Chairman Federal Board of Revenue (FBR) Muhammad Jehanzaib Khan has said that a huge reforms agenda has been finalized for FBR in which massive investment will be made with major thrust on the Information & Communication Technology (ICT) to create an interface between taxpayers and tax collector in order to minimize human contact.
“Work is also underway on simplification of tax laws and tax policy and we are also in the process of delineating the tax roadmap which would define taxation principles for the next 10 years to be followed for the imposition of taxes, besides devising a roadmap for creating balance between direct and indirect taxes”, he added while exchanging views at a meeting during his visit to the Karachi Chamber of Commerce & Industry.
Chairman Businessmen Group & Former President KCCI Siraj Kassam Teli, Vice Chairmen BMG Tahir Khaliq and Zubair Motiwala, President KCCI Junaid Esmail Makda, Senior Vice President Khurram Shahzad, Vice President Asif Sheikh Javaid, Former Presidents AQ Khalil, Haroon Agar & Shamim Ahmed Firpo along with Managing Committee Members and others were also present at the meeting.
Referring to concerns expressed by Chairman BMG Siraj Teli over poor attitude and culture at FBR along with trust deficit between tax-collectors and taxpayers, he said that organizational change and change in attitude was an uphill task not just at the FBR but in any organization. “However, FBR is ready for the change in its attitude and culture. I absolutely have no doubt that vast majority at the FBR is willing to change in order to come up to the expectations and jointly move forward”, he added.
Jehanzaib Khan admitted that FBR has remained largely focused on the existing taxpayers who are already in the tax net while tax broadening has not taken place. It is also a fact that FBR possesses detailed information about every tax payer and evader due to massive digitalization but they don’t have the capacity to handle and interpret this huge data. “We are trying to build capacity to scrutinize such an enormous data carrying details about the lifestyle of individuals within and outside the tax net”, he assured.
Chairman FBR further informed that as a test case, FBR recently issued notices to 6500 individuals outside the tax net with numerous pre-defined parameters including purchase of property worth more than Rs30 million or car purchase by such individuals. FBR assessed a recovery of Rs3 billion from these individuals, of which Rs1.75 billion have been recovered so far.
He further stated that FBR has been facing a lot of crises mainly due to evasions in Sales Tax because of FBR’s own weaknesses. The Sales Tax has to be administered well by reviewing numerous exemption regimes that have distorted the entire taxation system, he opined, adding that the rate of Sales Tax can be reduced in due course if its application becomes uniform and all the distortions along with various concessions were removed.
Referring to KCCI’s suggestions about Asset Declaration Scheme, Chairman FBR assured that KCCI’s suggestions for the next Asset Declaration Scheme will be seriously reviewed and taken into consideration. “We are the custodians of your data and it is our responsibility to keep your data confidential and fulfill the promises”, he assured.
He also agreed that constitutional guarantee and judicial protection must also be part of the Asset Declaration Scheme. “Whatever is possible will be given in the Asset Declaration Scheme and your recommendations in this regard will certainly be reviewed and considered”, he added.
Referring to KCCI’s concerns over FBR’s discretionary powers, he said that judicious exercise of these powers was the responsibility of FBR officials. “Having power to search or arrest does not mean that we start searching and arresting everyone. If taxpayers and tax collector improve their communications by promptly replying to notices and openly sharing their miseries, there will absolutely be no need to exercise these powers”, he added.
He requested KCCI to nominate a team so that they could sit with FBR at numerous consultation meetings while the final meetings will be presided over by himself and all positive and mutually agreed suggestions arising from these meetings will certainly be incorporated which must focus not only on business facilitation but also on revenue generation with a view to ensure macroeconomic stability which was also very essential for flourishing businesses. Chairman FBR announced to designate a contact person from his office who will be responsible for promptly responding to issues raised by KCCI.
In response to a query by President KCCI, Chairman FBR clarified that FBR will not be conducting raids against filers only but will continue take action against non-filers.
