ISLAMABAD: In his first public appearance since returning from a leave over health issues, Federal Board of Revenue (FBR) Chairman Shabbar Zaidi laid emphasis on documentation measures, saying money whitening channels continued to flourish despite the government’s efforts to shut them down.

Mr Zaidi, who was one of the speakers at the All Pakistan Chambers Presidents’ Conclave 2020 on Tuesday, said the present government had taken several measures to curb the menace of undocumented flow of tax-evaded wealth, but he believed that real estate was still the preferred avenue for whitening ‘grey money’, along with bearer prize bonds and dollars remitted outside to purchase properties. However, he said, the government had taken some measures to curb these practices.

The event was also addressed by President Dr Arif Alvi, Planning and Development Minister Asad Umar and Adviser to the Prime Minister on Institutional Reforms Dr Ishrat Hussain.

Shabbar Zaidi says demand for tax exemption on local sales of export-oriented sector not justifiable

On the issue of reforms, the FBR chairman told the traders present that demand for reforms should come from their side. He stressed the need for documentation of the economy. “I will advise you as an accountant to pressurise the government over reforms and documentation,” he said, adding that only the documented business would thrive for three to four generations.

He said that documentation is a must for those who have a working capital of more than Rs1 billion, adding that lack of documentation is one of the reasons for discontinuation of family business mostly after one generation. Documentation is also necessary for industrialisation, he added.

On the issue of tax exemption on local sales of the export-oriented sector, Mr Zaidi said he was not in favour of it and the demand for it was also not justifiable. He urged the traders to come up with a workable solution on how to collect local taxes from the export-oriented sector in the next budget.

The FBR chairman said he had identified several factories in Lahore’s Sundar Industrial Estate which were not registered with the sales tax department. “Can we afford this exemption?” he asked and said local sales of export-oriented industries are not exempt from tax anywhere in the world.

He asked the traders to submit their taxation proposals by March so that these could be discussed in detail ahead of the budget announcement. He said customs duty on products would now be decided by the National Tariff Commission, headed by the commerce minister, and that government is working to strengthen the commission for doing the job.

The participants raised various issues, especially corruption among tax officials.

The FBR chairman said these issues could be resolved only through complete automation and minimizing interaction with the tax officials.

He admitted that customs duty is a big challenge at the moment and he is struggling to control under-invoicing. He said the unit measurement for customs duty has been changed which was earlier done on weight basis.

On the issue of advance taxes, he said the FBR had taken Rs70-80bn advance taxes to show good figure. “Being FBR chairman, I will do all-out efforts not to take advances,” he said.

About domestic transfer price, he said legislation would be made to plug loopholes that lead to tax evasion by manufacturers. He noted proposals from the traders for resolving issues of information technology returns, taxes on dates and DTRE.

On the issue of refunds, Mr Zaidi clarified that it is just a matter of completing procedures that lead to clearance of due refunds.

The FBR chairman said he is not only simplifying the procedures but also doing away with discrimination by tax officials. He said tax return is a complicated issue and taxpayers have to take support from experts in filing their returns. “We can’t simplify tax return,” he said.

Published in Dawn, January 22nd, 2020