ISLAMABAD: A Withholding Zone of Regional Tax Office (RTO) Sargodha has effectively utilised the existing data and unearthed tax evasion to the tune of Rs 23.5 billion through analysis of returns and digitisation tools for assisting the Federal Board of Revenue (FBR) to achieve the assigned target for 2024-25.
The FBR has received several reports from the RTO Sargodha reflecting the remarkable performance of the Withholding Zone-RTO Sargodha. The most interesting aspect is that the Zone has surpassed the investigative audit and tax analysis being done by the Auditor General of Pakistan, Directorate of Internal Audit (Inland Revenue) and Directorate General of Intelligence and Investigation Inland Revenue.
The large-scale income tax and sales tax evasion has been detected from a small and non-industrial tax base like Sargodha RTO.
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This clearly reflects that the deployment of innovative data analytics and other electronic tools by using the existing data sets with no extra cost or resources.
Keeping in view example of this Zone, it is evident that there is an enormous potential from all tax jurisdictions across Pakistan enabling the FBR to surpass budgetary targets and increase tax-to-GDP ratio.
According to sources, this groundbreaking detection of tax evasion marks a significant milestone in identifying risks and combating tax evasion. This achievement demonstrates the potential for instant risk identification, which will be further augmented upon the completion of the ongoing digitalization project. The integration of innovative electronic tools and comprehensive data analytics has enabled the FBR to unearth substantial tax evasion, paving the way for enhanced revenue collection and a more robust tax system.
As the digitalisation project reaches its culmination, the FBR is poised to unlock even greater efficiencies in tax administration, further solidifying its commitment to combating tax evasion and promoting a culture of compliance.
In a landmark achievement, the Withholding Zone Sargodha RTO, has successfully cracked down on tax evasion, uncovering a staggering Rs23.5 billion in unpaid taxes through the application of innovative electronic tools.
This breakthrough success has far-reaching implications for Pakistan’s tax landscape, showcasing the immense potential for revenue growth through technology-driven solutions.
When contacted, Commissioner-IR Babar Nawaz Raja informed Business Recorder that the FBR’s pioneering initiative is a testament to our unwavering commitment to combating tax evasion and enhancing revenue collection.
By harnessing the power of electronic tools and leveraging legacy data, we have achieved a major milestone in tax compliance. However, these instant detections are just a small segment of the series which focuses mainly on Return Based Tax Evasion, a major factor in damaging the tax base and offsetting the impact of revenue growth measures. It can be expanded to wider horizons covering mega businesses. We are confident that replicating this approach nationwide will yield substantial results, significantly boosting Pakistan&39;s tax base and revenue collection. The true potential of this initiative can only be realised by scaling it up to cover larger tax bases, including mega businesses, to unearth the massive tax evasion prevalent in our system.
The commissioner concluded that “we have only scratched the surface, and there is much more work to be done to uncover the full extent of tax evasion in Pakistan.
Details of the investigations revealed that 383 registered taxpayers and 7,519 unregistered persons have been identified in tax evasion of Rs 23.5 billion in unpaid taxes detected in a small tax base of RTO Sargodha when electronic tools were used to analyse datasets for tax years, 2022 and 2023 and only 32,766 sales tax and income tax returns were subjected to electronic audit.
The estimated additional revenue of Rs 1.4 trillion, representing a 15 percent increase in current tax collections.
The enhanced tax compliance and reduced evasion through technology-driven solutions would play an important role in expand the tax base.
It is important to mention that the said detection has been made in one of the smallest and non-industrial tax bases. Historically contributing only Rs 36 billion annually in total taxes.
The scaling up this initiative nationwide could lead to substantial revenue growth and tax base expansion.
Copyright Business Recorder, 2024
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