ISLAMABAD: The government is planning to provide access of Federal Board of Revenue (FBR) data of taxpayers to the National Database and Registration Authority (Nadra) for broadening the tax base, and accurate declaration of assets/income by the existing filers and non-filers of income tax returns based on their expenditure patterns.
Sources told Business Recorder here on Sunday that Nadra may be given access to all of FBR's databases including existing income tax returns and wealth statements through promulgation of the Tax Laws (Third) Amendment Ordinance, 2021. Under the proposed Ordinance, the Nadra would be given the authority to obtain all kinds of data available with the FBR.
Tax Laws (Third) Amendment Ordinance, 2021 has been drafted to amend the Sales Tax Act 1990, Income Tax Ordinance 2001 and Customs Act 1969. The Ordinance would be promulgated in the coming days.
Tax Laws (Third) Amendment Ordinance, 2021 would also remove some procedural and technical anomalies in the Finance Act 2021 including changes in the Pakistan Customs Tariff (PCT) codes of different items.
Broadening tax base: FBR, Nadra chalk out plans: Tarin
Under the Income Tax Ordinance 2001, the income tax returns and wealth statements of the taxpayers are confidential. However, under section 216 (disclosure of information by a public servant) of the Income Tax Ordinance 2001, the FBR can provide information of returns to the Nadra for the purpose of broadening the tax base. Apparently, the powers of the Nadra to have real-time access to information and databases of FBR would be ensured through the Tax Laws (Third) Amendment Ordinance, 2021.
If the Nadra is being given access to all kinds of FBR's databases of taxpayers, the process of determining actual tax liability and prediction of future tax liability may be worked out by the Nadra. The third party audits would be conducted on the basis of information available with both the FBR and the Nadra. The authority may be empowered to issue notices/intimations or emails to the potential taxpayers or non-filers to share their actual expenditures, wealth, assets and income for payment of due taxes and file returns. The existing taxpayers and filers involved in concealment of income and assets would also be targeted under the new exercise. The persons who have concealed their assets or income may also receive notices/emails /intimations from the Nadra.
Another proposal under consideration is to use some new web-portal or FBR's or Nadra's portals for this purpose. The third party auditors would be hired to check and verify the data to expand the tax net. There is a huge potential for identification of persons who are either outside the tax net or conceal their income and assets, sources said.
FBR's access to databases of Nadra, others: Proposed amendment could be illegal
In the past, the Nadra had asked the FBR to provide third-party data including property/land data, vehicles/utilities' information, telecom, banks/stock market data, etc, for analysis/working out tax liability of tax evaders/short-filers.
Presently, section (175A) of the Income Tax Ordinance 2001 deals with the real-time access to information and databases. Under this section, arrangements shall be made to provide real-time access of information and database to the FBR in the prescribed form and manner by the Nadra; Federal Investigation Agency and the Bureau of Emigration and Overseas Employment; Islamabad Capital Territory and provincial and local land record and development authorities; all electricity suppliers and gas transmission and distribution companies. The Board shall make arrangements for laying the infrastructure for real-time access to information and database and aligning it with its own database in the manner as may be prescribed.
Broadening tax base: 15m names with NADRA, 7.2m with FBR in hand: Tarin
During his last visit to Overseas Investors Chambers of Commerce and Industry (OICCI) and the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in Karachi, Finance Minister Shaukat Tarin said the government is trying to broaden the tax base and has as many as 15 million profiles including unregistered voters with Nadra and 7.2 million names with the FBR.
"The authorities are now in a position to tell 80 to 90 percent accuracy of their income levels with the help of technology and how much tax they should pay," he said.
"We are using the data of individuals from various sources such as electricity bills, telephone bills, deposit data and travel, etc. We have identified profiles of the customers and unregistered voters - 15 million names with Nadra and 7.2 million names with FBR through artificial intelligence and comparing it with the behavior of the registered taxpayers. We would seek services of 1,500 professionals from the Institute of Chartered Accountants of Pakistan (ICAP) for the audits. Defaulters would be sent messages and reminders to pay taxes and if they failed to do so, action would be taken against them as per the law," he added.
Copyright Business Recorder, 2021