ISLAMABAD: Business community fears harassment by Federal Board of Revenue (FBR), according to the Taxpayers’ Satisfaction Survey (2023) released on Friday.
According to the survey results issued by the FBR on Friday, it was observed that businesses generally agree that paying tax is a legal obligation and that tax payment will help bring progress/betterment in Pakistan.
However, they tend to agree less that the taxes levied upon businesses in their industry are fair. Correlating this further with the behavior dimension, respondents note that businesses are not fulfilling this responsibility in terms of paying their taxes because they feel that they are not rewarded for their payment and they are unsure how the tax monies will be used. Businesses also fear harassment by FBR.
Thus, a large majority of businesses understand and agree that paying taxes is a legal responsibility, and a social one, which is necessary for the development of the country.
However, they note that businesses are not always fulfilling this responsibility. In other words, there are apparently inconsistent norms prevailing in the taxpayers where legal requirements are not necessarily equated with appropriate behavior in society. When taxpayers view the tax system to be unfair and regressive (or not progressive enough) it may contribute to low compliance.
This is an important finding, as it is a key feature which formulates tax morale and influences tax compliance. These results indicate that gains in voluntary compliance can be made through appropriately structured taxpayer communication programs.
Appropriately designed (and targeted) programs for taxpayer education can also seek to change taxpayer norms in the country which modulate voluntary compliance. Focusing on digitization of services at FBR, feedback from businesses was quite positive, survey result said.
Businesses generally agreed that digitization of services has made it easier to file their tax returns and that digitization as made the tax filing process more transparent.
This is a key area to project further to not only improve tax filing processes, but also promote the image of FBR.
To encourage tax compliance, businesses highlighted that facilitating measures and improved communication appear to be more effective relative to penalties.
As shown below, 84% of businesses believed that awareness campaigns could be very effective in helping to promote tax compliance (an additional 10% believed this could effective and 6% somewhat effective).
This was followed by process-oriented measures including tax form simplification and extended deadlines. On the other hand, high penalty on evaders scored the lowest in terms of effectiveness on encouraging compliance, survey added.
Copyright Business Recorder, 2023
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