Business bank account opening: RRMC for making NTN mandatory

ISLAMABAD: The Reforms & Revenue Mobilisation Commission (RRMC) has recommended that the National Tax Number...
Updated 28 May, 2023

ISLAMABAD: The Reforms & Revenue Mobilisation Commission (RRMC) has recommended that the National Tax Number (NTN) should be made mandatory for the opening of the business bank accounts from July 1, 2023.

According to the report of the RRMC under consideration of the Federal Board of Revenue (FBR) for the upcoming budget (2023-24), there are a number of individuals who carry out their businesses, and the same are not documented owing to the reason that they are not registered with FBR. However, they do maintain their bank accounts. In order to cater to such businessmen, it is recommended that NTN registration should be held mandatory for opening a bank account. Compulsory NTN should also be issued to non-filers for executing certain transactions, including sales and purchase of vehicles, property, foreign travels, and membership of clubs etc.

Furthermore, Section 111 of the Income Tax Ordinance 2001 can be invoked on non-filers who carry out banking transactions exceeding a certain threshold without any restriction of statutory time limitations.

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The RRMC further recommended that Section 114(1)(b)(ix) of the Income Tax Ordinance prescribes a resident person to file return of income if he/she is registered with any chamber of commerce and industry or any trade or business association or any market committee or any professional body including Pakistan Engineering Council, Pakistan Medical and Dental Council, Pakistan Bar Council or any Provincial Bar Council, Institute of Chartered Accountants of Pakistan or Institute of Cost and Management Accountants of Pakistan. It has been observed that many professionals do not file return of income and are not even registered with FBR, resulting into loss of revenue to the country.

It is recommended that enforcement of the provision should be strictly ensured by way of evaluating information already available with the FBR, in its records based on the Form filled by those persons divided into categories of professions or data can be sought from recognized professional bodies. In some countries, individuals are required to disclose their professional memberships or employment status on their tax return, while in others, this information may be collected through other channels or registration processes.

One example of a country that requires reporting of professional memberships for tax purposes is Australia. The Australian Taxation Office (ATO) requires individuals who are members of professional bodies, such as accountants, lawyers, and doctors, to disclose their membership on their tax return. This is because membership in a professional body may affect an individual’s eligibility for certain tax deductions or other tax benefits, the RRMC added.

Copyright Business Recorder, 2023

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