Sources told Business Recorder here on Wednesday that the SA to the Prime Minister on Revenue issued these directions to the FBR during last meeting of the Tax Reform Implementation Committee (TRIC) for an appraisal of the progress made on the implementation of various recommendations made by the Tax Reform Commission. Special Assistant (SA) to the Prime Minister on Revenue presided over the meeting which was attended by the Chairman FBR, senior officers of the FBR, Chairman TRC and members of the TRIC.
Sources said that it has been agreed to disclose parameters for selection of cases for audit in future for which amendments would be proposed in coming budget (2017-18). The Commissioners should be bound to share reasons with the taxpayers for selection of case for audit.
During the meeting, a presentation was made by FBR Member Taxpayer Audit ((TPA) on strengthening of tax audit functions. At the outset it was pointed out that forensic audit is not included in the job description of FBR Member (TPA). It was proposed that in order to make audit more transparent the bar placed upon the Board with regard to maintenance of the confidentiality of the parameters for audit selection under section 214C of the Income Tax Ordinance 2001 be withdrawn through omission of sub-section (1A) of section 214C of the Ordinance and it be made incumbent upon the Commissioner to share reasons for selection of case for audit under the Sales Tax Act, 1990 and Federal Excise Act, 2005 as well. The committee was apprised that a Risk Assessment and Management System (RAMS) is being developed by FBR, Pakistan Revenue Automation Limited (PRAL) and an international donor agency. It was also disclosed that a module for "field audit techniques" has been developed by a World Bank consultant for training of audit officers under the auspices of which 200 officers have been trained in 12 sessions. As regards Forensic Audit it was pointed out by Member (SPR&S) that the World Bank can assist in this endeavour and that the Board has the legal mandate to appoint special audit panels to conduct forensic audit. Masoud Naqvi submitted that if solicited, guidance/instructions could be provided in this respect. Ashfaq Tola apprised the committee that the aim is to acquire actual data from the source for the purpose of which software/technology is available.
It has been decided that the SA to PM on Revenue suggested that the proposals relating to transparency in audit selection put forth by the Member (TPA) may be taken up for consideration during the budget exercise. A sub-committee was constituted tasked with identifying two sectors/cases for purposes of forensic audit and delineating the requirements in this respect. It was decided that the sub-committee will comprise of Member (TPA) Convener, Member (SPR&S), Masoud Naqvi and Abid Shahan.
The meeting commenced with a presentation by Abid H. Shaban, Member TRC in which data /information providing valuable insight was submitted with regard to the number of income tax return filers from Tax Year 2007 to Tax Year 2016, slab-wise tax contribution of companies/AoPs and individuals, analysis of tax directory 2015, registered taxpayers in income tax and sales tax viz-a-viz returns filed, status of updation of various taxpayer facilitation guides'' pendency of appeals at the ATIR and the Sindh High Court as well as the unprecedented increase in the stock of prize bonds in the last three years.
The second agenda item taken up during the meeting related to the constitution of Alternate Dispute Resolution Committees (ADRCs). FBR Member (IR) Policy was of the view that implementation of the existing provisions in this respect was required by identifying cases riddled with factual controversies. The SA to the Prime, Minister on Revenue desired that such committees be revived keeping in view the existing legal framework.
It has been decided that the Chairman FBR to constitute a sub-committee tasked with delineating the way forward/submitting proposals with regard to constitution of ADR committees in the existing legal framework till next TRIC meeting. The Member (Legal), FBR was nominated as the Convener of the committee and it was decided that there would an equal representation of members from within/outside FBR. Abid Shaban and Chief (HRM) were designated as members of the committee.
During the meeting, a presentation on the Electronic Monitoring of Production of the Tobacco Industry was made by FBR Member (SPR&S). The committee was apprised regarding the challenges encountered in the implementation of a complete track and trace system envisaged with the consultation of the Word Bank. It was proposed that FBR engage Pakistan Security Printing Corporation (PSPC) in printing of tax stamps to stall the loss of revenue and additional enforcement measures were also suggested in this regard. SA to PM observed that the tobacco industry was depicting a downward, trend in terms of production as well as revenues and that electronic monitoring constituted the ultimate solution for combating pilferage in various industries.
It has been decided that a sub-committee was constituted to exhaustively examine the pros and cons of both systems relating to electronic monitoring of production and make recommendations in this regard. Member (SPR&S) was designated as the Convener of the committee. The nominated committee members include Ashfaq Tola, Abid Shahan, FBR Chief (Legal) and FBR Chief (Sales Tax Policy).
FBR Chief (IR-Operations) apprised the Committee on the progress made with regard to the adoption of a 3 tier hybrid tax administration structure and the establishment of 11 new Regional Tax Offices (RTOs). A detailed presentation on the infrastructure, logistical, financial and human resource requirements was made and the progress made/bottlenecks encountered in respect of the preparatory administrative framework in various major cities/peripheral areas was highlighted.
It has been decided that Note for establishment of RTOs at Sahiwal and Gujrat to be put up to the concerned quarters on a priority basis. The FBR Chief (IR-Operations) also made a comprehensive presentation on the mapping of retail outlets and apprised the committee that physical survey of territorial jurisdictions has been initiated as a result of which 33,209 cases have been booked. It was explained that the process entails digital mapping, registration and issuance of TRN in case of non-compliance and that simultaneously transactional broadening the tax base (BTB) data is also being utilised by field formations. The contribution of Member (IR-Policy) in the amendment of Rule 81(A) and Member (SPR&S) with regard to upgradation of "Iris" module in this respect was lauded.
The SA to PM on Finance observed that expertise with respect to gee-ragging is available in Pakistan in the private sector. Ashfaq Tola advocated outsourcing of geo-tagging whereas Abid Shaban expressed certain reservations regarding the methodology being employed in this respect and suggested that usage of street directories etc would be a more viable option.
It has been decided that Sub-committee comprising Member (IR-Operations) and Member'' (policy) was constituted to appraise the viability of outsourcing of geo-tagging and make recommendations in this regard. The committee was given the mandate to co-opt two members.
It has been decided that Abid Shahan would make furnish recommendations/make a presentation on how to refine and make improvements in the process of gee-tagging/mapping of retail outlets. It was decided that the members of the TRIC headed by Masoud Naqvi would present a report/appraise the committee on the issue of declaration of assets located abroad by resident Pakistanis and delineate the way forward in this respect.
A discussion was also held on the issue of simplification of laws. Abid Shaban opined that tax processes should be harmonized and viable proposals in this respect should be incorporated in the budget. Member (IR-Policy) also pointed out that that certain provisions were proving to be irritants for taxpayers and contributing to litigation.
It has been decided that a sub-committee on Simplification of Tax laws was constituted comprising of Member (IR-Policy) [Convener], Member (Legal), Chief (Income -Tax Policy), Abid Shahan and Ashfaq Tola. The committee was authorised to co-opt other members if required and to identify specific areas in this respect within 45 days.
A sub-committee was constituted to formulate an action plan to reduce the quantum of the underground economy in Pakistan and to give recommendations in this respect. It was decided that the sub-committee would comprise of Member (FATE), Masoud Naqvi, Abid Shaban and Ashfaq To1a and was given the mandate to co-opt other members if required.
FBR Member (FATE) apprised the committee regarding various initiatives taken by the FATE Wing, particularly with reference to the adoption of the Customer Relationship Management (CRM) software, its benefits and the way forward in this respect.
Copyright Business Recorder, 2017