Around 90,000 new taxpayers have been registered with the Federal Board of Revenue (FBR) web-based Inland Revenue Information System (IRIS) since launching of the IRIS in September 2015. This has been mentioned in the joint report of the World Bank and UK Aid on Multi-Donor Trust Fund for accelerating growth and reforms (Tax Policy and Tax Administration Reform Component).
Sources said that the report has been prepared for the FBR to improve registration and other processes for new taxpayers. According to the report, the taxpayer registration function supports efforts to expand the formal economy and should serve as a gateway to the delivery of a range of services and financial support to small and medium enterprises by state agencies and banks. The final objective is to reduce the gap between potential taxpayers (as defined by law) and actual registered taxpayers.
While the FBR registration system is modern and functional, there are opportunities for further improvement. Approximately 90,000 new taxpayers have been registered since the FBR's web-based Inland Revenue Information System (IRIS) was introduced in September 2015. The IRIS system is used to manage both income tax and sales tax.
The FBR uses three numbers to identify taxpayers. Firstly, national tax number (NTN), which is used for income tax registration of companies. Secondly, sales tax registration number (STRN), which is generated for sales tax registration. Historically, this number included reference to the location of the registration office of the taxpayer. However, this number is no longer necessary and should be eliminated.
Thirdly, computerised national identity card (CNIC) for individuals and the FBR uses the CNIC number with an added check digit. Prior to the introduction of IRIS, the same NTN number system was used as for companies.
The report has highlighted the issue of duplicate registration numbers. Sales tax registrants currently have two identification numbers, the national taxpayer number (NTN) and the sales tax registration number (STRN). The NTN registration is a prerequisite for the sales tax registration, which results in the STRN. The report recommends eliminating the STRN as a simplification measure. This measure would have advantages and disadvantages, the report said.
When it was created, the sales tax registration number (STRN) digits indicated the RTO, circle (sub-office), business activity and serial number of registration of the taxpayer. With the introduction of modern tax systems, this information is no longer necessary in the number. Filing a sales tax return, for example, taxpayers use their NTN.
Buyers and suppliers currently rely on the existence of an STRN as evidence of the sale tax registration status of a supplier. Under sales tax law, there are provisions for the payment of 2 per cent additional payment for sale of supplies to unregistered persons. Without a dedicated STRN, it is less obvious whether or not the other party is also registered for sales tax.
While the STRN indicates that a buyer or seller may be registered for sales tax, it does not indicate whether the registrant is active, non-active or blacklisted. A preferable system would eliminate the STRN and use only the NTN. Verification of the sales tax registration status of a registrant can be provided through the taxpayer online verification tool using the NTN.
With the advent of electronic registration systems, the FBR is ready to use a single taxpayer identification number, it said. The report said that all taxpayers must complete an income tax registration before registering for other taxes. Registration of individuals, Associations of Persons (AoPs) and companies can be carried out online or in-person at FBR offices. In either case, registration is processed using IRIS either by an individual inputting data directly or with facilitation by a representative of the FBR at an RTO. Registration is decentralised to RTOs, but the maintenance and operation of the IRIS platform is centralised.
Requirements for Online Registration: To complete a registration online using IRIS, taxpayers must have access to a computer, scanner/camera and Internet connection; a cell phone with SIM registered against own CNIC; a personal email address; scanned PDF copies of certificate of maintenance of personal bank account in taxpayer's name, evidence of tenancy/ ownership of business premises, if having a business; paid utility bill of business premises not older than 3 months, if having a business.
The report said that taxpayers who do not meet these requirements must visit an RTO with the required documentation for assistance with the registration process. The RTO staff will complete the same IRIS registration process, assisting the taxpayer in completing the required steps using FBR computers and scanners.
The IRIS provides strong validation for new registrations and modification of existing registrations. First, IRIS validates an individuals' computerised national identity card (CNIC) number, performing a static look-up of the data stored at the National Database and Registration Authority (NADRA) to validate the user's name, date of birth, and registered address. Next, the applicant's cell phone number is cross-checked with the telecom companies, ensuring it matches the CNIC number on file. A PIN number is sent to the cell phone number in SMS format which the user must confirm in IRIS to validate ownership of the number to complete the next step.
The validity of the user's email address is ensured by sending a confirmation password via e-mail. In order to log into IRIS to complete the next registration steps, the taxpayer must enter the PIN and the password received by email.
In the case of compulsory enrolment following an assessment by an FBR officer to a non-filer, sales tax registration is completed by the FBR on behalf of the registrant in order to create a file for further action. In this case, fingerprints and photos are not recorded.
There are registration requirements for income tax and sales tax. For each tax there are specific requirements and procedures depending on the taxpayer type (individual, AOP, or company). Modifications other than for individuals' information must be made online, it added.
Comments
Comments are closed.