FAISALABAD: Despite some minor system-related discrepancies, the FBR has paid unprecedented refund claims to the tune of Rs. 250 billion during this year, said Dr. Muhammad Ashfaq Ahmad, Member Inland Revenue (Operations). Addressing the business community in Faisalabad Chamber of Commerce & Industry (FCCI) along with Faiz Ullah Kamoka, chairman of the National Assembly Standing Committee on Finance, Revenue and Economic Affairs, he said that every patriotic citizen has to file his tax return in order to disassociate him from the tax evaders and FBR to extend maximum facilities to the responsible taxpayers. He appreciated the productive questioning session during this meeting and said that he will critically analyze the system in the light of suggestions and proposals presented from the different segments of society.
“It will also help Inland Revenue to understand the pros and cons of the system and introduce new and innovative measures to further improve it,” he added.
Regarding issues of notices to the Information Technology (IT) sector, he clarified that it is the constitutional and legal responsibility of the tax collectors to ask about the taxable money and it should not be dubbed as harassment. He said that IT export is exempted but at the same time, the exporters are bound to file declaration and upon declaration, they could enjoy this exemption. Quoting American IT giant “Standards & Poors”, he said that its global business was around 40 billion dollars but it did not send even a single penny to Pakistan excluding the staff salaries. He said that we want to regulate this sector so that IT companies that are earning hefty profit could bring back foreign proceeds to Pakistan.
Dr. Muhammad Ashfaq Ahmad expressed satisfaction with our 18% extra revenue collection and said that it will help the government to dole out better facilities to the masses. However, if some individual has a problem, he could discuss it with the Chief Commissioner Regional Tax Office (RTO) of Faisalabad.
Regarding further tax, he said that it is the most ticklish issue and he is pondering on its impacts on the overall economy. “FBR will try to give maximum relief to the concerned persons if it is deemed possible within the system,” he assured. He said the FBR was trying its optimum best to ensure speedy payment of refund claims but after it, the concerned processing officers have to face a tough audit. “However it is our well-defined policy to pay refunds without any unnecessary delay and if any discrepancy was identified in a later phase, the responsible elements would be penalized in accordance with the law. He requested the trade bodies to help FBR further improve the tax system so that tax evaders could be segregated from the law-abiding citizens and given deterrent punishment. Continuing, he said that if FBR failed to net the black sheep, the current generous policy of the government could not be continued for a longer period.
About plugging loopholes of smuggling, Dr. Ashfaq Ahmad said that excellent work has been done in this connection by all concerned departments as they are working with commitment and unanimity. He said that smuggling through Iran and Afghanistan borders has been eliminated, however, the real issue confronted by the FBR is the declaration of miss-invoicing. “Four hundred items are declared in an incoming container whereas actually, it had more than 4000 items”, he said and added we could control this issue only through 100% inspection of the containers for which we need more financial resources.
Continuing, he said that many proposals have been forwarded to trim the tax rate whereas the IMF is demanding more taxes. He said that we will collect Rs. 60 billion revenue from this head. “If it is eliminated, we have to introduce a new or alternative tax to meet its budgetary shortfall”, he remarked.
About the electronic manufacturing sector, he said that it is an Rs.2.5 trillion market where tax evasion is rampant. “This sector is on FBR radar and we are conducting a consolidated audit of all electronic manufacturers. He said that an effective and transparent system will be introduced to check tax evasion in this organized sector. He was optimistic that this situation will be controlled within 4-6 weeks. “Moreover, it is an issue of implementation by the state”, he said and added that influential persons supporting these sectors are sitting in the parliament and sometimes the government has to roll back its policies.
About the hotel industry, he said that it has to be linked with the FBR system for the immediate realization of sales tax but there are some provincial hitches. “We are establishing a maximum “Point of Sale” within Islamabad but due to the reservations of provinces it could not be fully implemented throughout the country”, he added. He said Prime Minister Imran Khan intends to introduce a track and trace system from 1st July 2021 and the Attorney General is trying to get a stay order vacated in this connection which will pave the way for its implementation across the country. He said that if the stay order was vacated it would be immediately enforced in 4-5 major sectors of the economy and we are expecting to generate additional revenue of Rs. 200-300 billion from this head.
About the spinning sector, the Member Inland Revenue said that the black economy introduced at one stage could pollute the entire chain of this sector; however, we are trying to eliminate it through prudent measures. About the refund of income tax Dr. Muhammad Ashfaq Ahmad said that verification is a prerequisite to pay back the income tax refund. He said that we are working on a system so that income tax refund could also be paid speedily in line with the sales tax refund.
Mr. Faiz Ullah Kamoka said that the government, as well as people, have braved a bad time during the last two years, however now the economic situation is improving but despite it, the business community is not getting a matching response from the FBR. He disclosed that the PTI has offered opposition parties to ensure their active participation in the formulation of new economic policies with consensus so that the next government could also own it. He said that FBR is getting a meager share of 0.6% for its own consumption as compared to the size of its tax collection. He further told that NADRA is also extending full support and information to the FBR and hence, now the potential taxpayers must be brought into the tax net without any discrimination or delay. He specifically mentioned the importance of the SME sector and said that it could not only expedite overall economic growth but also play a major share in poverty alleviation. “Hence the field formations of FBR must give them preferential treatment in addition to extending them full support and help”, he said and added that with the economic improvement government has also decided to enhance the allocation for Public Sector Development Program (PSDP) from 650 billion to 900 billion. “Under long term strategy, the government will allocate sufficient funds for the construction of ten dams”, he added. About additional weekly holidays of Saturday and Sunday, he said that he will personally take up this issue with NCOC as the positivity rate of the corona is now below 2% in Faisalabad.
Engineer Hafiz Ihtasham Javed President FCCI welcomed the guests on behalf of the business community of Faisalabad and said that the government must revisit its policies to encourage taxpayers by discouraging the tax evaders. He said that registered and unregistered taxpayers must be treated differently according to the payment of their tax liabilities. He said that government should also close down the window of corruption that is plaguing the system in the form of 3% further tax and thus supporting the undocumented economy.
Syed Zia Alamdar Hussain, Rana Muhammad Sikandar Azam, Chaudhry Muhammad Nawaz, Waheed Khaliq Rame, Riaz-ul-Haq, Haji Talib Hussain Rana, Rana Shehzad Ahmed, Ashfaq Ashraf, Sohail Butt, Abdul Waheed, Mian Tanveer Riaz, Lala Moin, Mahmood Ahmed Jutt, Muhammad Akbar Malik and Inam Afzal Khan took part in the question-answer session.
