Uniform application of penalty regime: FBR team to draft Inland Revenue Act 2010

The Federal Board of Revenue has formed a high-level committee to draft the Inland Revenue Act 2010 to combine Sales Tax Act, 1990, Federal Excise Act 2005 and Income Tax Ordinance 2001 into a unified law for uniform application of penalty regime and other provisions.
Sources told Business Recorder here on Wednesday that the FBR has constituted a committee headed by FBR Member Legal for drafting of the Inland Revenue Act. However, some senior sales tax officials objected that the Sales Tax Laws and Direct Taxes Laws remained separate under the best tax administrations.
The argument was rejected on the ground that the uniformity in the penalty and assessment regime would facilitate the taxpayers. The idea of the Inland Revenue Act has also been strongly supported by the international tax consultants of the FBR. In the presence of the Inland Revenue Act, the taxpayer would not be required to consult all three laws ie Sales Tax Act, 1990, Federal Excise Act 2005 and Income Tax Ordinance 2001 seeking treatment of similar kind of provisions like penalties, etc.
The Board is planning to introduce the Inland Revenue Act following harmonisation and integration of taxes under the reform process. The Inland Revenue Act would simultaneously deal with the sales tax, income tax and federal excise. Giving rationale of the proposal, sources said that there would be a common Act for all three federal taxes ie sales tax, income tax and federal excise duty following establishment of Inland Revenue Service.
The FBR is providing all income tax, sales tax and excise related services under one roof to the taxpayers. A simplified combined law would further facilitate the business community for which the FBR is planning to draft the Inland Revenue Act. Therefore, a single Act would deal with all the taxes under the harmonisation of taxes exercise. The further synchronisation of income tax and sales tax would be required under the revamped tax machinery.
So far, the FBR has taken many steps to harmonise tax laws. The alternative dispute resolution (ADR) laws have been harmonised. Other measures implemented included harmonisation of penalties/additional taxes regime; time period for adjudication and appeals. Following integration of sales tax and income tax laws, the books of accounts maintained by the income tax department could effectively be used by the sales tax officials. Secondly, sales on the income tax and sales tax sides would also be verified effectively.
Under section 4 of the Federal Board of Revenue Act, the Board shall exercise powers and perform all such functions that are necessary to implement the tax administration reforms. This section has wide scope for implementation of reforms including harmonisation of tax laws.