December 03, 2006	Sunday	Ziqa'ad 11, 1427

ISLAMABAD, Dec 2: The Central Board of Revenue (CBR) is likely to revive the field audit of sales tax suspended two years ago due to non-existence of any effective audit policy and corruption of auditors.

CBR sources told Dawn on Friday that a new policy for the sales tax audit had been finalised in consultation with American consultants hired by the government under the World Bank assistance for reforms of the tax administration.

The audit policy would be unveiled next month, the official said and added the policy was formulated in a way to make it less discretionary for the auditors and facilitate taxpayers.

The need for the audit policy was felt following a declining trend in the sales tax collection from major revenue spinners.

An audit policy had already been worked out earlier in consultation with international firms besides appointment of a member from the private sector at a market-based salary for a period of three years.

The policy was approved by the board-in-council in April last year last but it was discarded by the chairman.

The sources said that the audit functions of the CBR were worked out on the models of developed states, indicating the scope, role and responsibilities of all the audit related functions. However, the report did not mention that how these could be achieved and implemented in a developing country like Pakistan.

According to the sources, Pakistan would be the only country in developed and developing countries to introduce a universal self-assessment scheme for all taxes but failed to install an effective audit policy for detecting the nil filers or the short filers.

In countries like India, Sri Lank, Nepal, South Korea, Malaysia, a strong audit department was established simultaneously with the introduction of the self-assessment scheme in their taxation regime.

This action would be in violation of the Tax Administration Reform Project (TARP), which envisaged a separate wing of audit policy for all taxes.

In the TARP report, the tax authorities agreed with the World Bank that the audit department to be headed by a member would work out section criteria for all taxes; originate audit structure for all taxes; audit programmes and procedures for all taxes; post clearance audit of customs; warehousing audits; selection and training of auditors of all taxes.