ISLAMABAD: In a move to determine non-filers’ investments in the real estate, the Federal Board of Revenue (FBR) has identified more than 16,000 tax evaders who paid zero taxes despite investing billions in the sector during last two years.

These individuals who did not even posses national tax numbers (NTN) were identified following an exercise to weed out investors pouring billions into propoerties, but were not brought under the tax net by FBR.

During last two years, more than 80,000 transactions worth approximately Rs800 billion (as per deputy commissioner rates) have been identified but the market value of these transactions is likely to be much higher than the stated figure.

This data was accumulated by the Pakistan Revenue Automation Limited, a subsidiary of FBR which automatically detects real estate investments exceeding Rs4 million and records it on the board’s system.

In order to ensure the sector is accurately documented, the government in its recent budgetary announcements mandated all real estate transactions from July onwards to be linked with the filing of tax returns.

A well placed source at the board told Dawn that FBR has already started issuing notices to high net worth individuals who are not registered with the tax authority. He also said that the board will start issuing notices to those individuals who are registered as filers but avoided filing their returns.

He added that in the first phase, 200 notices have been dispatched to these individuals across the country. “This is a continuous process and all these people will be issued notices in the next phases”, he added.

The government has asked FBR to identify high-net-worth individuals and bring them under the tax net. However, an official told Dawn on the condition of anonymity that despite collecting sufficient data from various sources, Finance Minister Asad Umar has still not given the go ahead to initiate action against them. “We have almost finalised our clamp down plan on tax evaders”, the officer said.

FBR has also issued notices to approximately 1,000 individuals who have purchased properties in Dubai along with those who have bought properties in the UK. In addition to that, the board has also identified individuals who were purchasing luxury vehicles without NTNs.

The FBR official believes that the notices will help tax bodies to determine whether the recipients have declared properties through their tax returns in this country or not. “We don’t know exactly how much investments were made in Dubai,” he added. FBR will be to determine the volume of tax evasion and investment after receiving replies from these notices.

.“We are not even sure about the accuracy of the addresses provided in the data”, the tax official admitted.

He said the board received this data during the previous government’s tenure, but the top management was apparently unwilling to issue notices to tax avoiders. “Now, we have received a go ahead from the new government”, the official said.

Finance Minister is scheduled to visit FBR on Monday to brief tax officials on the preliminary requirements of the International Monetary Fund and measures to be implemented by the tax authorities.

Despite a dozen attempts to reform the tax system, the results have been dismal so far considering the extremely small tax base and present tax-to-GDP ratio of 9pc.

Published in Dawn, October 14th, 2018