facilitation of taxpayers. The FBR will enforce a new harmonised and simplified Inland Revenue Code from July 1, 2022, combining Income Tax Ordinance, 2001, Sales Tax Act, 1990, Federal Excise, 2005, and the Islamabad Capital Territory (Sales Tax on Services) Ordinance, 2001.
When contacted, sources said that the procurement of hardware and software is under process and tender/bidding is completed. The IT equipment would be procured after completion of legal formalities. The FBR has received 2.213 million income tax returns for the Tax Year 2021 with tax deposit of Rs41.895 billion up to October, 2021.
Responding to a query, sources said that notices to more than 200,000 high net-worth un-registered persons were issued.
Data has been obtained from DISCOs and gas companies for broadening of tax base. More than 650,000 notices have been issued on the basis of data obtained from the DISCOs and in lieu of these notices 129,541 returns have been enforced so far.
Under the reforms, the track and trace system has been launched in sugar and tobacco sectors. It would also be extended to cement industry, fertiliser, beverages, and petroleum sector.
The FBR has also launched the much-awaited prize scheme for the shoppers from POS-integrated Tier-1 retail outlets. Thousands of prizes worth hundreds of thousands of rupees will be distributed among the shoppers through a computerised ballot, who opt to shop from POS- integrated retail outlets.
The FBR has already abolished/merged three positions of the FBR members and brought down the total strength of the 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 has abolished 12 withholding taxes in last budget. A total of 40 withholding taxes would be abolished under reforms.
Copyright Business Recorder, 2021
Comments
Comments are closed.