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FBR to simplify laws to undercut shadow economy

Updated May 19, 2017 01:09pm

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ISLAMABAD: The Federal Board of Revenue (FBR) is expected to consider a set of proposals for documenting the informal economy through steps such as simplifying tax laws and discouraging the use of cash, an official source told Dawn on Thursday.

The Tax Reforms Commission (TRC) has also submitted a detailed plan to the FBR. It has been proposed that a high-level commission or committee should be set up to develop a specific plan, similar to the ones developed and being implemented in India and Turkey.

For instance, in its three-year action plan for 2011-13, Turkey took various actions to increase voluntary compliance, strengthen audit capacity, in­­crease deterrence and sanction, share data base and raise public awareness.

The committee would also monitor and evaluate the action plan, and identify actions to improve documentation.

The action plan will be initially developed for three years to minimise the size of the informal economy by at least 30 per cent.

According to the source, the FBR will revise upward the property valuation table to generate more revenue from the sector. “We have achieved significant progress by taxing the black money landed in real estate in the current fiscal year,” the source said.

Raising the values would also help document untaxed money in the real estate sector. Immoveable property is a sector where significant amount of untaxed money is parked, especially due to the difference in fair market value and the collector rates, which in most cases is less than 25pc of the fair market value.

A former TRC member told Dawn that the government has agreed on most of the recommendations of the committee to be considered in the upcoming budget.

One of the agreed proposals was the simplification of tax laws. “The committee has already submitted details to the FBR,” the TRC member said.

“We have also submitted details to facilitate taxpayers in the next budget,” he said, adding that services such as acquiring passport and travel should be linked with the filing of returns.

It was also proposed to seek information regarding the source when remittances exceed a certain limit. It has also been suggested that a national tax court or special tax benches should be set up to speed up the justice system.

Published in Dawn, May 19th, 2017

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Comments (4) Closed



Jaguar May 19, 2017 05:28pm

Twice similar proposals were given, none were implemented. In fact the most important were making the salary of staff appropriate to task, training of staff by HR head ( new member) and implementation of IT across the FBR through IT ( new member ) post were created but without providing post security or budget. MoF has implemented state of art IT financed by World Bank but not FBR to date. Current taxation is mostly of state enterprises and few large entities and their salaried staff. The other part comes from withholding taxes, a regressive tax that mostly affects the poor. The reforms is simple and basic and does not need tax reform boards. It's been throughly vetted and suggested twice, now it needs implementation only without new suggestions .

(3H) May 19, 2017 06:03pm

@Jaguar . Everybody is already paying tax,even a box of match,cigerrates,price consists of tax,the food items taxed at factory or wholesalers,the importers pay tax at soure,the OMCs,the MNCs,all paying taxes. FBR even not sparing the tax on cash withdrawal from bank,it's enough.If FBR wish a prosperous Pakistan it must simply get max tax revenue from elite politicians and their family members who are well known to all their lists of properties and offshore accounts all available on internet. The most easy and comfortable way to raise revenue.

Alba May 19, 2017 07:46pm

That is a war the government won't win.

jamal May 20, 2017 01:11am

Like I always say, tax consumption, not income. Punish corrupt FBR official and reward the honest ones.