Some categories of taxpayers, including individuals, small businesses and opinion makers, still believe that there is low level of transparency in the tax machinery, and complaints against the tax officials had increased in the recent past.
A latest survey conducted by the Federal Board of Revenue (FBR) shows divided opinion of the business community on the level of transparency in the affairs of the FBR. According to the final survey report of an international firm prepared for the FBR, the perception of transparency in FBR had also improved as the current results indicate that around 18 percent stakeholders perceive high level of transparency in comparison to 7-8 percent in previous study.
Higher level of transparency was observed by the legal experts, large tax payers and agents/intermediaries in FBR. However, individuals, small businesses and opinion makers perceive low level of transparency. In the previous study, level of awareness among tax authority was 37-42 percent, whereas the current study showed improved level of awareness, at 85 percent. No major change was observed in the level of courtesy and assistance offered by FBR staff.
Increased in referral of complaints to higher authorities and staff was observed, which showed that either more people had started lodging complaints or complaints are not resolved at lower levels. The survey report said that the tax audit is an important component of Tax Administration Reform Project (TARP). The objective of the tax audit was to develop readily traceable and transparent computerised selection for audit and control of distribution of taxpayer folders.
The results of this survey suggest that improvement in the tax audit system was observed by large taxpayers, tax authorities and trade bodies in most of the aspects during the past few years. This positive perception, however, is not shared by small and medium businesses and a major reason for it is their lack of awareness about the reform initiatives in the tax audit system under TARP.
The overall trend in each aspect of perceptions about user friendliness in laws and procedures is somewhat positive and similar throughout. Deviation has been observed from the previous study where the large number of stakeholders has responded "do not know" about the issue under consideration.
In many aspects of perceptions about duty and tax remission for export (DTRE) Scheme, the trends of previous and current findings are similar. The signification deviations have been observed from the previous study in areas such as extent of achievement of overall objectives of DTRE Scheme, provision of assistance to SME Sector by DTRE Scheme, extent of
DTRE Scheme's provision of assistance to SMEs Sector, extent of DTRE Scheme in reduction of malpractices and extent of DTRE Scheme's support to exporters, the survey said. The survey report further said that a comprehensive program of local and foreign trainings was undertaken by FBR under TARP. Results showed that both local and foreign trainings had yielded improved results.
A large number of respondents showed high levels of satisfaction with the training programs. Webpage of HRM wing was also created to provide HR services to FBR employees, which has received a mixed response, with some employees agreeing that webpage provides the required information while the others still believe that sufficient information is not available on the website.
Regarding the general perception about Pakistan Customs Computerised System (PaCCs) project, awareness level was extremely low among all stakeholders except intermediaries/agents. Positive trend was observed in large tax payers about the overall objectives of the CAREPaCCS project. Perception regarding level compliance with trade regulations showed positive trend in large taxpayers whereas trade bodies witnessed low level of compliance. Results indicated that large tax payers perceive reduced port congestion as compare to the previous study.
However, trade bodies perceive low level of reduction in port congestion. All stakeholders except medium businesses perceive that the PaCCS has eliminated personal contact between tax collector and tax payers. Opinion regarding 'one window operation' and 'user friendliness' remains similar in both studies as large number of stakeholders agreed on perception about the effectiveness of risk management system has significantly improved whereas similar trend is observed in mis-declaration of goods.
The final survey report concluded that there were fluctuations in trends of previous and current responses in most aspects concerning perception about Sales Tax Automated Refund Repository computer system' (STARR) and its advance version ie 'STREAM'. Similarity in trend patterns can be observed in acceleration of the process of refunds against sales tax claims with full documentary trail of every claim properly established, reducing the adverse effect of defaulters on the refunds of other tax payers and overall limitations of STARR/STREAM.
Results show that the awareness of the overall Sales Tax Reform Objectives is very low overall and in all categories of respondents except tax authorities. There are mostly positive responses in all categories of respondents concerning "Speedier process and Detection of Fake Documents." Responses are mostly neutral to positive concerning "Reducing the adverse effect of defaulters on the refunds of other tax payers," "Creation of an efficient and effective sales tax refund system through automation (STARR/STREAMS)," "Accelerate the process of refunds against sales tax claims with full documentary trial of every claim properly established" and "Extent of effectiveness of STARR in processing input claims and refunds overall, the survey report added.