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ISLAMABAD: The National Database and Registration Authority (NADRA) is re-working on the data for correction of the profiles of non-filers before the launch of the scheme to ensure the filing of income tax returns by un-documented persons in coming September 2022.

Sources told Business Recorder here on Monday that once the Federal Board of Revenue (FBR) is satisfied with the quality of the data, the tax department would launch the Web-Portal for non-filers of income tax returns. The FBR has asked the NADRA to further refine the data so that the citizens cannot question the authenticity of the profiles.

The FBR will upload 3.5 million NADRA profiles of non-filers on the new portal. After an advertisement campaign, the non-filers would be encouraged to file returns in September based on tax profiles shared by the authority.

Under the FBR’s Inland Revenue Strategic Reform Plan for 2021-2025, the FBR will be heavily relying on third-party databases including banks, the NADRA, and the Securities and Exchange Commission of Pakistan (SECP) to detect tax evasion.

The public and private sector data can only be used to detect tax evasion with minimum human contact if it is in standard format and up to date, reflecting economic activity as soon as possible.

When data is accessible without much time lag, it makes verification simpler and possible. Updated databases will significantly improve the effectiveness of using third-party data, reduce the cost of administration and facilitate taxpayers.

In the past, the FBR had provided third-party data of 14 million people to the NADRA. The authority has mixed its own data with the FBR’s third-party records and finally developed profiles of non-filers. The NADRA has identified 3.5 million non-filers by applying three different methodologies using Artificial Intelligence (AI).

The FBR will upload the profiles on a new portal to be launched for the general public. The FBR will give some time period to the non-filers to respond to the profiles available on the new portal.

The FBR will also launch a massive media campaign in this regard. The non-filers would be allowed to file returns free of cost and the FBR will pay Rs5,000 to the tax lawyers for filing each income tax return of non-filers.

Non-filers can come forward and clear their position after analysing their data on the FBR’s web portal. The non-compliant non-filers would face the consequences of disabling their mobile phones or disconnections of their electricity and gas connections, etc.

The FBR said important data-generating processes of the economy would be identified, and technological bridges created with public and private entities carrying out and managing transactions with IT systems capable of transmitting data to IRS systems.

Initially, the focus will be on property transactions by non-governmental agencies, banks, the NADRA, utility companies, the SECP will be prioritised. The exchange of data will be real-time, or automatic periodic or electronic periodic. Software capacity will be developed to facilitate the automatic exchange of information, data warehousing and analysis.

The data-centric administration will be developed through valuing the importance of data and adopting data-based decision making. “We will improve our ability to manage existing data and expand our sources for data. The risk-based compliance management approach will be based on leveraging data to identify, prioritise, and action compliance risks,” the FBR said.

Data from other revenue authorities across the country, including Customs, Provincial Boards of Revenue, Excise and Taxation Departments and Provincial Revenue Authorities will be integrated with the IRS data and systems.

The IRS will access data from these databases to conduct data-led assessments. The data will be used to define risk parameters for risk profiling. Backward linkages to customs risk management for goods clearance would also be provided, the FBR said.

Technological bridges would be built across all tax databases to link taxpayers across taxes for flows of third-party information, along with findings of business analysis and risk management tools for broadening of tax base and effective audits. The consolidated tax profiles with information across all taxes will be made a part of the IRIS record for use in both broadening of tax base and meaningful auditing, the FBR report added.

Copyright Business Recorder, 2022

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