Chairman BMG & Former President KCCI Siraj Kassam Teli, in his remarks, underscored the need to change the attitude, culture, the way of working and the arm-twisting tactics by FBR which was widely being demanded not only by the business community but also by the present government under its slogan of ‘Naya Pakistan’.
While asking Chairman FBR whether the FBR is ready for this change or not, Siraj Teli advised him to sit with all his officers in order to urge them for change and if they are unwilling to do so, they must justify the reason for arm-twisting.
He was of the opinion that not all the officials of FBR were corrupt as the department must be having many good and honest officers as well who should be brought at the forefront and they should not only be trained about how to collect taxes but also on how to behave and how to get the laws implemented.
Referring to Prime Minister Imran Khan’s resolve to broaden the tax base, Siraj Teli said that the tax base would never improve until the corrupt officers were taken to task and good officers were promoted. Tax collection would only improve when FBR Officers stop misusing their powers and they also get punished in case they trap any taxpayer in a false case.
“FBR Chairman must focus on the capacity building of the right people who must be in large numbers within the FBR but they need to be searched and given prime responsibilities which, if done, would certainly help in achieving all the revenue collection targets as all such honest officers would make dedicated efforts in the national interest only rather than seeking ways and means for personal benefits”, he added.
Siraj Teli said, “Karachi city, being the financial and industrial hub of the country, contributes highest revenue of 70 percent and we only expect our rightful share and respect in return.”
He advised Chairman FBR that instead of staying confined to squeezing the existing taxpayers, FBR must take strict action against those elements who have been living lavishly but their contribution to the national exchequer is zero. “FBR claimed of possessing lists of around 700,000 such tax evaders long time ago but to date, not a single rupee has been recovered from these elements. If strict action is taken against such evaders, it would certainly result in substantially improving the tax collection and enhance country’s tax base”, he opined.
He said, “People are reluctant to come into tax net due to serious trust deficit. Tax officials frequently indulge in harassment of taxpayers which discourages others to come in tax net. In this situation, it is more appropriate to leave alone the taxpayers who may have evaded some tax for the time being and focus only on increasing tax base by bringing the evaders into the net.”
Siraj Teli assured to extend full support and cooperation to FBR in all its endeavors towards improving the working environment and performance of tax collection authority.
While referring to the Asset Declaration Scheme which is in the offing, President KCCI Junaid Esmail Makda stated that KCCI proposed the government to launch a new scheme which may be called “Asset Declaration Scheme” to allow people to declare their assets by paying some minimal tax. In this regard, he stressed that the wealth form must be simplified with limited details to encourage maximum number of individuals to declare their assets.
He was of the opinion that as 97 percent of last year’s amnesty scheme was availed by Karachi-based individuals, the government will now have to devise effective strategies so that individuals from all parts of the country could avail this year’s Asset Declaration Scheme which would help in documenting the economy, encourage growth and bring thousands of individuals into the tax net.
The new amnesty scheme should be ratified through the parliament so that the possibility of the scheme being struck down by the parliament in the future can be subsided while judicial protection should also be provided whereby empowerment of any court to suspend or struck down or rescind the enacted amnesty scheme should be limited.
While referring to massive discretionary powers, President KCCI said, “We want the Ministry of Finance and FBR to withdraw the ‘draconian’ provisions and laws, resulting in bestowing immense discretionary powers to the officers of Inland Revenue. We believe it is a core issue and is likely to result in loss of productivity and mental torture to the business community. These laws have kept a large number of potential tax-payers out of the tax regime. In fact these laws are a deterrent to broadening of tax-base and resulted in promoting the culture of tax-evasion.”
To make the tax mechanism more efficient, unnecessary powers of FBR should be curtailed, audit process should be reformed and laws should be passed for harassment by minimizing person to person contact through effective use of information technology, he advised.
Former President KCCI AQ Khalil, while expressing sheer dismay over an FIR lodged against President Lahore Chamber, stressed that FBR must strictly refrain from such tactics and instead of conducting raids, they should issue notices to seek explanation.