Tax profiles of prominent media personalities including leading television anchors have been finalised by the Federal Board of Revenue (FBR), revealing astonishing facts as most of them have concealed their income by not filing their wealth statements, through under-reporting and wrong-reporting of taxes, hiding their movable and immovable assets.
Sources told Business Recorder here on Friday that the FBR has prepared individual tax profiles of the television anchors for the Tax Years 2010 and 2011. Tax profiles of the individuals working as anchors in most popular television channels themselves talk about the massive under-declarations and mis-declarations of assets. In many cases, most of the sources of the income have not been declared in their own income tax returns.
The tax profiles of these television anchors reflected unique techniques to dodge the tax authorities. Non-filing of wealth statement is another glaring aspect witnessed in the tax profiles of the anchors. The report on prominent media personalities has provoked FBR and it has initiated exercise about analysing the tax status of the Prominent Pakistanis. The FBR has also proposed to invoke provision of section 177 of the Income Tax Ordinance 2001 for detailed audit of the top television anchors keeping in view their tax profiles.
According to the FBR, the media industry over the past couple of decades has experienced a phenomenal growth globally and Pakistan is no exception. This sprawling industry undergoes multi level/faceted transactions involving numerous individuals, business enterprises, media groups, TV channels, and production houses both in electronic and print media. To tap the true tax potential of this industry; a well-thought, properly co-ordinated, and meticulously-implemented plan is required which has, henceforth, been lacking.
While a comprehensive report on the taxability of multifaceted transactions taking place in the industry is separately being prepared, the current report focuses on the cases of prominent individuals engaged in the industry. Their profiles are generated with specific focus on facets such as; whether they are: on tax roll or not, filer or non-filer of tax returns, offering lawful and true declarations of their receipts/income, and whether their declarations are being subjected to proper taxation. The deficiencies observed have been highlighted for necessary legal action by the concerned tax authorities. Tax years 2010 and 2011 have specifically been focused but the highlighted deficiencies could be generalised for deriving inferences and scrutinising other Tax Years as well, sources maintained.
Sources said that certain anchors engaged in political and economic discussions on regular basis on private television channels have not filed their income tax returns. In cases where income tax returns have been filed, these anchors have reduced their income to evade the tax authorities.
Referring to the tax profiles of the television anchors, sources said that a famous journalist hosts the current affairs show on leading TV also contributes a column in an Urdu daily. He has not filed any return for the Tax Year 2011 whereas for Tax Year 2010, an employer's statement is available on the Pakistan Revenue Automaton Limited (PRAL) database. That is all the tax declaration that exists in his case for Tax Years 2010 and 2011.
Tax profile further revealed that tax deducted at source as per the employer's statement for Tax Year 2010 constitute only 17.2% of the total receipts which is less than the tax leviable under normal law. As he is deriving income from two entities, the likely reason for this short deduction seems to be the subjection of one of the sources to withholding taxes @ 6% under the head services (this fact could not be confirmed as no withholding statement available on PRAL database). In the given circumstances, proper tax returns need to be enforced in the case of top TV anchor to ascertain the true nature of his receipts and subject them to proper taxation at appropriately applicable tax rates. Additionally, the declared income from salary exceeds the threshold for filing wealth statements which have not been filed. Wealth and reconciliation statements also need to be enforced.
The most important aspect of his case is the proper taxability of receipts under the head services. The Finance Act 2009 amended the provisions of section 153 making tax collected from payments on account of services a minimum tax liability. Thus, with effect from tax year 2010, receipts under the services are to be taxed outside the final tax regime and the tax deducted thereon subjected to minimum tax.
As per unconfirmed social media reports, he received certain favours from a leading builder. It included Rs 25,000,000; a 5 Kanal Plot in Islamabad and Rs 10,000,000 for helping write a book for real estate developer. The tax department may like to verify the allegations during the course of proceedings. The details of foreign travel (made during last five years) of the said taxpayer may please be obtained from Immigration Wing, FIA, which maintains complete records of foreign visits.
Sources referred to the tax profile of another famous TV and film actor, model, drama producer and director. He is a non-filer of the Income Tax returns as per the PRAL database. Returns of income for various years need to be enforced immediately with wealth statements.
