The performance evaluation of the Large Taxpayer Units (LTUs) had become due in order to assess its merits and demerits to the tax machinery, said tax officials. While requesting anonymity, they said this is right time to evaluate the performance of LTUs across the country which would ultimately evaluate the companies registered with the LTUs with reference to their contribution to the national Gross Domestic Product (GDP) growth.
They said the companies register with the LTUs were the barometers of economic growth in the country. "Tax growth under the LTUs can be miraculous only if it is 20 percent per annum against five percent growth in the GDP. However, it would be rated as poor if tax growth is less than five percent against the five percent growth in GDP," they opined.
According to these circles, the phenomenon of advance taxes from large conglomerates to support annual budgets has been discouraged by and large now, as the large taxpayers were not paying taxes in time against any such arrangement and preferring to adjust their tax dues with advance payments.
The nature of advances is still very high and the existing state of affairs can be judged from the fact that the LTU Lahore has to pay Rs6 billion tax of a large auto manufacturer.
They said a major focus of LTUs is to ensure tax management, and not expansion of tax base like the Regional Tax Offices (RTOs). Taxpayers in the LTU are big and their business models are of such a huge size that requires peculiar operations. The large taxpayers contest demands raised by the LTU and prefer to settle the matter legally.
It may be noted that the LTU Lahore is dealing with large taxpaying companies and their directors. The number of companies is 570 followed by 1,500 directors and 130 partnership firms. A company with annual turnover of Rs1 billion automatically gets registered with the LTU. The LTUs deal with taxpayers in a highly concentrated way. Its collection is higher than any other unit. The LTU Lahore was set up in 2004-05 to monitor large taxpayers while dealing with them under one roof.
The large taxpayers included auto sector, power sector, textile sector, banks and such other conglomerates. A dedicated workforce deals with them. These large scale companies are seldom involved in tax evasion; however, tax avoidance is quite rampant. Most of these large taxpayers are good corporate bodies, which are fully organized and maintain their records. In order to keep homogeneity, a good audit and ensure good legal team, the LTU are playing a vital role in streamlining large taxpayers. The LTU Lahore contributes over Rs15 billion monthly.
The city of Karachi has two LTUs, followed by one in Islamabad and one in Lahore. The LTU officers examine the business models to evaluate the self-assessments made by these corporate firms. A constant monitoring of these units over a decade has streamlined tax matters of these companies. Each conglomerate carries a tax history, which is quite open to the LTUs.