ISLAMABAD: The Federal Board of Revenue (FBR) has served notices to tax evaders on a large scale with an objective to dig out potential tax evaders.
“With the strenuous efforts carried out by Member Inland Operations Muhammad Ashraf Khan, two major companies have been traced out which have not paid tax as per due rate of tax” a well placed source at FBR told this scribe here on Monday.
Tax evasion is rampant in our society with the help of the tax collecting authority and FBR collects taxes from the least percentage of registered tax payers of the total population. The government collects taxes indirectly by taxing luxury items like fuel, cigarettes, industries, etc while compensating budget deficits with loans and grants from other nations and organizations.
The estimates of tax evasion from Equation 1 show that tax evasion was 1.74%t of the GDP in the base year (1974). It increased to 3.46%t in 1982 and 3.7 % in 1987 but declined to 2.4%t in 1991. However, between 1991 and 1998 tax evasion increased rapidly; it was 4.86%t in 1998 but declined to 3.59%t in 1999. In 2003 it increased to 4.75% and then declined to 3.88 % some ten years back.
The tax receipts continue to be pre-empted almost entirely by current expenditure on general administration, defence and debt servicing. For financing development expenditure, reliance has been placed almost exclusively on internal and external borrowings. The tax system continues to be regressive in character due to its over-dependence on indirect taxes and has failed to be conducive to the achievement of the objectives of growth, efficiency and equity.
Now the FBR has sought a data of around 125 major companies and started their scrutiny. FBR is of the view point that tax evasion of Rs 10 billion can be recovered through this exercise.
On the directions of the Finance Minister Ishaq Dar, Chairman FBR Tariq Bajwa started this exercise. Bajwa assigned this task to Member Inland Operations Muhammad Ashraf Khan with instruction to complete the process as early as possible with maximum deadline of ten months.
Toeing the directions of FBR Chief, Member Inland Operations Ashraf Khan formed a team headed by Chief Operations to present to chalk out a mechanism to trace out major companies which were not paying taxes as per due rates and submit report in ten days.
In pursuance with the instructions passed by Finance Minister to FBR Chairman, FBR has been pursuing the give lines vigorously. In this regard, officials from the Large Taxpayers Unit Lahore were called in FBR Headquarters on Monday.
Bajwa while addressing the officers directed to prepare a comprehensive report about those companies which were not paying taxes in lieu with the specified tax rates. Bajwa directed the officials that he wanted results and nothing else. He also warned officials of dire consequences for showing negligence of professional obligations.
Officials were of the view that merely directions could produce due results because incentives were also must in this regard. FBR officials were of view nicks and carrots are also vital for getting good performance from them.
Moreover, they also demanded for the provision of facilitates for the execution of their professional duties, however, Chairman Bajwa gave no assurance to officials in this regards, however, he further pressed saying, he wants results.