Another point of note is the taxability of the income in the instant case under normal law and the minimum tax leviable to receipts on account of services rendered. The Finance Act 2009 amended the provisions of section 153 of the income Tax Ordinance 2001 making the tax collected from payments on account of such services a minimum tax liability. Thus, with effect from tax year 2010, receipts under the services are to be taxed outside the final tax regime and the tax deducted thereon constitutes minimum tax liability. While enforcing tax returns for Tax Years 2010 and 2011, this facet of the case may be given due cognisance.
Given above are some of the payments received by this famous TV and film actor. The actual quantum of his income is, however, expected to exceed far beyond these identified receipts considering his fame and repute. He is considered the highest paid actor on the circuit. He runs his own production house and also produces dramas in collaboration with another famous actor/producer. Details of foreign travel (made during the last five years ) of the said taxpayer could be obtained from Immigration Wing and FIA which maintains complete records of foreign visits.
Tax profile of a woman television anchor revealed that she hosts the programme on a private TV. Despite being in the Media industry for long, she remains a non-filer of the Tax Returns. All that exists in her case is a solitary employer's statement for Tax Year 2011. Tax returns need to be enforced along with wealth statements. Wealth statements also need to be examined from the angle of accruing any other incomes for her.
Tax profile of this one of the most famous anchor revealed that the most important factor in her case is the proper taxability of her receipts. Tax has only been deducted from her identified receipts @ 6%. If she is receiving salary income (as is the case with another anchorperson of TV) then her receipts are taxable at much higher rates. In such a situation, action is also warranted against the withholding agent for not deducting withholding tax at proper rate (possibility of additional tax for the default). However, if she is not an employee of the private TV, which in all probability may not be the case given the availability of employer's statement on the Integrated Tax Management System (ITMS), then her receipts are classifiable under the head 'services rendered' to which amended provisions of section 153 of the Income Tax Ordinance, 2001 are applicable. The Finance Act 2009 amended the provisions of section 153 making tax collected from payments on account of such services a minimum tax liability. Thus, with effect from tax year 2010, receipts under the services are to be taxed outside the final tax regime and tax deducted thereon subjected to minimum tax.
Given above are some of the receipts of this woman anchor, for which she has failed to file a return. These, however, do not exhaust all her sources of income. She has also made documentaries on various subjects and has received four awards for her outstanding work.
Details of foreign travel (made during the last five years) of the said taxpayer could be obtained from Immigration Wing and FIA which maintains complete records of foreign visits. Tax profile of another top anchor revealed that he is a famous journalist and a TV anchor for the current affairs programme aired on a private TV channel. He is borne on Tax Roll and has filed Income Tax Returns for Tax Years 2010 and 2011. No Wealth statements were, however, filed which were obligatory as his income exceeded the threshold for filing wealth statements. Wealth and reconciliation statements are therefore needed to be enforced immediately.
Tax profile further revealed that a point calling immediate attention is the taxability of receipts on account of services rendered. The Finance Act 2009 amended the provisions of section 153 of the Income Tax Ordinance 2001 making the tax collected from payments on account of services a minimum tax liability. Thus, with effect from tax year 2010, receipts under the services are to be taxed outside the final tax regime and the tax deducted thereon constitutes minimum tax liability. He has, however, simply clubbed the net income from receipts classified in return as 'Other Revenues/fee/ charges for professional and other services/commission" with salary income without calculating minimum tax on services receipts separately.
Another point of note is that he has offered for taxation only those receipts which have suffered the incident of taxation. However, his profile indicates his versatility and a verity of sources, which do not figure out in his tax declarations. Tax profile further revealed that he is one of the prominent journalists of Pakistan. His column is the most read column in Pakistan.
"He is also running a media consultancy firm. Amazingly the said firm had organised a seminar on tax evasion in 2012, which was sponsored/funded by a multinational cigarette manufacturing company. Receipts of the said concern also need to be looked into," sources referred to the tax profile of the television anchor.
He has also claimed expenses worth Rs 3,057,983 against the service receipts of Rs 4,085,107 which seems substantially higher considering the fact that minimum expenditure are normally incurred on earning the kind of service receipts as those of him. Complete details of these expenses are needed to be obtained. In addition to their verifiability/ admissibility, these expenditures are also needed to scrutinise whether the obligation u/s 21(c) and 21(1) of the Income Tax Ordinance 2001 have been met by invoking provisions of 177 of the Income Tax Ordinance, 2001.
