ISLAMABAD: The government has introduced legislation to empower the National Database and Registration Authority (Nadra) to share records and information about people with the Federal Board of Revenue (FBR) as part of the broadening of the tax base.

Several measures were introduced through Finance Bill 2022 to broaden the tax base, especially the empowering of FBR to ask utility companies to disconnect electricity and gas connections of non-filers of tax returns or avoiding of sales tax registration.

As per amendments, Nadra will now share personal information of citizens with the FBR regarding broadening of tax base like — identify any person whether a taxpayer or not, details of incomes, receipts, assets, properties, liabilities, expenditures, or transactions that have escaped assessment/are under-assessed/had been assessed at a low rate subjected to excessive relief or refund/misdeclared or misclassified under a particular head of income or otherwise.

The proposed bill also empowers Nadra to use any artificial intelligence/mathematical or statistical modeling/any other modern device/calculation method to compute the income and tax liability of anyone.

Move aimed at broadening tax base

The FBR will notify such calculations to the person on whom it was determined to pay the amount subject to the terms, conditions, installments, discounts, reprieves pertaining to penalty and default surcharge, and time limits.

The bill has empowered FBR to direct gas and electricity distribution companies to discontinue the gas and electricity connections of those persons who fail to register for sales tax purposes or those notified tier-1 retailers who are registered but not integrated with the Board’s computerized system.

The World Customs Organisation (WCO) updates its Harmonized Commodity Description and Coding System (HS) after every five years to accommodate modern developments and changing trade patterns.

The last HS version was updated in 2017. The current amendments to the HS nomenclature have entered into force since Jan 1, 2022. Pakistan is a signatory to the HS Convention and must adopt the HS 2022 version. In Pakistan, it will be effective from July 1, 2022.

As per amendments in the customs act, the definition of smuggling has been widened to include smuggling of essential commodities out of Pakistan through bordering and coastal areas to curb this menace.

To facilitate trade and industry, changes have been incorporated to align the provisions of the Customs Act, 1969 with the Pakistan Single Window (PSW) Act, 2021, providing a platform for the integration of other government agencies.

The timeline to finalise the provisional assessment has been reduced from the existing nine months to four months to facilitate trade and avoid delay in the realisation of government revenue.

The powers regarding extension in the warehousing period have been delegated to the Additional Collector of Customs to facilitate trade by expediting the grant of requests for extension. Option to change consignee name in relation to frustrated cargo has been provided to address the issue of port congestion.

To reduce the cost of doing business and rationalize fees charged by the terminal operators, enabling provision has been provided for the determination of various charges by customs authorities.

The provision has been incorporated to indemnify the officers of provincial governments for their actions taken in good faith to prevent the smuggling of essential commodities under the Customs Act, 1969.

Section 122 empowers a commissioner to amend the assessment of a taxpayer subject to certain conditions. One such condition, as introduced vide Finance Act, 2021, is that the amendment order is issued within 120 days of issuance of show cause notice. The bill now proposes to extend the time limit of 120 days to 180 days.

Published in Dawn,June 12th, 2022