ISLAMABAD: The Federal Board of Revenue (FBR) has almost finalised its strategy to bring all sectors in the tax net, but it will not take any decision that will affect the industry and business in the country.
The remarks came from FBR chairman Shabbar Zaidi at a news conference on Friday amid looming tension over the issues of zero-rating of sales tax on textile, identity card issue and imposition of tax on flour and white flour.
Reiterating their earlier stance of no tax on flour and white flour, Mr Zaidi said that this time government had made all prior preparation for documentation. “We have data of all sectors,” he said, adding that the FBR had reliable data and would now bring them in the tax net.
The chairman said that the government had already directed the district administration across the country to take action against those who have increased the prices of roti (bread) and other edible products in the wake of budget.
District administrations across the country have been ordered to act against those who have increased the prices of roti and other edible products
Mr Zaidi, however, clarified that the FBR would not take action against any sector referring to the issue of the textile sector.
He said in the post-budget period only two issues were under negotiations with stakeholders — removal of zero-rating of sales tax on local sales of five export sectors and requirement of CNIC (computerised national identify card) for sales tax registered persons.
The chairman said that only registered sales tax payers could ask for the CNIC copy. He went on to say that the requirement of CNIC was needed under the sales tax law and not income tax. He said only 47,000 people were registered in sales tax and only 19,000 were paying sales tax.
Mr Zaidi said the compliance of sales tax was very low and now when the government had decided to document the economy some people were trying to create confusion to resolve their own issues under the garb of these issues.
The chairman said the FBR was aware of all those sectors where the menace of under-invoicing and over-invoicing was taking place. “We are aware of these practices”, he said, adding that the FBR would take corrective measures.
On the issue of low compliance of sales tax, the chairman said the government intended to introduce fixed tax scheme for small shopkeepers.
“This will resolve the CNIC issue,” he said, adding still there was a need to define small shopkeepers. “The businessmen can draw these limits lines”, he said.
In response to a question, he said there was no deadlock between the board and chambers on the issue of zero-rating of sales tax on local sales of five sectors. He said the issue would be resolve with the stakeholders.
He said the FBR would meet representatives of all stakeholders to resolve the issue amicably. “We will sort out the issue”, he said.
The objective of the taxation measures taken in the budget was to enhance the tax to GDP ratio.
The chairman said proposed reform measures were meant to reduce human interaction, adding: “We want to automate the tax system to have less human interference.”
Member Tax Policy Dr Hamid Ateeq told reporters that all the measures taken in the budget were meant to document the economy. He said the government had already started implementation of the benami law.
“On average the department concerned is issuing notices to benamdars,” he said, adding now the focus would be on persons other than politicians.
Published in Dawn, July 13th, 2019