Lack of coordination between depts: FBR’s efforts aimed at broadening tax base hit a snag

KARACHI: The Federal Board of Revenue’s efforts to broaden the tax base have hit a snag due to a lack of coordination between departments, creating hurdles in the sales tax registration process after recent amendments.

According to a letter sent by the Karachi Tax Bar Association (KTBA) to the FBR chairman, the Inland Revenue Information System (IRIS) has not allowed Local Registration Officers (LROs) to entertain the sales tax registration applications and they are unable to accept or reject the applications due to the said technical limitations.

The issue arose after the FBR introduced SRO 350(I)/2024, which placed restrictions on the sales tax registration process for individuals, firms, and single-member companies under Rule 5 of the Sales Tax Rules. The amendments mandated that registration applications would first need to be approved by the LRO before being processed on IRIS.

Minister underscores need for broadening tax base

While the FBR has taken measures such as blocking mobile SIMs, SRO 350(I)/2024, and introducing the Tajir Dost Scheme to expand the tax net and avoid the misuse of the tax procedures, the lack of coordination between departments is rendering these initiatives ineffective, creating an “ugly situation” for the tax authority. The KTBA’s letter to the FBR chairman highlighted that although LROs can view the submitted applications on IRIS, they lack the necessary options to accept or reject them, leaving the applications pending indefinitely.

The KTBA requested the FBR chairman to direct the PRAL team to make the necessary changes on the IRIS portal, enabling LROs to dispose of sales tax registration applications efficiently.

As the FBR aims to broaden the tax base, addressing the coordination and technical issues hampering the sales tax registration process has become crucial to ensure the smooth implementation of its initiatives.

Copyright Business Recorder, 2024