The Federal Board of Revenue (FBR) is planning to combine four sales tax systems and automated refund programs into a single error-free integrated refund system to check issuance of bogus/illegal claims. Sources told Business Recorder here on Saturday that at present there are at least four automated sales tax refund systems operating in the field formations.
The most frequently used system is the Sales Tax Automated Refund Repository System (Starr), which replaced the manual checking of documents. The second system is Sales Tax Risk Evaluation and Management System (Streams). It is an improved version of Starr, but is highly dependable on Starr. The shortcomings of Starr become integral part of the Streams.
This system has to obtain invoices data from the Starr, but working under more sophisticated environment. Another successful system, Computerised Risk-Based Evaluation of Sales Tax (Crest) system has ample data on the sales and purchases of registered taxpayers. The Crest is concentrating more on the input/output ratio and effective sales tax rate parameters/criteria.
Primarily, it is an Information Management System (IMS) which has been implemented at the Regional Tax Office (RTO), Lahore. The Crest has the ability to conduct tax gap analysis and accurately verify refund and input tax adjustment. The fourth system-Expeditious Refund System-has been envisaged by Hugo Haneish, a consultant on Tax Administration Reform Project (Tarp).
It is also a refund verification system. It has been claimed that the system has developed more simplified criteria for refund payments, but it is yet to be tested for its implementation in any tax office. According to sources, the proposal is to amalgamate all refund systems --Starr, Streams, Crest and Expeditious Refund System--into one refund system, incorporating/deleting all essentials/non-essential data.
Besides system audit of Starr, when all information is available with the sales tax returns, there is a need to do away with capturing of data on client-end software and process the refund on real data submitted with the returns. In fact, the data of imports and exports should be obtained from the system automatically by clicking the relevant Goods Declarations (GDs) with a view to avoid any data error.
Moreover, it is important to mention that the Starr has no in-built mechanism for input tax verification which consequently become resource of for refund. Sources said that the proposal is to directly issue sales tax refunds on the filed returns to the taxpayers covered under the ''List of Active Taxpayers'' where inputs exceed the output.
The integrated refund and input adjustment software prepared on best international practices should be used for verification of refunds before making payment to the registered units. Sources said that a Task Force would be formed to review all four refund processing systems and recommend the criteria and parameters for verifying data and speedy clearance of pending claims.
After thorough analysis of all four systems, the Task Force can recommend a new single Automated Refund System to be applicable in all Large Taxpayer Units (LTUs) and Regional Tax Office (RTOs). The members of the Task Force would be highly professional and most experience officials in sales tax and federal excise matters.
Task Force would include Shafquat Mehmood, Collector, Sales Tax Regional Tax Office (RTOs), Lahore; Abdul Hameed Memon, Additional Collector, RTO, Karachi, Rashidullah Khan, Joint Director, sales Tax Wing and Hassan Pervez Chief Automation Pakistan Revenue Automation Limited (PRAL).