Tax initiatives

The Federal Bureau of Revenue is taking new initiatives to check tax evasion in the country. Falling short of its targets for the current fiscal year, the FBR has deputed teams in mega chain stores to detect tax evasion by major traders. The tax collector has instituted a mechanism to obtain sale receipts from 2500 retail stores online. The objective is to bring more stores into the online loop to be able to maintain a record of their sales and the tax it should be collecting. These measures should help the FBR come closer to its annual tax collection target of around Rs4,398 billion. Despite tax collection not meeting the targets, FBR officials are confident that they can meet their revenue targets for the coming year. Tax officials say that tax collection has grown by around seven percent in February, compared to 3-4 percent in the last seven months due to the new measures. The FBR also says that deputing staff at mega stores to check their real sale has shown major discrepancies between real sales and those shown in tax records.The FBR has also claimed to have made a major breakthrough in its ongoing crackdown on tax evasion by high-net worth individuals, including CEOs and celebrities. It has discovered over Rs2 billion stashed in the bank account of an oil marketing company official, and has also served notices to around 100 high-net individuals, based on an assessment of their lifestyle compared to their declared incomes. It will need to successfully prosecute a few to shake up the system.Despite these measures, the fact is that the FBR still faces a Rs170 billion revenue shortfall and will need to step up its measures to catch rampant tax evasion across different sectors. The tax collector is also taking the position that the government should no longer keep tax refunds stuck or inflate revenue collection figures, since they have a negative impact on business. Instead, it should fulfil its promises to businesses as quickly as possible. It is, however, worried about the loss in revenue caused by the massive cuts to the public-sector development programme. It claims that it has lost revenue of over Rs120 billion due to measures that fell outside its purview, which should be factored in when assessing its performance over the past seven months. While one must be wary of the FBR’s view of the revenue shortfall, it is true that certain shortfalls were beyond its control. But it should also be clear that some of the taxes removed should not have been collected in the first place. It is important to ensure that the bulk of the FBR’s income comes from taxing real commercial activity. This is the sector where the FBR has performed the worst traditionally. More efforts like those instated to tax mega stores are needed.

from The News International - Editorial https://ift.tt/2EwBvF9