Tax Reform Implementation Committee (TRIC) and Federal Board of Revenue (FBR) have decided to implement short-term recommendations of the Tax Reform Commission (TRC) including accurate valuation of properties to control under-valuation of immovable properties. Sources said on Wednesday that the decision to implement TRC final report recommendations have been taken in the meeting of the TRIC chaired by Special Assistant to Prime Minister on Revenue Senator Haroon Akhtar Khan and attended by the Chairman FBR, Chairman TRC, FBR team and members of TRC.
During the meeting, it was decided that Medium Term and Long Term recommendations will be taken up in due course. However, regarding short term recommendations, the TRC and FBR agreed to follow implementation mechanism. On the proposal of the valuation of property, TRC recommended federal government in co-ordination with the provincial governments need to agree on a valuation mechanism for properties in various categories which need to be revised at least every year through independent credible valuer's. The value should be at minimum of 75 percent of current market value. These values may be relaxed for existing owners on a cut-off date for the purpose of determining subsequent gains.
Tax Reform Implementation Committee and FBR have taken the following decisions on the implementation of the short-term recommendations of the Tax Reform Commission:
1. TRC proposal: Committee for simplification of laws.
Decision: During meeting with the F.M it was decided that the agreed sales tax proposals may be implemented within short time. Further action: Sub-committee constituting of Member (IR Policy), Member (Customs) and member (SPR&S) will make recommendations and present before the committee.
2. TRC proposal: Framework for monitoring implementations of Reforms on an on-going basis.
Decision: Tax Reform Implementation Committee has already been formed. Further action: No further action is required.
3. TRC proposal: Ethics and Grievance Redressal system. Decision: It was decided that there should be structural ethics and Grievance Redressal System both at Chief Commissioner / Collector level and FBR(HQs). Further action: Member (FATE) will make presentation on this proposal.
4. TRC proposal: Functional and territorial jurisdiction. Decision: It was discussed that the mufasil units will be used for the purpose of BTB. Further action: Member (I.R Operations) will make presentation on this proposal.
5. TRC proposal: IT infrastructure. Decision: It was discussed that post of CEO of PRAL has already been advertised, while a committee will conduct interview of candidates and decide the issue shortly. It was also discussed that third party audit of PRAL has already been made; however report is not satisfactory. Further action: Member (I.T) will make presentation on IT structure.
6. TRC proposal: Cost of Compliance. Decision: It was agreed that in order to reduce the cost of compliance, IT system/automation has to be improved. Further action: Member (IR Policy) will make presentation on this proposal.
7. TRC proposal: Performance Evaluation. Decision: It was discussed that KPIs have been finalised with the help of professionals, which were also shared with the TRC. It was decided to obtain further progress. Further action: Member (HRM) will make presentation on performance appraisal on the basis of KPIs.
8. TRC proposal: Emphasis to curb corruption and liaison with NAB for implementation of recommendation against corruption. Decision: It was decided that work done so far by FBR shall be presented. Further action: member (Administration) will make presentation on this proposal.
9. TRC proposal: Valuation of property. Decision: It was decided to have draft rules for the purpose. Further action: Member (IR Policy) will make presentation on draft rules.
10. TRC proposal: Utilisation of Withholding tax data. Decision: It was decided that withholding tax data will be used for the purpose of BTB. Further action: DG (WHT) and DG (BTB) will make presentation on this issue. Chief (WHT), IR Operation Wing will give input.
11. TRC proposal: Data Available with Other Authorities. Decision: It wad decided that the data of NADRA should be utilised for the purpose of BTB. Further action: DG (BTB) will make presentation on this proposal.
12. TRC proposal: Submission of Annual Tax Returns. Decision: It was discussed that NTN has already been replaced with CNIC, which would go a long way towards broadening the tax bases. It was decided to simplify the procedure. Further action: TRC will make presentation on this proposal.
