Federal Board of Revenue (FBR) Chairman Ali Arshad Hakim said on Monday that expansion of intelligence network is the key to document the black economy besides setting up intelligence offices at district and tehsil level to bring undocumented business transactions into formal tax regime at grass-roots level.
Addressing the first quarterly conference of Directorate General Intelligence and Investigation, Inland Revenue (IR), at the FBR House, Hakim said wide intelligence network is need of the hour to bring black economy into documented regime. The expanded network of the agency is necessary to cover the whole of the black economy across the country.
For this purpose, the concept of taxpayer's mapping and collection of business transactions related data at District and Tehsil level is most important to check black economy in the country. The geographic and sectoral mapping of various businesses would help in developing a national database to document persons working in informal regime. A hidden/secret force of the intelligence agency is needed to effectively tackle the issue of black economy, FBR Chairman added.
Referring to the FBR Chairman's address, sources further stated that tax authorities have informed the intelligence officers about the quantum of black economy in Pakistan. Hakim stated that at present there are two economies - black and white - simultaneously operating in the country. Those operating in the white economy are registered with the tax department whereas unregistered persons are part of the black economy and totally out of the tax net.
The persons registered with the tax department are at least paying some taxes and making contribution to the national economy. The unregistered persons are paying nothing and not even ready to disclose the basic information of their business activities to the tax department.
He said that the tax officials should facilitate registered persons, who are enrolled with the tax department, as they at least contribute some amount to national exchequer. The registered taxpayer is also on the database of FBR and his basic income/turnover, income and assets has been declared in the income tax returns, whereas unregistered persons are neither disclosing any information to the tax department nor paying any taxes, and the registered persons should be the top priority of the tax department.
Sources said the FBR Chairman stressed upon the supervisory officers of the Directorate General of Intelligence & Investigation IR that the facilitation should be our main slogan for the registered persons. The un-registered segment of the society is the area where wide intelligence network is needed to bring black economy into the formal tax regime. The extensive intelligence network would be instrumental in for recording the all business transactions and income related data in the FBR's system. This information would form basis for brining the undocumented persons into the tax net.
The directorate of intelligence IR should collect data of the un-documented persons through proper network and disseminate the same for the field formations for taking necessary action against them. Hakim highly appreciated the idea of the directorate of intelligence IR about the taxpayers' mapping which is need of the hour. The mapping of the business markets on national level would identify the exact volume of black economy.
The tax department should have basic information about the person to be brought into the formal regime. In this way, the intelligence officials of the agency would be able to confront the unregistered persons with the help of authentic data and he would be left with no option but the register and start paying his due amount of taxes. The information about investment and expenditures of un-documented persons would force them to come with the formal regime due to availability of proper information with the tax department.
In order to handle the comparatively large black economy, there is a need for a large workforce of intelligence officials in the field formations. The tax department is utilising its officers to deal with the registered persons already operating under the tax net. On the other hand, expanded intelligence network is required to handle the large number of persons operating in the black economy of the country.
Sources quoted FBR Chairman as saying "intelligence has been considered as eyes of the department. The wide and extensive intelligence network would help in checking persons, who are operating in the black economy", he added. Meanwhile, according to FBR, the first quarterly conference of the supervisory officers of the Directorate General of Intelligence & Investigation (Inland Revenue) was held on September 17, 2012 at FBR (HQs), Islamabad.
The conference, which was chaired by the Director General I&I (IR), Khawaja Tanveer Ahmad and attended by the Directors and Additional Directors of the DG was also addressed by the Chairman FBR, Ali Arshad Hakeem. In his address, the Chairman shared his vision for the FBR with the Supervisory Officers of the DG I&I (IR). Chairman stressed on raising the DG I&I (IR) as an effective arm of the FBR, sufficiently empowered to supplement the field formations with concrete and timely information on all sorts of tax evasion. The Chairman emphasised the central role which an Intelligence Agency like the DG I&I - IR could play in enhancing tax compliance in the country.
In this introductory speech, the DG I&I - IR, Khawaja Tanveer Ahmad highlighted the role envisaged for the DG I&I - IR and called upon the participants to draw a roadmap for achieving the tasks assigned to the Directorate General. He appreciated the fact that despite numerous hardships and resource constraints, the nascent Directorate General I&I - IR has been able to establish itself as a worthwhile institution within the FBR hierarchy in a short span of one and a half year.
The Director General I&I - IR Karachi, Lahore and Faisalabad and Director (HQs) I&I (IR) Islamabad, then gave presentations on the performance of their respective Directorates and shared their plans for the ongoing Financial Year. As a short term vision, detailed discussions were held on how to contribute effectively towards the achievement of the targets assigned to the FBR for the current year. As a long term plan, various strategies were discussed to curb revenue leakages through mis-declaration, tax frauds, fake refunds and general non-compliance. The need for effective information gathering to curb tax evasion through all these means, was strongly felt and strategy derived for geographic and sectoral mapping of various businesses to develop a database and use it as tool of checking non-compliance and evasion. The conference ended on a note of thanks for the participants by the Director (HQs) I&I - IR, Muhammad Tanvir Akhtar.
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