Finance Act 2016 would formulate specific amendments to tax laws to protect the tax officers of the Federal Board of Revenue (FBR) and its field formations from undue harassment of National Accountability Bureau (NAB) and other investigation agencies. It is learnt that the issue was discussed during the last meeting of Tax Reform Implementation Committee for considering the recommendations of the Tax Reform Commission (TRC).
During the meeting, Special Assistant to Prime Minister on Revenue Haroon Akhtar stressed upon the need for formulating specific laws to protect the officers from undue harassment of NAB and other investigation agencies. It was decided that FBR Member (Legal) will formulate the specific amendments in laws in this regard that could be introduced through finance Act, 2016.
The issue came to the light during the last meeting of the TRC. FBR Member (Administration) made the presentation and apprised the Members regarding the core-functions of the Admin Wing. He deliberated upon the existing provisions and administrative actions being taken by the Admin. Wing to ensure transparency in the working of FBR and its field formations. He emphasised that Federal Board of Revenue is persistently following policy of zero tolerance on corruption and ensured the house that any official or officers found in malpractices will be dealt with strictly in accordance with the existing provisions of E&D Rules.
Special Assistant to Prime Minister on Revenue has also deferred a recommendation of the Tax Reform Implementation Committee to introduce changes in withholding tax regime due to revenue implications during 2015-16. The issue of withholding tax regime was also discussed during the last meeting of Tax Reform Implementation Committee for considering the recommendations of the Tax Reform Commission (TRC).
Member TRC Abid Shaban also dilated upon the existing structure of withholding tax regime. The issue was deferred by the SA to Prime Minister and suggested that no intrusion in the withholding tax regime is advisable at this stage due to the revenue implications.
A presentation was made by FBR Member (IR Operations) on the subject of Functional and Territorial jurisdiction. FBR Member (IR Operations) apprised the house regarding the previous reforms structures and discussed in depth the existing functional structure and the revenue constraints being faced by the department. The Member (IR Ops) proposed a three tier structure, pertaining to Large Taxpayer Units, Corporate Zones and Mufassil Commercial Zones which could cover those areas of the country where considerable economic activity is taking place, however, their share in national revenue is negligible. The issues of restructuring and a three tier system was discussed in detail by all the participants and the house supported the subject proposal and the proposed structure.
The SA to PM also appreciated the new proposal and endorsed the same. The Finance Minister Ishaq Dar also attended the meeting and was apprised of the dynamics of the three tier structure. After reviewing the presentation of the new proposal, he appreciated the efforts being made by Dr Muhammad Irshad FBR Member (IR Operations) and his team for devising comprehensive structural reforms in the field formations of the Inland Revenue and desired that the proposal may be submitted formally for approval.
During the meeting, the first presentation was made by Member (FATE) on the "Ethics and Grievance Redressal System". FBR Member (FATE) briefed the house about the existing mechanism available under FBR Act, ADRC and E&D Rules. He also apprised participants regarding the role of FBR Helpline, its working and performance. The members of the Implementation Committee raised certain issues regarding disposal of the complaints received by the FBR on helpline Member (FATE) dilated upon the undergoing exercise regarding improvement of the functioning of helpline in co-ordination with HMRC and DFID.
It has been decided that the Grievance/Redressal Software shall be made operative after the current financial year. Moreover, FBR Member (IR Policy) to frame rules regarding the provisions of whistle blowing through the Finance Act, 2016. It has been decided that the timeline for the full operation of the Grievance Redressal System to be given by Member (FATE).
Abid Shaban also shared the practical constraints being faced by the taxpayers and suggested steps for improving the ease of doing business. It was decided that Member (FATE) will address the issue of improvements in the service standard of the FBR and will implement the strategy in consultation with Chairman, FBR before the next meeting of Implementation Committee. The issue of the black economy and the revenue implication was discussed in detail by Abid Shaban, it was decided by the house that a committee shall be constituted to study the existing size of black economy and its implications for revenue.
Members of the TRC discussed the idea of appointment of the chief Financial Officer for the FBR. Member (Admin) apprised the existing structure of the financial controls and it was decided that the appointment of CFO is not a viable option for Government Department like FBR. The Members of the TRC opined that the recommendations regarding appointment of CFO was in the context of an autonomous status for the FBR. As such, CFO may be appointed whenever FBR obtains complete autonomy.
FBR Member (Taxpayers Audit) made presentation regarding strengthening of tax audit function. Member (Taxpayers Audit) apprised the audience regarding the existing provisions of parametric and risk based concepts of audit. It has been decided that the FBR Member (TPA) would suggest legal amendments for effective audit to be incorporated in the Finance Act, 2016. FBR Member (TPA) would develop risk management system in co-ordination with World Bank. FBR Member (TPA) to develop a comprehensive compliance program to be developed and advertised through FATE Wing and Member (TPA) to ensure specialised training for Audit Officer.
SA to Prime Minister suggested that specific qualification criteria may be communicated to the FPSC for induction of the Audit Officers. On the issue of cost of compliance, presentation was made by the Member (IR Policy). The Member (IR Policy) dilated upon various aspects of the IT Modules currently in vogue and emphasised for the development of a user-friendly interface. The chairman FBR apprised the participants regarding the short term and long term strategies for effective utilisation of the information technology. The SA to Prime Minister emphasised the need for a major overhaul in the IT system.
It has been decided that the FBR Member (IR Policy) to devise a framework for the hiring and training of the tax facilitator before the next meeting of the Implementation Committee. The existing irritants in the system would be removed by Member (IR Policy) and Member (IT) within four weeks. Moreover, the automated feedback mechanism shall be incorporated in the existing architect of the IT system by the Member (IT) to reduce the cost of compliance.
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