FBR chief forms task forces to improve dwindling revenues

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ISLAMABAD: Just before leaving for Washington DC to attend a meeting with officials of the International Monetary Fund and the World Bank, Chairman FBR Ansar Javed on Tuesday constituted two task forces to recommend measures in the next 10 days for improving dwindling revenues, ensuring transparency in tax administration and enhancing efficiency.
“Yes, the chairman FBR has constituted two task forces related to Inland Revenue (IR) and Customs separately, and has asked them to submit a report by April 26 on three major Terms of Reference (ToRs),” official sources confirmed on Tuesday.

One task force will recommend measures related to the Customs side and will be headed by Deputy Chairman FBR Shahid Rahim Sheikh. This task force will comprise Member Customs and other relevant officials.

The second task force will come up with measures related to IR including direct taxes, sales tax and federal excise duty. It will be headed by Deputy Chairman FBR Malick Abdul Samad and will comprise Member IR Operation and other officials of the same department.

The FBR registered a massive shortfall in the first nine months of the fiscal year, forcing the tax machinery to revise its tax collection target from the original Rs2.381 trillion to Rs2.193 trillion.

It has so far collected Rs1.352 trillion and the tax machinery will have to collect Rs841 billion in the remaining three months of the fiscal year to meet the desired target.

Many independent tax experts believe that the FBR will have to revise its tax target again as Rs2.193 trillion seems unattainable at present. Even collecting Rs2.05 to Rs2.1 trillion would be a significant achievement on the part of the FBR, say experts.

According to FBR’s experts, on average, collection during the last three years stood at Rs728 billion in the last quarter (April-June) of the fiscal year. Therefore, the FBR will have to take measures to collect additional revenues of Rs113 billion to reach Rs2.193 trillion on June 30, 2013.

Without implementing a comprehensive strategy, the goal of increasing revenues cannot be achieved. According to some proposals, the FBR requires a multi-pronged strategy in the last three months including strengthening the mechanism of red alerts to curb fake refunds. Through strict administrative control, the FBR can save Rs5 billion.

With monitoring, tax authorities have found that over 90 percent revenues of 21 Regional Taxpayers Office (RTOs) were generated through the withholding regime.

The same workforce should be designated for ensuring effective enforcement of withholding tax regime in all parts of the country, experts say.

With effective enforcement of the withholding regime, the FBR can yield additional Rs30 billion during the remaining period of the current fiscal year. Collection on account of domestic sales tax witnessed massive growth (in the range of 40 percent) in March 2013 against the same month of the previous fiscal year. The current rise has to be maintained to fetch another Rs25 billion to Rs30 billion in the current fiscal year.

“The FBR should make efforts to get decisions in those cases pending before courts where hearings are complete and we are just awaiting the verdict. The chief justice of the Supreme Court of Pakistan as well as chief justices of provincial courts could be requested to announce verdicts in such cases, either in favour of or against the tax machinery. If conservative estimates are accounted, it can be assessed that the FBR can achieve Rs10 to 15 billion by ensuring recovery soon after the verdict of the courts in those cases which were given in favour of the FBR,” said the sources.

Against the telecom sector, the FBR has generated a demand of Rs30 billion. It is either stuck in litigation or pending with Large Taxpayer Unit (LTU) Islamabad. A major portion of this chunk can be converted into real collection by strengthening the telecom zone at LTU, Islamabad.


Courtesy: The News

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