As per un-confirmed social media reports, he has reportedly received the favours from a real estate builder. Tax Department may like to verify the allegations in the due course of proceedings. Details of foreign travel (made during the last five years) of the said taxpayer could be obtained from Immigration Wing, FIA which maintains complete records of foreign visits.
Tax profile further revealed that no wealth statement has been filed despite the fact that income exceeds the threshold for filing wealth statement. Details of Foreign travel (made during last five years) of the said tax payer may please be obtained from Immigration Wing, FIA which maintains complete records of foreign visits.
Tax profile of another television anchor revealed that the tax receipts also includes income from other sources and income claimed as exempt from taxes. As it is not clear from his declarations whether taxes have been deducted from these receipts, therefore it could not be confirmed whether exempt income and income from other sources are reflected in the identified receipts. Obtaining details of the exempt income and income from other sources could prove valuable for reaching at the correct conclusion.
The above details reflect huge discrepancies in the received and identified receipts of the anchor. Explanations for these discrepancies are needed to be called and appropriate action taken under the law as warranted. He is borne on tax net and has also filed his Income Tax returns for Tax Years 2010 and 2011, duly accompanied by wealth and reconciliation statements. Declarations are, however, marked by a number of deficiencies.
First notable point in his case is the under or mis-declaration of receipts. As reflected from his identified and declared receipts, there is a huge difference between the receipts declared to the department and those sifted out from the PRAL database. On scrutiny it revealed that in addition to receiving payments in his personal case, he has also been receiving payments from various sources on behalf of a company in which he is a director. While disbursing such payments and deducting taxes, various TV Channels and Media Groups have mentioned either the NTN or the CNIC of this anchor while payments have been shown to his media firm. To unravel the mystery and know as to who is receiving what and how it is declared in the Income Tax returns, a detailed exercise was carried out which revealed the following position.
Second point which is worth probing is failure to declare any receipts from different channels and print media. He has been working on a variety of ventures, both in country and outside, as mentioned on his personal website but his declarations are bereft of any foreign sources of income (whereas the website points towards a number of international ventures). As resident individual, in which status returns have also been filed, both the Pakistan and foreign sources of his income are taxable in Pakistan. This aspect of the case is needed to be looked into in detail.
Fourthly, his wealth statements do not contain any immovable assets, however, there are reports regarding at least two properties, in his name, in the USA. As per un-confirmed social media reports, he received favours from the Real Estate Tycoon. The tax department may like to verify during the course of proceedings. Details of foreign travel (made during the last five years) of the said tax payer may please be obtained from Immigration Wing, FIA which maintains complete records of foreign visits.
Tax profile of another woman anchor revealed that she hosts the current affairs programme on a private TV. She was previously associated with another channel. For Tax Year 2010, she filed return of income declaring her receipts from TV under the head salary. However no wealth statement has been filed for Tax Year 2010 despite the fact that income exceeds the threshold for filing a wealth statement Wealth and reconciliation statements are therefore needed to be enforced for Tax 2010. For Tax Year 2011 no return has been filed, only an Employer's statement is available on the PRAL database showing salary received from channel. However, she has also derived income from another TV channel at Rs 10,432,447. Tax on these receipts is deducted at Rs 622,651 @ 6% which is applicable to services rendered. Return for Tax Year 2011 also needs to be enforced with wealth statement and proper taxation of receipts ensured in the light of the facts mentioned below.
Receipts on account of services rendered need to be taxed in light of the amended provisions of section 153 of the Income Tax Ordinance, 2001. The Finance Act 2009 amended the provisions of section 153 making tax collected from payments on account of such services a minimum tax liability. Thus, with effect from tax year 2010, receipts under the services are to be taxed outside the final tax regime and the tax deducted thereon subjected to minimum tax, sources said.
Details of foreign travel (made during last five years) of the said tax payer may please be obtained from Immigration Wing, FIA which maintains complete records of foreign visits. In another case, non-declaration of income has been witnessed in a case of a top anchor. Though on tax roll, he has not filed his Income Tax return for the Tax Year 2011. Additionally, though return for Tax Year 2010 is filed, yet it is without a wealth statement which was mandatory as his income exceeds the threshold for filing wealth statement.
In fact no wealth statement exists on the PRAL database in his case. Return for the Tax Year 2011 and wealth statements as on 30.6.2010 and 30.6.2011 need to be enforced in his case along with wealth reconciliation statements. Tax profiles of some other anchors showed similar kind of discrepancies in their tax returns and sources of income, sources added.