Sales tax registration: FBR retains discretionary powers under ''RegSys''

The Federal Board of Revenue has retained its discretionary powers under the new risk-based sales tax registration system called ''RegSys'' - empowering the FBR Secretary (IR Automation) to perform the desired functions. An expert on sales tax registration matters told Business Recorder here on Monday that the FBR had issued instructions to the field formations regarding the new system.
According to the FBR, the role of Central Registration Office (CRO) has been minimised in the new system. Now, the residual functions shall be performed by Secretary (IR Automation). However, Local Registration Offices (LRO) will continue to conduct physical verification and other inquiries as required under the new system. Sources said that the new system was exclusively designed to fully abolish the role and discretion of the CRO Islamabad. The new software and procedure has been designed by the FBR to get rid of discretionary powers and functions at the Board''s level. However, the FBR on one hand claimed minimising role of the CRO whereas on the other hand empowered the Secretary (IR Automation) to perform the residual functions. Moreover, a loophole in the new system has been identified that is the residual functions have not been defined. Apparently, powers have been retained at the FBR level by allowing Board''s official to perform functions under the new sales tax registration system.
Expert said that experience has shown such residual functions eventually overshadow the automation process. The problems that e-systems like STARR/STEAMS suffered may not be with the e-registration process. Therefore, there is a need of periodical review by the IT architectures such as Member IT or Computerised Risk-Based Evaluation of Sales Tax (Crest) core team to go through all such cases where so-called residual functions are performed. The residual powers have been retained by the FBR to give legal coverage to the e-registration, which primarily is being processed through Pakistan Revenue Automation Limited (Pral) IT networking system, expert added.
A new automated, risk-based registration system called ''RegSys'' has been developed by FBR. A number of improvements have been made in the revised procedure to expedite registration while minimising the risk of dubious registration. These changes have been notified by amendments made in the Sales Tax Rules, 2006 through SRO 79(1)/2014 dated 31.01.2014, available on the board''s website, the FBR said.