Steps afoot to curb under-invoicing, smuggling, ATT misuse: Shabbar

LAHORE: Chairman Federal Board of Revenue (FBR) Shabbar Zaidi said on Saturday the government was putting in place effective measures to curb under-invoicing and smuggling as well as misuse of Afghan Transit Trade (ATT) so as to stabilize local industry and businesses.

He was talking to business community here at the Lahore Chamber of Commerce and Industry (LCCI) where Minister of State for Revenue Hammad Azhar, Provincial Minister for Industry and Trade Mian Aslam Iqbal also accompanied him.

LCCI Acting President Fahim-ur-Rehman Sehgal, leading businessmen and industrialists, representatives of various trade associations attended the meeting and put forth their problems.

Shabbar Zaidi said smuggling and under-invoicing had been major challenges in the taxation system for the last many years, adding markets in big cities were flooded with smuggled goods and the FBR, despite having legal authority, did not seized these stocks, because the present government wanted the businesses flourish instead of halting the trade activities, however, the government was focused to tap the basic source of smuggling.

Shabbar Zaidi said FBR was now switching over to automation to eliminate human interaction in the taxation system, assuring that industrialists and businessmen would not face the people, who they claimed harass them.

He said Sales Tax Registration process had been automated while certification for imports would also be automated soon.

The FBR chairman expressed the concern that there were around 342,000 industrial units in the country out of which only 43, 000 were registered with tax department, while FBR also had 3.1 million commercial consumers' data and the details of people with outsized bank transactions but so far, the FBR did not approach them, thus giving them a golden chance to register with tax department/become filer voluntarily otherwise law would ultimately take its due course.

On this occasion, Minister of State for Revenue Hammad Azhar said Pakistan's tax revenue ratio was 11 per cent which was lowest in the region, asserting that the PTI government was working to increase the tax to GDP ratio up to three or four per cent within next three to four years.

After the federal budget 2019-20, he said, drastic changes had been made in the tax system, and the businessmen and industrialists should not worry about it as the temporary problems during the transitional phase of the taxation system would soon be done away.

He assured that the government would take along business community and all other stakeholders, and give due consideration to their feedback/input while making any procedural changes in tax rate mechanism.

However, the focus of the PTI government, he reiterated, would remain on data integration, tax registration, automation and broadening of tax base, asserting that the government would not put the business community and industrialists in any unnecessary documentation and they would not be harassed by any officer/official.

LCCI Acting President Faheem-ur-Rehman Sehgal said certain measures taken in the Federal Budget 2019-20 would prove to be counterproductive for the industrial sector which contributes around 70 per cent to tax revenues and the economy as whole.

The overall increase in taxes, particularly the import duties would encourage smuggling and black economy, therefore, government should resolve these anomalies in consultation with stakeholders, he pointed out.

Although the decision of exemption of custom duties on more than 1600 industrial inputs would help in making the local industry more competitive, however the increase in Additional Custom Duties (ACD) on 3,000 items would affect industrial inputs cost, he said and demanded that ACD should be withdrawn.

Sehgal mentioned that withdrawal of zero rating facility had created a fear among the exporters that their refunds would start getting stuck as an efficient system of refund payments was not in place yet.