The value-added textile industry has conveyed to the Federal Board of Revenue (FBR) that a new kind of illegitimate business of fake/flying computerised national identity card numbers (CNICs) has taken roots in Karachi, following implementation of SRO 821(I)/2011, to obtain CNICs or National Tax Numbers (NTNs) of unregistered buyers.
Sources told Business Recorder here on Tuesday that the issue of fake business of CNICs was raised by a delegation of value-added textile sector headed by Chairman of Pakistan Apparel Forum Javed Bilwani during meetings with Acting FBR Chairman Mahmood Alam and FBR Member Inland Revenue Shahid Hussain Asad. Saleem Tariq, Chairman of All Pakistan Textile Processing Association and senior FBR officials were also present at the FBR House.
According to sources, Bilwani informed the tax authorities that the business of fake/flying sales tax invoices already exists within the supply chain, but a new phenomenon of fake business of CNICs has also started in the market. This new unfair technique has been invented by the fraudsters to fulfil the compulsory condition of submitting CNICs of the un-registered buyers of manufacturers, importers and exporters. People are using fake CNICs just to fulfil the mandatory requirement of the SRO 821. Some brokers have started business that if anybody wants to declare his sales or disclose his identity as buyer, the brokers provide them CNICs, and some commission is charged by the market. In this way, a small percentage has been charged in the market to submit the CNICs of some person to comply with the legal obligation of submitting CNICs under the SRO 821(I)/2011.
The business of fake ID cards has been started in the open market, which is only due to the unilateral implementation of SRO 821(I)/2011 by the tax authorities, sources quoted textile representative as telling the tax authorities. The value-added textile industry has also rejected the phase-wise implementation of the SRO 821(I)/2011 to fulfil condition for manufacturers, importers and exporters to give the CNIC numbers or NTNs of unregistered buyers.
It is the basic responsibility of the FBR to bring un-registered dealers, wholesalers and retailers etc within the documented regime. This responsibility should not be shifted to the registered persons as hey cannot be engaged in police work to collect CNICs of the un-registered persons. Moreover, the FBR should itself document the un-registered dealers, wholesalers and retailers instead of relying on the manufacturers, importers and exporters.
The representatives of the value-added textile sector also showed surprise over FBR''s exercise of implementing SRO 821(I)/2011 phase-wise without consulting the value-added associations. During the meeting between the value-added textile sector and the tax authorities, Chairman of Pakistan Apparel Forum categorically informed the Board that the textile sector had not been taken into confidence and the new scheme of phase-wise implementation of the SRO 821(I)/2011 has been implemented without consultation of the concerned export associations. There should be brainstorming sessions between the FBR and the textile associations on the revised scheme under SRO 821(I)/2011, sources said.
Responding to the queries of the textile''s representatives, tax authorities informed the delegation that the Ministry of Finance has given approval of the revised scheme of SRO 821(I)/2011 for its phase-wise implementation. The Board is committed to implement the scheme as approved by the competent authority and results would be analysed. The tax authorities also dispelled impression that the FBR had not done active consultation with the business and trade on SRO 821(I)/2011. Tax authorities reportedly informed the delegation that different chambers, associations and federations including Federation of Pakistan Chamber of Commerce and Industry (FPCCI) had been consulted for implementation of SRO 821(I)/2011. The FBR also clarified that all leading trade bodies had been taken into confidence for phase-wise implementation of SRO 821(I)/2011. The main body of business and trade ie FPCCI, had been consulted in this process, sources referred as tax officials saying to the delegation.
In this connection, the FBR further informed the delegation that everything had been finalised regarding implementation of SRO 821(I)/2011 in a phase-wise manner and now the FBR is not in a position to further change the scheme, sources said. Under the proposed scheme, in the first phase, 60 percent compliance has to be shown by all sales tax registered persons ie manufacturers, importers and exporters, by providing identification in the form of NTN or CNIC of buyers under RO 821.
In the second phase, the percentage would be gradually increased to 70 percent, and this percentage would be increased systemically until 100 percent compliance is achieved by the registered persons under SRO 821. The compliance level would start from 60 percent which would be increased to 70 percent, 80 percent, 90 percent and 100 percent on monthly basis. The FBR will only allow input tax adjustment proportionally as per slabs to be notified by the Board. The registered persons would be bound to submit specified minimum percentage of sales made to the identified taxpayers.