Federal Board of Revenue (FBR) Monday announced that Benami Act will be made operational this week, empowering the government to confiscate all properties and bank accounts registered with a fictitious person. This was disclosed by FBR Member Inland Revenue Policy Hamid Ateeq Sarwar during a press briefing here at FBR House on Monday. Member Inland Revenue Service (IRS) Operation Seema Shakil was also present on the occasion. The FBR Members said that the government has taken decision to make Benami Act operational as the Parliament approved the law during the tenure of the last regime. "We have now forwarded the draft rules to Ministry of Law for vetting. By making this law operational soon, all those bank accounts and properties which are kept on the name of others will be seized and then the relevant Tribunal will decide process of sale of confiscated bank accounts and properties under the Benami Act," he added.
As part of government's efforts to document the economy, Dr Hamid said the law will allow government to take strict actions against those who got their movable and immovable assets registered with fictitious person in order to evade taxes. He said the law was passed in January 2017 and after finalising of its rules and regulations, it will come into operation latest by February 8. When asked whether the government will give amnesty to those who registered their assets with other person's name before the enactment of law, Dr Hamid responded that he was not aware of this decision at the moment. However, he said other laws already exist in the country to deal with benami assets.
When asked about establishment of high-powered Tax Commission to consider proposals for getting back powers from the provinces to collect of sales tax on services, tax agriculture income and place a unified valuation rates for properties, the FBR Member IRS Policy said that National Tax Collection Agency could provide solution to these issues. They cited examples of India, the EU and the USA and stated that the collection of sales tax on goods and services need to be harmonised. He presented the examples of multinational companies where it could become hard to treat them as goods or services.
He said the sales tax collection on services and goods should be solely handed over to the FBR or a single tax authority be created for collection across the country.
The FBR Member IRS Policy was of the view that due to the decision there is overlapping in the collection of sales tax on goods and services among provinces. He said this also created undue hurdles for the businessmen. As part of ease of doing business, the member said the federal government will take up the issue with the provinces.
He said that the provinces objected over capital gain tax collection by the Centre and they might take up this issue in the upcoming National Finance Commission (NFC) meeting scheduled to meet tomorrow (Wednesday).
To another query about increase in valuation rates on property, he said that the valuation rate notified by FBR is still standing at 60 percent compared to the existing market rate and after hiking the valuation rate it would not affect negatively the real estate business in the country.
Responding to a query, he said that FBR received Rs12 billion from property transactions as tax. "We expect that this collection will reach by Rs15 billion by end June 2019", he said. He said the valuation table for taxation is still far behind the actual market value.
To a question, the member said that the chief commissioner Lahore is looking into the case of Prime Minister Imran Khan's sister. FBR Members replied without mentioning any name that in this individual case, the taxpayer had deposited the tax amount. Member IR operations, Seema Shakil said that 6,000 notices were issued to high net worth individuals in the past two months. Of these, she said tax demand of Rs 6 billion was created in 204 cases. The recovery so far made after assessment of these notices was Rs 2.6 billion.
Seema said that FBR issued notices to non-residents without any discrimination. However, she said that the second notice will be issued after the approval of the high authority to non-residents. "We will soon issue a clarification in this regard as well," said the member, the issues of genuine taxpayers will be taken into account. However, the member requested to all those people who received notices to just submit reply to the notices by clarifying of availing amnesty scheme or being legitimate taxpayer.
The FBR Members assured that the FBR would not harass those who availed amnesty scheme. The FBR obtained information from OECD mechanism from 26 jurisdictions but the field formation did not have information who availed the last amnesty scheme. When someone declared less but possessed more, he/she will have to explain undeclared assets before the tax authorities. The FBR officials said that there would be no discrimination against anyone under the tax laws.