Easy recovery scheme being launched: TRCG to give more financial autonomy to FBR
ISLAMABAD: Tax Reform Co-ordination Group (TRCG) of the Federal Board of Revenue (FBR) has agreed to give more financial and operational autonomy to the FBR and decided to launch a new kind of 'easy recovery scheme' for persons against whom cases have been framed for claiming illegal input tax adjustment by the Directorate General of Intelligence and Investigation FBR.
Sources told Business Recorder here on Friday that the idea of the amnesty scheme was discussed during the 7th meeting of the TRGC at the FBR Headquarters to take up key tax policy issues including possible amnesty scheme for the tax defaulters. Minister of Finance Dr Abdul Hafeez Sheikh and FBR Chairman Salman Siddiqui were also present in the meeting.
During the meeting, some members of the TRCG observed that there is a need to enhance the financial and operational autonomy of the FBR. As a government policy, the tax policy and operations would remain separated. However, there is a need to make FBR a more autonomous organisation on the pattern of the Securities and Exchange Commission of Pakistan (SECP) and State Bank of Pakistan (SBP). Finance Minister has asked the TRCG members to submit their proposals on the enhanced autonomy of the FBR for consideration. The financial and operational autonomy of the FBR would effectively tackle the issues of lack of motivation and linkage of pay structure with the performance of the employees etc.
The meeting of the TRCG has also agreed that instead of proceeding against the sales tax defaulters through the FIRs and prosecution, an amnesty scheme may be announced for all tax defaulters to pay penalty, surcharge etc without going through the process of prosecution. This would not be a blanket amnesty scheme, but it would be amnesty in the form strict legal action like lodging of the FIRs and initiation of criminal proceedings against the tax defaulters. "It would be a new kind of amnesty scheme for the persons ready to pay the defaulted amount of taxes. We can call it easy recovery scheme for recovery of sales tax from defaulted units", sources said.
The FBR will devise some procedure of the amnesty scheme to ensure recovery of the evaded amount of taxes along with imposition of penalty without taking criminal actions against the persons, who are voluntarily ready to pay the past dues/arrears etc.
It was decided that the recovery of illegal sales tax adjustments would be pursued vigorously by the field formations of the FBR. However, the possibility of the proposed amnesty scheme was discussed during the TRGC meeting.
In the past, the FBR had dropped the idea of launching a new amnesty scheme for persons against whom cases have been framed for claiming illegal input tax adjustment by the directorate. The Board had initially agreed with the idea of the amnesty scheme for payment of principal amount of sales tax by the persons involved in the mega sales tax scam. The issue was discussed between the tax authorities and representatives of business/trade associations at Karachi 1-2 months ago. It was also agreed that the FBR may allow the taxpayers to pay the principal amount of sales tax in lieu criminal proceedings against them may be dropped. Later, the FBR has disagreed with the scheme and it is not likely to be given to the sales tax evaders for the reason that no guarantee has been given about the exact amount of payment of the recoverable tax.
The issue of amnesty scheme was again discussed during the meeting of the TRCG held at the FBR House. Some members of the TRCG opined that let the scheme come and see the desired results of the scheme.
Sources said that the Minister of Finance has directed the FBR to make maximum efforts to bring 700,000 potential persons into the tax net under the documentation drive of the FBR. An aggressive campaign should be launched against the non-filers of income tax returns to ensure compliance and filing of returns and statements. He further directed the FBR to launch enforcement action against the non-filers of returns and statements.
Finance Minister further directed the tax managers to submit an analysis on the revenue collection from the FBR's own efforts of enforcement and administrative measures and revenue collection from other factors like inflation, increase in imports, price hike, exchange rate and other factors. The revenue collected from the FBR efforts should be separated from the revenue increased through factors like price hike etc. in this way, the revenue generated from the administrative and enforcement measures of the FBR would be highlighted. The impact of factors like inflation, increase in imports and exchange rate etc would be known to the policy markers and share of the FBR in revenue through its own efforts could be identified, sources added.
