Sources said that the PM has given these directions during a meeting chaired by him on tax reforms in the country here at Prime Minister's Office on Thursday. The meeting was attended by Haroon Akhter Khan, SAPM, Miftah Ismail, SAPM, members of Tax Reforms Commission and senior government officials.
The Prime Minister also examined the basic features/versions of amnesty scheme drafted by the Tax Reforms Commission (TRC) for legalization of unexplained assets held locally and abroad. The PM, in principle, was in favour of the amnesty scheme to document un-declared and un-disclosed assets held abroad, sources said.
The PM also agreed to the proposals of the Tax Reform Implementation committee (TRIC) to immediately implement the proposed electronic monitoring of production of the tobacco industry through tax stamps /track and trace system. He also agreed to strengthen tax audit of the FBR. TRIC has proposed the forensic audit of banks/telecom sectors.
TRIC also urged the PM to restore exemption on the inter-corporate dividend within the context of group taxation. The PM has directed the FBR to establish real time linkages with relevant organizations including National Database & Registration Authority (NADRA), banks, provincial authorities, and utility service providers to discover new taxpayers and bring them into the tax net.
During the meeting, Shahid Khaqan Abbasi inquired about the use of CNICs for documentation and expanding the tax net. When all economic activities are CNIC-based, why the FBR is not documenting all activities carried out on the basis of CNICs. CNICs are equivalent to the National Tax Numbers (NTNs) and then why all activities which are CNIC-based are not documented and registered, sources quoted the PM as asking the FBR.
According to sources, the FBR officials said that the proposal is doable which needs linkages between the FBR's database and all other databases having CNIC-based activities. The FBR needs real time basis linkages with the relevant organizations including NADRA, banks, motor vehicles registration authorities, provincial authorities and other utility service providers. In the presence of such real time basis linkages, the FBR would be in a position to document all CNIC-based business activities and transactions.
During the meeting, the FBR officials admitted that the income tax return form is complex which needs to be simplified. Sources said that Shahid Khaqan Abbasi further directed the FBR to simplify tax income tax return form so that people can easily fill in the forms. He directed that tax return forms should be further simplified and reduced to minimum possible size for the ease of common citizens and tax-filers.
The Prime Minister asked Federal Board of Revenue to undertake systemic and broad-based reforms in consultation with all stakeholders. The Prime Minister was briefed on various measures being taken to introduce much-needed tax reforms, broadening of tax base, incentivizing and simplification of tax collection system and bringing about qualitative improvements in the auditing system.
Various proposals to make the revenue collection system more efficient and customer friendly were also discussed threadbare. Various steps being taken by FBR to facilitate tax-payers of the country also came under discussion. The Prime Minister also observed that in order to broaden tax base, steps should be taken to bridge trust deficit between the tax-payers and the tax-collectors.
FBR Chairman Tariq Pasha informed the PM that the FBR has received over 608,587 income tax returns till November 1, 2017 against 352,022 returns during the same period of the last fiscal year, reflecting a growth of 72 percent. The number of return filers is expected to be much higher as compared to 1.2 million last year, he said.
He further said that FBR has provisionally collected Rs 1,033 billion during July-October (2017-18) as compared to Rs 872 billion during 2016-17, reflecting an increase of around 18.5 percent. The refunds during this period have been issued to the tune of Rs 42 billion as against Rs 21 billion issued during this year depicting an increase of 100% during the corresponding period of previous fiscal year. In addition to issuance of these refunds, another amount of approximately Rs 13 billion has been issued as sales tax refund to claimants through direct credit to their bank accounts.
The provisional collection for the month of October 2017 was Rs 267 billion which shows an increase of more than 12% over the collection for October 2016 which depicts a substantial improvement over the growth of 5.23 percent registered in the monthly collection last year. During fiscal year 2016-17, the collection for the first four months stood at Rs 872 billion as against the figure of Rs 1,033 billion collected this year.
During October 2017, according to the provisional figures received so far, the FBR has made a net collection of more than Rs 267 billion as against Rs 237 billion collected during October, 2016, he added. Meanwhile, Tax Reforms Commission (TRC) shared proposals of the commission with the PM. The FBR responded to the proposals of the TRC and submitted its rationale behind each proposal. The FBR also informed the PM about the proposals of the TRC which are doable.
Copyright Business Recorder, 2017