He said the assessment of SBP in its report was based on July-November FY10 period and added that the country would be attaining the tax-to-GDP target of 10.4 per cent in the current fiscal year. The SBP's First Quarterly Report on the State of the Economy for FY10 has termed the improvement in tax-to-GDP ratio as a "major challenge."
"The 0.6 percent Y-o-Y increase in tax collection during July-November FY10 is a source of concern; if this continues, Pakistan's tax-to-GDP ratio will decline from an already low 9.8 percent seen in FY09," according to the report. To a question, Asrar said that some 468 corporate cases from among 17000 returns had been selected through a random ballot for composite audit and added that the performance of ICAP would also be monitored in this regard.
He said the policy regarding 20 per cent selection of cases for audit for tax year 2008 had finally been revisited and the FBR had restricted the authority concerned not to conduct audit of cases for tax year 2008 other than those selected through balloting.
He said that out of total 2.7 million potential taxpayers, identified through electricity bills, only 0.685 million taxpayers filed tax returns and added that the tax collecting authority had been striving to bridge the gap between return filers and non-filers. For the purpose, the FBR had communicated the list of potential taxpayers to the field offices and directed them to take prompt measures to get them inducted in tax net, he added.
Earlier, Abdul Rahim Suriya, president, ICAP, in his keynote address, said that the institute, as a regulator of accounting profession, considered it to be its national duty to support and assist the authorities in their endeavours to build strong tax base and culture of compliance for achieving sustained economic growth and economic stability. He said the sole purpose of outsourcing the tax audit to chartered accountants was to establish an effective tax audit system and to create deterrence to mis-declarations in the tax returns filed by some taxpayers.
According to him, the immediate enhancement in tax revenue is not at all the objective of this exercise. However, this exercise will ultimately help develop a culture of compliance with tax laws over time, which will improve the tax collections as well as the tax-to-GDP ratio in the long run.
He said the tax audit framework had been developed, which ensures the auditors' independence. He also said that FBR would obtain a prescribed declaration of independence from the prospective auditor, adding that ICAP had also suggested that the statutory auditors and the tax advisors of the taxpayers and its associates should not be eligible for appointment as their tax auditors.
Suriya said the responsibility to monitor complaints against auditors, if any, would be dealt with by FBR while ICAP would be acting as per the provisions of its CA ordinance, if some one is found negligent. In his briefing regarding the process of tax audit, Saqib Masood, chairman, taxation committee, said the final audit report would be submitted to the commissioner after analysing the audit documents of the taxpayers. He said the authority concerned was striving to maintain transparency in the selection of taxpayers and auditors.
He said the outcome of the decision to outsource tax audit would definitely be visible but it could not be judged in a brief span of one year. He said: "We never claim that the tax audit framework is perfect and suggestions and recommendations in this regard would be welcomed to make the audit process more effective".
Later, the panellists including Syed Mohammad Shabbar Zaidi, former, president ICAP, Syed Asad Ali Shah, former, president ICAP, Abdul Qadir Memon, president, Pakistan Tax Bar Association, Pervaz Muslim, vice president, ICAP discussed various requirements under the tax audit frame.