Federal Board of Revenue (FBR) is going to withdraw all tax exemptions granted to specific sectors and individuals in coming days, said top tax official here on Thursday.
Speaking at a pre-budget seminar organised by Institute of Chartered Accountants of Pakistan (ICAP) held at a hotel here Shahid Hussain Asad, member Inland Revenue Policy FBR, said that tax exemptions had done nothing but caused a colossal revenue loss hence FBR was planning to withdraw all tax exemptions, granted to specific sectors and individuals, shortly.
He said that withdrawal of tax exemption, only from crude oil sector, would create a revenue impact of around Rs 1 billion to the national kitty. "No new tax measure or increase in tax rate is under consideration for coming budget but the authorities are more concentrating on broadening of tax base.", he said.
Replying to a question, he said there was no co-ordination between NADRA and FBR for identifying potential taxpayers. "I don't want to comment on past claims regarding information sharing of 0.75 million potential taxpayers by NADRA but now there is no co-ordination with NADRA in this regard". "However, we are striving to create a liaison with NADRA for getting access to its database for identifying potential taxpayers," he said.
Moreover, he said that FBR was expecting to come closer to its annual budgetary target as 17 per cent revenue growth had been witnessed in ongoing fiscal year as compared to 3 per cent growth reported in the last year. He said that annual budgetary target was still Rs 2475 billion and no official downward revision had been made, so far.
Meanwhile, President ICAP, Naeem Akhtar Sheikh, said that FBR had failed to create deterrence among taxpayers through fair audit, despite conducting it for many years. He said that FBR did not focus on its prime job rather indulged into irrelevant matters. He said that FBR's approach towards non-reporting was not effective, which appears to be one of the major issues of country's economy.
Earlier Saqib Masood, former president ICAP, had given an electronic presentation on ICAP budget proposals 2014-15. According to the presentation, ICAP suggested that the government should use databases available with NADRA, electricity and gas distribution companies, airlines and hotels for identifying non- taxpayers and their source of income. It said that CNIC be used as the key identifier for transactions. A central number will make filing easy for the tax payers and will provide access to all information to all the relevant tax collection authorities.
ICAP also recommended putting a constitutional bar on tax amenities, providing tax whitening opportunities for future. Appropriate checks & balances may be introduced for immunity regarding source of foreign remittances under the relevant laws. There should be a statutory body for policy making process, separate from FBR, represented by the planning commission, ministry of finance, ministry of law, FBR, professional and organisations like ICAP, tax bars, chamber of commerce and stock exchange, ICAP proposed.
Tax rates should also be rationalised to bring down, to acceptable level, to help broadening tax base; corporate tax be reduced to 30 percent, in phased manner, while 17 percent sales tax, with an additional 3 per cent value addition tax, on commercial imports should gradually be brought down to 10-12 percent, ICAP suggested.
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