ISLAMABAD, Jan 11: The Central Board of Revenue (CBR) is setting up a Large Taxpayer Unit (LTU) in Karachi in line with the restructuring of the tax machinery to facilitate taxpayers.

The unit, first of its kind will come into operation from July 1, this year, a senior official told Dawn.

In this regard a private building has been hired, from where operations will start.

At the head of the unit will be a director general (DG), equal in rank to a regional commissioner, who would be reporting directly to the chairman CBR.

The director general’s duties would include looking after income tax, sales tax and central excise duty. It will thus work like a one window operation, the official added.

The official said that this would also be a first step of integration of functions of various taxes.

For the smooth functioning of the LTU, the director general will be assisted by collectors sales tax and commissioners income tax.

There would be seven commissioners under income tax in the LTU one each for — taxpayer facilitation; information, processing and enforcement; audit; legal; human resource management; information technology and enforcement.

Similarly, under the sales tax department, there will be seven collectors one each for — taxpayer facilitation, information, processing and enforcement, audit, legal, human resource management, information technology, and enforcement.

Moreover, both the taxes will be administered on functional lines.

The official said that setting up of LTU will reduce compliance cost of large taxpayers, to secure revenue, improve audit capacity, monitor arrears and to integrate taxes.

This he says, will improve tax collection performance, provide standard and transparent procedures for large taxpayers, sound legal framework and identification of regular compilation of key performance indicators.

It may be added that currently the top 100 taxpayers of income tax pay 20 per cent of total revenue, while 32 per cent of the total sales tax is being paid by top 100 taxpayers.

Besides, 100 top taxpayers pay around one third of the total revenue.

Dealing with these cases together, the official said would enable the department to utilize its best available resources to large taxpayer, which will facilitate them.

Countries that already have similar units are the USA, UK, Netherlands, France, Russia, Bangladesh, Sir Lanka and Australia.