The Federal Board of Revenue has assured Finance Minister Ishaq Dar that the risk-based profiling of new sales tax registration applicants will start on priority basis to ensure issuance of Sales Tax Registration Numbers (STRNs) to solely genuine applicants. Sources told Business Recorder here on Wednesday that the issue of new sales tax registration system was discussed threadbare during recent visit of Ishaq Dar to the FBR Headquarters.
During briefing of the FBR's Members on sales tax issues, Ishaq Dar inquired about the policy measures to improve sales tax registration processes. Tax authorities have informed the Finance Minister that the new systems of risk-based profiling of applicants for sales tax registrations and automated issuance of notices to impose penalties on non-filers of sales tax returns through Computerised Risk-Based Evaluation of Sales Tax (Crest) would be launched without delay.
Sources further said that the new sales tax registration system has divided applicants into three categories, ie, high-risk, medium-risk and low risk cases. The new system would check whether the new applicant is financially stable for the declared business for which sales tax registration has been applied. The applicant's credentials should reflect that the applicant has enough financial resources for running businesses declared in the STR application form. The new system would also be instrumental in checking frauds of fake invoices. There are cases where the business units are untraceable on the declared addresses. All such issues would be resolved through checking of applicants under the categories of high-risk, medium-risk and low risk cases.
According to sources, the FBR will set pre-conditions for the eligibility of sales tax registration. For example, the new applicants would be required to submit the commercial and industrial electricity and natural gas connections. The Board would also equip the Inland Revenue officers with the Android-powered phone for taking photographs of the declared manufacturing/business premises to ensure physical verification. With the help of technology of the GPRS, the Android-powered phone would take photographs for record. This would ensure proper physical verification of the declared business or manufacturing premises. The record of the declared premises would be available with the tax department in the form of photograph to ensure registration of only genuine and bona fide applicants.
The department will use technologies of Global Positioning System (GPS) and GSM (Global System for Mobile Communications) for verification of business premises of units that intends to obtain STRNs. The FBR will use both the technologies for physical verification of the business premises under the new rules to be notified for new sales tax registration system. The purpose of the whole new system is to introduce some kind of secure mechanism to issue STRNs only to verified business premises, which could be monitored in future.
The physical location verified through GIS/GPS system making it possible to track the location co-ordinates, geospatial images, population density of different types of units on map. The Risk based verification of registration application and particulars changes on scale of dynamic risk factors mitigating the fraud risk. For imposing penalty on non-filing of sales tax returns, sources said that the legal backing is required under the law to empower Crest system to issue notices for imposition of penalty on non-filing of sales tax returns.
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