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ISLAMABAD: Former chairman Federal Board of Revenue (FBR) Shabbar Zaidi has said that the FBR is collecting most of the revenue from withholding taxes and there is only a need of 8,000 tax employees as compared to the existing huge workforce of 23,000.

Speaking as a guest in “Paisa Bolta Hai” of Aaj News with Anjum Ibrahim on Sunday, Shabbar Zaidi stated that most of the tax collected by the FBR is only due to withholding taxes and there is no tax collection due to the department’s own efforts. “If I have deposited Rs 100 as tax with the income tax return, there is not even an increase from Rs 100 to Rs 101 due to the department’s efforts”, he said. “Out of 23,000 officers of the tax machinery, there is only a need for 8,000 tax officers. Till this huge workforce of 23,000 is present, the basic changes in the FBR structure cannot be seen”, Shabbar Zaidi said.

However, renowned tax lawyer Waheed Shahzad Butt fully endorsed the viewpoint of Shabbar Zaidi that even 100 tax professionals having the mindset of tax collector would be enough in the areas of tax policy, operations and enforcement. The figure of tax from the department’s efforts would increase at least from Rs 100 to Rs 120 with the help of tax professionals.

Shabbar Zaidi stated that the existing process of audit and assessment is not adding to any increase in revenue collection except corruption.

Shabbar Zaidi said that the government has imposed 10 percent Supertax on 15 industries, which is discriminatory and would be eliminated by the courts. The industry is already in problem and the government can take some other measure instead of imposing Supertax on big industries.

‘Registering 0.3m new taxpayers is unrealistic target’

He questioned that during the last 20 years, how many cases of concealment of income have been maintained at the level of the Supreme Court of Pakistan? The department has failed to win a single case of concealment of income from the Supreme Court. This is the test case for the department’s credibility of putting efforts to win cases of concealment of income.

Former FBR Chairman acknowledged that the track and trace system has been successfully implemented in the tobacco sector and would also be implemented in cement sector. Irrespective of the fact who implemented track and trace, this is a very big achievement.

Former Special Assistant to Prime Minister on Revenue Haroon Akhtar stated that credit goes to Shabbar Zaidi and the government of Imran Khan for implementing the track and trace system. In my tenure, tax officials were afraid of the National Accountability Bureau (NAB) and reluctant to open bidding documents, etc., which delayed the project, he said.

During his tenure as FBR Chairman, Shabbar Zaidi introduced two websites with the help of the NADRA, i.e., FBR Maloomat and NADRA link where taxpayers can see their financial transactions. The work on these projects has been slowed down.

Former Chairman FBR regretted that the tax officials have the mindset of not cooperating with other government departments like NADRA to exchange information. This is unfortunate that the FBR officials are not ready to share any information with another department. He faced stiff resistance from the tax officials when he coordinated with the NADRA to exchange information for the purpose of broadening the tax base.

About the point of sale (POS) system, top chartered accountant opined that a joint venture is going on between the FBR and the business community that they do not want to integrate with the POS system. The system is being deliberately deferred by the retailers with the consent of the concerned tax officers in the name of technical glitches. The concerned tax officers are not taking any action against the retail outlets where POS is installed at few machines and clearance/ sale of goods is done from the machine where POS is not installed.

He said that the purpose of the POS system is that the whole sales of goods is being done from the POS machines. He suggested that the audit of the POS should be outsourced to a third party to check whether sales are done from the POS or not.

The analysis of the POS revealed that 99 percent of shops integrated with the POS belong to Karachi, Lahore and Islamabad. The retail outlets in cities like Peshawar and Multan, etc., are not ready to integrate with the FBR’s POS system.

Shabbar Zaidi stated that the provision of the CNIC from the unregistered buyers was a very big step for the documentation of the economy. However, those businessmen, who have earned money illegally, would never want to record their purchases. Our society, tax advisers and even tax officers are not in favour of the implementation of the CNIC condition.

Former Special Assistant to Prime Minister on Revenue Haroon Akhtar stated that the FBR has achieved the assigned revenue collection targets during first two months of 2022-23 despite the current economic situation and would also meet the target set for the first quarter of the current fiscal year.

He said that the third-party audit was an excellent idea, but it was tried once in the past and it failed. “I was very happy when former Finance Minister Shaukat Tarin reintroduced the concept of third party audit but it was not implemented”, he said.

The chartered account firms have their own interests and it is difficult for them to give orders against their clients or clients of other firms, he said.

The audit should be done once in three years. The random selection of cases for audit in sectors based on parameters would create deterrence, he said.

Haroon Akhtar stated that the scheme of the CNIC was an excellent step towards documentation. People have started using CNICs of their drivers/ workers for carrying out business transactions. It was not appropriate to suddenly discontinue the CNIC condition. The gradual implementation of the CNIC condition can help in achieving the objective of the documentation.

Haroon Akhtar stated that the NADRA’s data should be actionable which should be sustainable in the court of law. The cases framed on the basis of NADRA’s tax profiles should not be challenged in the court. The authority has been trying for the last many years to finalize tax profiles, but their information is not actionable. All third-party information from NADRA, FIA, banks, immovable properties and other sources should directly come into the FBR system. Tax expert Waheed Butt stated that the FBR has ample information of the financial transactions of citizens. However, there is a need of serious efforts by the tax machinery to utilize this information for registering new taxpayers. The FBR has never focused on the cost of litigation in courts. The time of courts has been wasted at the cost of the taxpayer’s money.

Waheed Butt added that the previous FBR Chairman had introduced the concept of the Inland Revenue Ombudsman to reduce litigation in courts and facilitate the taxpayers. However, the new government has not followed this important concept of the IR Ombudsman in the field formations.

Copyright Business Recorder, 2022

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