The Federal Board of Revenue (FBR) would introduce new software Nexus to provide better facilities to taxpayers. "The Nexus would be more sophisticated and make available information regarding income tax, general sales tax, federal excise tax and customs duty at one place. It was initially introduced in Lahore and Karachi", said FBR Acting Chairman and Direct Taxes Member Salman Nabi here on Saturday.
As a result of the tax reforms, the FBR has succeeded in doubling the tax collection in last three years as the income tax collection has increased from Rs 165 billion in 2004 to Rs 330 billion in 2007, said Salman Nabi, while talking to senior executives of the Rawalpindi Chamber of Commerce and Industry (RCCI).
RCCI President Dr Hasan Sarosh, former presidents, Sheikh Shabir, Mian Pervaiz, Usman Khalid, S.M. Naseem, Sabir Butt, and other members apprised the FBR acting chief about the problems of the business community regarding taxes.
Salman Nabi said the FBR had introduced zero taxation on Real Estate Investment Trust (REIT) and now it is introducing Private Equity Funds (PEFs) which would also be exempted from taxes.
He emphasised the need for encouragement of the corporate culture, saying it is the need of hour that businessmen should move towards corporatization. The government has fixed 35 percent tax on big enterprises, while 20 percent on small and medium enterprises (SMEs) with a maximum turnover of Rs 250 million, he added.
He said in spite of using harsh mechanism the FBR introduced incentives and laid emphasis on simplification of tax system, which impacted positively the voluntary tax payment. It increased by 30 percent in 2005 to 70 percent in 2006. The people have paid Rs 117 billion voluntarily as advance tax.
Salman Nabi said the automation of tax system has helped increase the taxpayer from 1 million in 2004 to 1.8 million in 2007. "We are making efforts to increase it manifold", he added.
He rejected the impression of negative taxation impact on public sector enterprises, saying that Article 165-a of the Constitution did not give any exemption to income of public sector enterprises. He also rejected the increase in tax on ship-breaking sector, saying there were some anomalies in this sector as edibles were mixed with ship-breaking.
Earlier, RCCI President Dr Hasan Sarosh, in his address of welcome, said that business community was not aware of taxation but knows that the revenue target is high for the current fiscal year, therefore the FBR should inform business community about the taxation.
He criticised the FBR policy of decreasing group taxation to 0.75 percent, saying that the tax was decreased, but the withdrawal of utility bill adjustment has overburdened business community. Sarosh stressed the need for mutual understanding between taxpayers and tax officials, saying that without gaining confidence of taxpayers, the government would not succeed in broadening the tax base.