ISLAMABAD: Federal Board of Revenue (FBR) Member Inland Revenue and official spokesperson Shahid Hussain Asad has asserted that the tax exemptions, granted to certain sectors and individuals, have failed to yield positive results and instead have caused a colossal revenue loss hence the FBR is planning to withdraw all tax exemptions.
“The FBR is going to withdraw all tax exemptions granted to specific sectors and individuals in coming days.”
Addressing a pre-budget seminar organised by Institute of Chartered Accountants of Pakistan (ICAP), Shahid Hussain Asad cited that withdrawal of tax exemption, only from crude oil sector, would create a revenue impact of around Rs1 billion to the national kitty. “No new tax measure or increase in tax rate is under consideration for coming budget but the authorities are more concentrating on broadening tax base”, he said.
To a question, the FBR member pointed out that there was no coordination between Nadra and FBR to identify potential taxpayers. “I don’t want to comment on past claims regarding information sharing of 0.75 million potential taxpayers but now there is no any such link with Nadra in this regard,” he claimed, adding that however, the board was striving to establish a channel with Nadra for getting access to its database for identifying potential taxpayers.
On the occasion, he claimed that FBR was optimistic to come closer to its annual budgetary target as 17 percent revenue growth had been witnessed in ongoing fiscal year as compared to 3 per cent growth reported in the last year. He said that annual budgetary target was still Rs2,475 billion and no official downward revision had been made so far.
Speaking on the occasion, ICAP President Naeem Akhtar Sheikh said that the FBR had failed to create deterrence among taxpayers through fair audit, despite conducting it for many years.
Earlier, former ICAP president Saqib Masood gave an electronic presentation on ICAP budget proposals 2014-15. Through the presentation, the ICAP suggested that the government should use databases available with Nadra, electricity and gas distribution companies, airlines and hotels for identifying non-taxpayers and their source of income. It said that CNIC be used as the key identifier for transactions. A central number will make filing easy for the taxpayers and will provide access to all information to all the relevant tax collection authorities.
ICAP also recommended putting a constitutional bar on tax amenities, providing tax whitening opportunities for future. Appropriate checks and balances may be introduced for immunity regarding source of foreign remittances under the relevant laws. It proposed that there should be a statutory independent body for policy-making process, to be represented by the planning commission, the Ministry of Finance, Ministry of Law, FBR, professional and organisations like ICAP, tax bars, chamber of commerce and stock exchange.
Tax rates should also be rationalised to bring it down to acceptable level to help broadening tax base, corporate tax be reduced to 30 percent phased-wise while 17 percent sales tax, with an additional 3 per cent value addition tax, on commercial imports should gradually be brought down to 10-12 percent, the ICAP suggested.
