FBR refuses to share audit parameters

RECORDER REPORT

ISLAMABAD:Federal Board of Revenue (FBR) has refused to share risk-based parameters used for selection of cases for audit (Tax Year 2015) under a new audit policy and stated that parameters were declared confidential through an amendment in the Finance Bill 2013. A meeting of the Senate Standing Committee on Finance, chaired by Senator Saleem Mandviwalla here on Friday, observed that the committee would undo this amendment in Finance Bill for the next fiscal year when it would come to it for discussion after presentation of the budget.

Briefing the committee over the audit policy, the FBR officials said that a paradigm shift in the audit policy was made in 2016 by shifting from random balloting to risk parameters. Under the criteria, a total of 1.2 million income tax returns were processed through risk-based parameters for selection of cases for audit and 0.7 million fallen under the categories of tax payers were excluded from audit as the same were not fallen under risk-based parameters. Out of remaining five hundred thousands, 93,276 were selected for audit under risk parameters, said the officials.

They claimed that the shift from random balloting to risk parameters in taxpayers' audit will not only promote compliance with the existing tax laws but will also generate increased revenue through better declarations for better public spending by the government.

The committee discussed in detail the measures to discourage import of used and old auto parts in form of raw material because this has not allowed development of local industry. The members of the committee further said the import of parts in the form of raw material has been detrimental for local industry and if this practice continues, there is no chance of development of the local auto spare parts industry in the next 50 years.

The FBR stated that import of old and used auto parts (including serviceable auto parts imported as steel scrap) is banned in terms of IPO, 2016. However, the same can be redeemed against a fine of 20 per cent of the import value.

However, chassis of used automotive vehicles cut into pieces whether or not designed as steel scrap are also banned for import into the country. The customs department is fully vigilant to thwart any attempt of import of old and used auto parts in the shape of scrap.

Tax officials claimed that in order to obviate chances of mis-declaration in the import of used auto parts, a comprehensive special procedure for examination of such goods has been prescribed and all consignments of old and used auto parts are subjected to 100% examination.

They further stated that in order to discourage import of old and used auto parts, contraventions have been made out against such imports and forwarded to the adjudicating authorities for adjudication.

The adjudicating officers confiscate the old and used auto parts and a minimum fine of 20% of value of such goods is imposed, in lieu of confiscation, which is over and above the customs duties, other taxes and penalties imposed under relevant law.

The committee and FBR officials agreed that either redemption fine on the import of old and used parts being imported in the form of scrap should be increased sufficiently to the level of the rate imposed on the brand new vehicle or the imported stuff should be out-rightly confiscated.

The committee also directed FBR to sit with the governments of AJK and Gilgit-Baltistan to resolve the issue of filers because the companies operating in AJK and GB are being treated as non-filers despite being filers in Pakistan.

The committee deferred public-private partnership bill to establish a regulatory body to undertake infrastructure projects after some members of the committee argued that a law was unnecessary.

Senior officials of Finance Ministry stated that in coming years the government financing for infrastructure projects would be inadequate and the projects would be undertaken in a joint venture with the private sector.

The proposed law would provide a regulatory framework for infrastructure projects under public-private partnership. The government would also inject equity and only commercially viable and socially viable projects would be implemented.