Sources said that the FBR Chairman Salman Siddiqui showed full confidence in his team of tax managers and field formations, which would be able to surpass the revenue collection target of over Rs 840 billion during July-December of 2011-2012. The payment of advance taxes and tax payments along with the corporate returns during December 2011 would also be instrumental in increasing revenue collection during the period under review. Salman Siddiqui was confident that the FBR would not only be able to achieve the assigned target, but also surpass due to day and night efforts of FBR Inland revenue Wing and other departments, sources added.
During the meeting, a member of the TRCG informed about the decrease in the number of transactions (buying and selling of shares) at the stock exchanges after imposition of capital gains tax on stock market. Responding to this, it was pointed out during the meeting that it is not possible to withdrawn the CGT on stock exchanges.
Sources added that the Finance Minister appreciated the efforts of Riffat Shaheen Qazi, Member (FATE) on the presentation on the Outreach and Awareness programs with the way forward strategy for expanding the Outreach programs. Finance Minister also directed the concerned tax officials to conduct seminars and awareness programs on the documentation of the economy.
According to the press release issued by the FBR here on Friday, the seventh meeting of the Tax Reforms Core Group (TRCG) was held in the Board Room of FBR Headquarters under the chairmanship of Federal Minister for Finance Dr. Abdul Hafeez Sheikh.
The meeting discussed the progress due to reorganisation of FBR, finalisation of administrative-measures agreed with World Bank in April 2011, Centralized Audit, Revenue collection of FBR as well as expanding the Outreach Program. The meeting included an update on redrafting the treatment of five zero-rated export sectors, Tax incentivization scheme as well as proposals of stamps on cigarette packs to help identify/smuggled/non-excise paid cigarette packs and enforcement of Capital Gains Tax.
The meeting was attended by FBR Chairman Salman Siddiq, Deputy Chairman Planning Commission Nadeem ul Haq, Members (TRCG) Abdullah Yusuf, Habib Fakhruddin, Arshad Zuberi, Bashir Ali Mohammad, Ali Jameel, Muhammad Arshad Chaudhry, Ashfaq Tola, Chairman SECP Muhammad Ali, along with the core team members of the FBR, Mumtaz Haider Rizvi, Member (Customs), Hafiz Muhammad Anees, Member (Taxpayers Audit), Riffat Shaheen Qazi, Member (FATE), Shahid Hussain Asad, Member (IR), Sardar Amimullah Khan, Member (Enf. & Acctt), Imtiaz Ahmad Khan, GM PRAL, Dr. Amna Khalifa DG (SP&R) and Dr Khaqan Hassan Najeeb DG (ERU), Finance Division.
The Finance Minister reviewed the revenue performance of the FBR and desired that a follow-up meeting of the TRCG be held after two weeks to have a complete analysis of the taxpayers' data and to discuss strategy to pursue the non-taxpayers.
Progress of Broadening of Tax Base was discussed along with review of the progress on the 295,000 notices issued to non-filers. The minister also directed the Member (IR) to ensure that notices to the remaining 300,000 non-tax filers be issued on priority
Member (TRCG), Muhammad Ali, would also give a presentation on Capital Gains Tax (CGT) in the follow up meeting along with relevant data and strategy for enforcement of CGT based on meetings with Member (IR).
The Policy Wing of FBR was asked to give a break-up of revenue based analysis of the amount of revenue generated due to exclusive efforts of FBR, and those due to the policy decisions and due to exchange rate difference. The expected revenue collection during the period January to June 2012 was also reviewed. The Minister for Finance desired that in the next meeting, the preliminary budget proposals and efficiency enhancement measures would also be taken up for discussion.
Earlier Member IR Shahid Hussain Asad, Member (Customs) Mumtaz Haider Rizvi, DG (SP&R) Dr. Amna Khalifa gave presentations on performance and revenue targets of FBR while Member (FATE) Riffat Shaheen Qazi, gave a presentation on the Outreach and Awareness programs with the way forward strategy for expanding the Outreach programs. Proposals were also put forward by members of TRCG on various policy issues.
The Federal Minister for Finance, at the close of meeting, appreciated the efforts of FBR officers and expressed confidence that the assigned budget targets would be achieved through sustained efforts, the press release added.
On the issue of Capital Gains Tax on stock exchanges, Finance Minister said that an effective mechanism should be developed by the FBR so that the stock markets should continue to functions smoothly without disturbing the collection of capital gain tax on shares trading.