FBR proposes measures to broaden tax base

ISLAMABAD: The Federal Board of Revenue (FBR) will propose to the federal cabinet to empower the government, as in India, to purchase property from anyone after enhancing declared value by 25 percent in order to overcome rampant tax evasion in the real estate business in the upcoming budget 2015-16.
The FBR will also propose amendments in section 111 (4) of the Income Tax Ordinance for imposing certain restrictions on bigger transactions of remittances, a method which is being used for the purpose of tax evasion.
These disclosures were made by Chairman FBR Tariq Bajwa in a meeting of the Senate Standing Committee on Finance presided over by Senator Saleem Mandviwalla here at the the Parliament House on Thursday. FBR’s Member Customs Nisar Khan told the committee that Pakistan and China’s customs authorities agreed to exchange data sharing with each other for exact valuation of items of trade which he termed as a major breakthrough aiming to help the FBR for getting certificates of origin and exact evaluation of traded items. When Chairman of the Committee Saleem Mandviwalla and Senator Taleh Mahmood inquired about three million potential tax dodgers’ profiles prepared by Nadra for the purpose of broadening the tax base, the FBR’s Member Shahid Hussain Asad said that it would be great for the taxman to have profiles of three million tax-evaders. “We had requested in the past and could request Nadra again to share these details. In the past after lot of insistence Nadra had shared profiles of 45,000 individuals but this data should be shaped in such a way that could be helpful for tax authorities to broaden the tax base.”
Earlier, the FBR chairman told the committee that the broadening of tax base was underway and it had gone up from 0.7 million to 0.9 million during the ongoing fiscal year.
He said that the FBR would propose abolition of more tax exemptions in the coming budget 2015-16. The FBR will continue increasing share of direct taxes and reducing indirect taxes, he added. “We will enhance tax burden for non filers and will facilitate registered filers in the coming budget,” he said and added that for non-filers the withholding tax (WHT) would be increased.
On the proposal of tax amnesty scheme for whitening of black money, the Chairman FBR said that the FBR had offered three amnesty schemes in the recent decades but all of them failed to yield the desired results as the government had collected only Rs10 billion, Rs6 billion and Rs2 billion respectively in last three such schemes. “It will be difficult decision for any government because certain arguments for and certain against exist.
Senator Kamil Ali Agha severely criticised FBR’s arm-twisting measures and said that taxpayers were harassed and blackmailed in the name of audit. On this, FBR’s Member Shahid Hussain Asad said that under Universal Self Assessment Scheme (USAS), the random balloting audit was being carried out as a deterrence.
At the start of the committee’s meeting, Finance Minister Ishaq Dar told the meeting that the government could increase gains through privatisation of Heavy Electrical Complex (HEC) from meagre Rs33 million to over Rs950 million.
It was first time that the refunds amount was made part of privatisation transaction, he added. On privatisation of PTCL and related properties, he said that there was question of transferring properties under this deal and in case of those 34 properties that could not be transferred a mechanism was under discussion to resolve this issue amicably.
While sharing macroeconomic framework for 2015-16 to 2017-18, Secretary Finance Dr Waqar Masood told the committee that the government would achieve budget deficit target of 4.9 percent of GDP for the outgoing fiscal year despite revising downward the FBR’s target by Rs205 billion, bringing it down from Rs2, 810 billion to Rs2, 605 billion.