The Federal Board of Revenue (FBR) is examining various proposals to bring changes in the withholding tax regime for improving collection during 2009-10. Sources told Business Recorder here on Saturday that the issue of improving withholding tax collection was discussed in the last board-in-council meeting.
FBR Member Domestic Operations, South proposed withholding of taxes on exports by the collectors of customs at the time of export against the current practice of withholding by banks at the time of realisation of export proceeds. The FBR is facing problems in proper reconciliation of export proceeds realised by concerned bank branches with the State Bank of Pakistan (SBP) data on foreign exchange actually realised on exports.
Sources said that if the FBR changes the mechanism for collection of withholding tax on exports, it would not only improve collection but would also check delays in collection system under existing arrangement.
FBR Member Enforcement and Accounting has proposed that the obligatory reconciliation statements might be made part of the withholding statement, as most of the withholding agents are not filing the reconciliation statements. FBR Member Legal was of the view that the withholding statements were to be filed by the taxpayers pertaining to both exempt and taxable transactions. As such no reconciliation would be required if completion of such statements was ensured by the field formations.
Sources said that internal departmental co-ordination should include reconciliation of information as incorporated in the withholding taxes statements and in the income tax returns, sales tax returns and summary of invoices. Moreover, regular exchange of information in the cases of investigation and audit and results thereof should be carried out on regular basis.