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Plan to bring affluent in tax net


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ISLAMABAD: Federal Board of Revenue (FBR) has finalised a comprehensive plan to bring affluent people in the tax net in a countrywide tax broadening drive to be launched from July 1, a tax official told Dawn.

The proposed target for bringing rich people in the tax net for the next fiscal year is 500,000 persons, who would be traced on the basis of financial transactions and data collected from NADRA.

Income tax return filers fell to less than 800,000 in tax year 2012, showing that less than 0.5pc of the population files tax returns in the country of 180 million.

“We will start work on broadening of tax base from July 1,” a senior tax official told Dawn. NADRA has already provided data of 140,000 potential people, who are living in posh areas, having multiple banks accounts, and frequently make foreign visits, but they do not figure on the tax roll.

An official statement of the FBR issued on Wednesday said the most important step in this direction has been the decision to use the National Data Warehouse (NDW) for identification of new taxpayers who can be brought into the tax net.

The NDW would be used in various ways, including its usage for acquisition of data through profiling loading and data mining and usage.

In Pakistan, the National Data Warehouse was only owned and maintained by NADRA. But the statement by FBR has created confusion which NDW would be used for tracing taxpayers because no such thing exists at the FBR.

An information expert says that there is a huge difference in database and national data warehouse. He said FBR can only have a database based on a few machines.

FBR officials contacted were not available for comments to clarify this issue.

According to the FBR statement, the respective RTOs would be sent details and electronic profiles of these potential taxpayers so that notifications are issued by the tax commissioners concerned.

All monitoring and control of the process would be automated and system based.

The FBR has also upgraded its call centre facility for facilitation of taxpayers. Linkages with third-party sources, including provincial revenue authorities, have also been established for effective implementation and monitoring.

To strengthen the enforcement mechanism for the broadening plan, various decisions have been made by the FBR which include initiation of statutory proceedings against persons who failed to respond to outreach notifications through issuance of notices under section 114 of the Income Tax Ordinance, 2001.

In case of taxpayer’s persistence on non-compliance, provisional assessment would be finalised and the taxpayer would still have the option to file a return accompanied by a wealth statement and reconciliation of wealth statement within the period of 60 days whereby provisional assessment order would be automatically vitiated.

If the taxpayer did not file the return and required documents within 60 days, the tax liability raised as per the provisional assessment order would become final and would be recoverable and, if necessary, penal and prosecution proceedings, which may culminate in imprisonment and imposition of fine, would also be initiated in selected cases for creating a credible deterrence.

Comments (12) Closed

Muhammad Shafique Jun 27, 2013 11:21am

Another way of making money by income tax people and their bosses. Call a person ask for huge amount as tax and then show him the way to avoid the tax by giving some share to tax people.

Javaad Ali Jun 27, 2013 12:38pm

Great. However, the landed gentry would still be excluded and so would all the very rich "sardars" in Punjab, Sindh, Balochistan, Khyber Pakhtunkhawa and FATA. Of course, when the become parliamentarians /ministers which apperently is their birth right then all the vehicles. residences. rest houses, foreign junkets will be provided to them at the expense of the "Other" tax paying citizens ..... Awesome indeed

Malik Jun 27, 2013 12:54pm

It is sad to see in country of 180million only 800,000 pay tax. if corruption rooted out and collections are done honestly, i think easily we should have 2.5 million tax payers including the big wholesale stores. the day this happens Pak can break their begging bowl. No wonder we are so poor country - people must pay tax, thats how it works everywhere in the world. And Govt need to work on natural resources in order to initiate better country and society and eductated people in Modern Pakistan.....everyone must participate for Modern Pak by tax, by vote and by honesty. like all Pakistanis do in any country abroad.

farooq Jun 27, 2013 01:20pm

Why FBR don't implement agricultural income tax and trying to burden the people who are paying even not full but at least something to them . FBR wants to get all 100% from 20% of people who are businessman and dont touch 80% who have big land holdings big vehicles etc. Pakistan economy never be on track unless agricultural income tax is implemented truely.

farooq Jun 27, 2013 01:25pm

@Muhammad Shafique: That is 100% true

Ameeds Jun 27, 2013 02:35pm

This would be very difficult for FBR to manage.

Pakistan needs tax reforms on land. That is the first place where tax can be properly collected. But then that would never happen as half of our federal and provincial parliaments members won't go against their own interests. :-)

So end game! back to IMF and US to beg. :-)

AA Jun 27, 2013 02:38pm

Another scam, a polished and modernised "jaga tax collection". If they really are serious about bringing the "real" affluent people under the tax net, they do not need any data base. Just bring all the MPAs and MNAs under tax net and see how tax collection jumps up. After all, our assembly hosts some of the richest people in Pakistan.

Mirza Jun 27, 2013 03:40pm

What about the agriculture sector? Can the government afford to "touch" those lords!

As stated by Muhammad Shafique, realistically, it will benefit the income tax personnel and department more than it would serve the country.

Bilal Jun 27, 2013 03:37pm

A step in the right direction. Start with people living in Askari schemes, DHAs, Clifton, Bahria towns and posh sectors of Islamabad. In a country of 180 million, we only have 800k tax payers? This is a joke! In Rawalpindi/ISB alone there are thousands of multi millionaires.

Also please include these ordinary retailers in the tax net. A normal retail store in a normal neighborhood of Pindi easily rakes in at least 100k PKR in sales everyday!

Ahmed Jun 27, 2013 11:05pm

Corruption rates will go up. tax men will get rich.

Ask the nation for help. Nation will help

Send notices to nation. Nation will become more corrupt.

SHB Jun 28, 2013 04:21am

FBR has been planning to tax the rich people for the last five yrs but they have not taken the next step. What they are waiting for? For GOD to come down and take the tax on behalf of FBR?

Faraz Haider Jun 28, 2013 02:31pm

i am a middle class 9-5 salaried person, but even then I paid more income tax than nawaz sharif when he became prime minister the second time. that was quite some time back, and i am still a middle class 9-5 salaried person and still pay more income tax than 95% of our MNAs and Senators.