13. TRC proposal: Alternative Dispute Resolution (ADR) to be under FTO. Decision: It was agreed that the existing ADRC provisions require legal amendments, which will be made during the budget exercise. Further action: Ahsfaq Tola, Member TRC will make presentation on this proposal.
14. TRC proposal: Advance Ruling mechanism. Decision: It was decided that the Advance Ruling Mechanism will be devised for all the taxes. Further action: Member (IR Policy) and Member (Customs) will make presentation on this proposal.
15. TRC proposal: Administrative Reforms. Decision: It was agreed that the administrative reforms involve on-going process, which needs to be analysed regularly. Further action: Member (Administration will make presentation on this proposal.
16. TRC proposal: Prize Bonds discontinuation of Rs 40,000 and Rs 25,000 Prize Bonds. Decision: It was decided that data may be sought from DG, DEBT, Ministry of Finance. Further action: SA to the Chairman will seek data and present before the Committee.
17. TRC proposal: Inward Remittances. Decision: The item was decided to be dropped. Further action: No further action is required for the time being.
18. TRC proposal: Declaration of assets located abroad by Resident Pakistanis. Decision: It was decided that TRC will give detailed proposal in the matter. Further action: Abid Shaban will make presentation on this proposal.
19. TRC proposal: Benami Transaction (Prohibition) Act 2015. Decision: It was agreed that since Bill has already been submitted to the National Assembly no further action is required. Further action: No further action is required.
20. TRC proposal: High level Committee to monitor implementation of Action plan to reduce the level of underground economy. Decision: It was decided that Chairman TRC would suggest proper course of action. Further action: Masoud Naqvi to give detailed presentation.
21. TRC proposal: Audit as an Independent Division. Decision: It was decided to deliberate further on the proposal. Further action: This proposal will be discussed in future meetings.
22. TRC proposal: The stock of refunds being carried forward needs adjustment and disclosure as a liability. Decision: No further action was suggested. Further action: No further action is required for the time being.
23. TRC proposal: Independent Policy Board and FBR Board. Decision: It was agreed that FBR Act already provides for Board. Further action: No further action is required.
24. TRC proposal: Appellate Forums. Decision: This proposal will be discussed in future meetings. Further action: Abid Shaban will make presentation on this issue.
25. TRC proposal: Phasing out of Final taxation Regime. Decision: It was decided to discuss in future meetings. Further action: Abid Shaban will make presentation on this proposal.
26. TRC proposal: Administrative Reform. Decision: It was agreed that the administrative reforms involve on going process, which needs to be analysed and discussed at length. Further action: Member (Administration) will make presentation on this proposal.
27. TRC proposal: Development of Compliance management framework. Decision: It was decided to discuss in future meetings. Further action: Masoud Naqvi will make presentation on this proposal.
28. TRC proposal: Compensation for withholding Agents. Decision: The proposal was not supported. Further action: No further action is required.
29. TRC proposal: Taxation of Small company. Decision: Will be examined in budget. Further action: No further action is required at present.
30 TRC proposal: Taxation of Small Entities Ninth Schedule. Decision: It was agreed that FBR has already established Transfer Pricing Unit (TPU), while discussions have also been made with the representatives of HMRC. Further action: Head of TPU will make presentation on this proposal.
31. TRC proposal: Transfer Pricing. Decision: It was agreed that FBR has already established Transfer Pricing Unit (TPU), while discussions have also been made with the representatives of HRMC. Further action: Head of TPU will make presentation on this proposal.
32. TRC proposal: Strengthening of Tax Audit Functions. Decision: It was agreed to strengthen audit and capacity building of officers. Further action: Member (Taxpayers Audit) will make presentation on this proposal.
33. TRC proposal: Establishment of National Tax Agency. Decision: This proposal will be discussed in future meetings. Further action: No further action is required at present.
34. TRC proposal: Development of harmonised tax codes. Decision: It was decided that FBR will take action on this proposal. Further action: Member (IR Policy) and member (Customs) will make presentation on this proposal. The implementation Committee unanimously decided to hold next meeting on 4th and 5th March, 2016.
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