The Reforms Co-ordination Group (RCG) of the Federal Board of Revenue has recommended effective utilisation of information of foreign currency transactions and banks data to discover new taxpayers and enforce accurate declarations of wealth and assets by the taxpayers in their income tax returns.
Talking to Business Recorder here on Thursday, a leading Karachi-based chartered accountant and member of the RCG Syed Muhammad Shabbar Zaidi said that the FBR could utilise data of different external sources including regulatory bodies and State Bank of Pakistan to verify the accuracy of declarations made by the taxpayers in their returns. The accurate information about the wealth and assts owned by the potential persons would be collected through the FBR survey units to be established for effective utilisation of third party data.
The tax survey data, bank account data including information of foreign currency transactions, foreign/domestic air travel, school fees, medical bills and property registration documents would be analysed to broaden the tax-base. The FBR will also approach the regulators like SBP to check the banking transactions, if required. The said data would be utilised to verify the accuracy of the declared returns/statements as well as income declared in the returns. The survey units would verify data under the drive to document the national economy. The survey information is a basic documented data of the markets and shops available with the tax department.
FBR Member RCG said that the FBR can approach the National Database and Registration Authority (NADRA) and SBP for collecting information of the foreign currency transactions and banking transactions to verify the declarations of wealth and assets of the taxpayers.
Shabbar Zaidi stated that the purpose of the documentation exercise unearth new taxpayers and ensure correct filing of returns by the already registered persons. The survey data and similar information could be used for identifying un-declared or under-declared income and wealth. The RCG suggested that there should be deterrence in general as well as the whole society rather than a specific case against a particular person where the chances of connivance are higher.
The FBR will establish an independent survey department for identifying un-declared and under-declared economic transactions. The objective is to create deterrence against the under-declaration of income tax and wealth other than the information filed in the returns or identified thorough audit. The ultimate objective of the recommendations of the co-ordination committee is to create an effective environment of deterrence for under-declaration and non-declaration, Shabbar Zaidi said.
The independent survey units of the tax department would particularly focus on determining the realistic declarations of wealth and assets by the taxpayers in their income tax returns, top tax expert added. Meanwhile, a statement issued by the FBR here on Wednesday said that the FBR has decided to establish a specialised unit at FBR Headquarters to utilise data on income, expenses and assets of persons from different sources to trace potential non-filers and ensure filing of income tax returns for the Tax Year 2010 by the registered persons.
A meeting of the Reforms Co-ordination Group, set up in the Federal Board of Revenue to spearhead the ongoing reforms process, was held at the FBR House here to discuss and review the pace of ongoing tax reforms. The meeting was chaired by Vakil Ahmed Khan and attended by Asrar Raouf, Member Policy (Direct Taxes), tax expert Shabbar Zaidi, Muhammad Arshad Chaudhry, representative of the business community as well as officers of the Policy Wing.
Progress and general direction of tax reforms in the light of reforms objectives were discussed in detail. It was observed that reform objectives were needed to be disseminated to all the stakeholders in a more elaborate manner for proper and better understanding of the reforms initiatives.
The meeting also felt the need for establishment a core unit at FBR Headquarters to gather and use data on income, expenses and assets of persons from different sources, laying emphasis on utilisation of the same for ensuring correct filing of income tax returns for the tax year 2010 and tracing the non-filers for further necessary action under the law. It was also recommended that updated data of electricity consumers and the data collected as per survey forms in 2001 shall be utilised to enforce the income tax returns. It was also discussed and decided that the group will present its topic-wise reports after further deliberations, as early as possible, it added.