Corporate sector companies: only 3,031 income tax returns received, against expected 21,000

Only 3,031 companies had filed their income tax returns electronically till December 22, as compared to expectation of over 21,000 by the corporate sector. Sources told Business Recorder here on Wednesday that the Federal Board of Revenue (FBR) had received over 21,000 income tax returns last year.
"So far, the Board has received around 3,031 returns by the corporate sector. Till December 22, a total of 270 corporate entities and business establishments had filed their returns with the Large Taxpayer Unit (LTU) Karachi. The LTUs at Lahore and Islamabad received 74 and 67 income tax returns respectively. The data further showed that the Regional Tax Office (RTO) Karachi had received only 902 returns as compared to the potential 10,000 returns.
Sources said that the last date for filing of returns by the companies is December 31, 2010. The companies should timely file their income tax returns electronically to avoid overburdening of the FBR Web-Portal during last days of the current month. Due to pressure on the FBR Web-Portal during the last days of the month, the system is overburdened and companies should avail the opportunity of filing returns electronically prior to December 31, 2010.
It is mandatory for the companies to file their income tax returns electronically for which the corporate sector should not wait for the last working days of the current month. When compared, around 45,000 companies registered with the Securities and Exchange Commission of Pakistan (SECP), the FBR had received 21,000 corporate returns last year. However, there are many companies registered with the SECP, but are dormant and inactive. These business units are not carrying out any business activity, but are registered with the SECP.
It is important to mention that the FBR quarterly review of 2009-10 showed that an in-depth analysis of the corporate sector would provide a comprehensive picture to ascertain and pinpoint the non-compliant sectors so as to devise a strategy accordingly. It was evident that of the top 20 corporate entities, except for five sectors, the compliance level in submitting the returns is less than 50 percent. The sector-wise analysis of corporations in respect of declaration of income and loss (Table 9) is also quite dismal as the percentage of cases declaring income in all the listed major 20 corporate entities is 24 percent and majority of the companies are either declaring loss or nil income. The question here is how a company is surviving over the years by continually declaring losses. This aspect must be probed into by conducting a detailed field audit.
As far as the contribution of revenue is concerned, top five sectors contribute 80 percent of total revenue received with the corporate returns. Owing to uneven composition and reliance on few entities of corporate sector is not at all promising for the overall health of the economy. Thus, a detailed analysis and probe is required to get maximum revenue from the rest of the non-compliant entities of corporate sector. As far as the growth is concerned, the traditional sectors like telecom, chemical and POL have either shown negative growth or marginal improvement. The non-traditional sectors, like sugar, paper and cement had exhibited higher growth during first half of 2009-10, the FBR report added.