The tax gap analysis by the World Bank (WB) on the basis of anonymized data of taxpayers' returns is doable and will help government ascertain tax trends in various sectors of the economy as well as to make realistic revenue projections. Sources in the Federal Board of Revenue (FBR) said that the analysis would be helpful in carrying out sectoral analysis, ratios/percentages in a specific sector, abnormal behaviours of taxpayers, income/profitability and trends of tax payments in different sectors and industries.
The anonymized data of different sectors would also be instrumental in determining trends of annual turnover, sales/supplies, output tax/input tax ratio, ratio of taxable supplies to total supplies, value additions, any change in carry forward of input tax and reduction in sales and other analysis in sectors/industries.
The analysis of data of different taxpayers in a specific sector and its comparison within the sector would also help in identifying tax gaps in that industry, sources said. The present government had made an amendment in the Income Tax Ordinance 2001 through Finance Supplementary (Amendment) Act, 2018 in September 2018 to allow provision of anonymized data to any person for data analysis by inserting a sub-section (6A) in section 216 of the Income Tax Ordinance. The amendment clause read as: The Board may provide data to any person approved by the federal government to process and analyze such data for broadening of tax base or for checking evasion: Provided that such data shall be anonymized before transmission to the person and identifying particulars of the taxpayers shall be kept confidential.
The data to be provided to the World Bank was possible through authorization with the approval of federal government, which would be anonymized to protect taxpayer's identity.
An up-to-date tax gap analysis enables the government to achieve two main objectives: i) prepare realistic revenue projections reflecting actual economic conditions for the budget (ii) design tax policy and tax administration measures with a high level of confidence about the expected impact on revenue and the economy.
Comments
Comments are closed.