KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has recommended personal identification on each financial transaction in order to broaden the tax base, sources said on Tuesday.
In its recommendations for the budget 2017/18, the apex trade body proposed the Federal Board of Revenue (FBR) must obtain CNIC, NICOP or passport number at the time of allocation, registration or transfer of immovable properties.
Besides, withholding agents, including banks and other financial institutions should provide information in respect of tax deduction on goods purchased, services acquired or execution of any other contracts on a quarterly basis, sources in the FPCCI said.
The apex trade body said for the last several years it is observed that the registered taxpayers are less than one percent of the country’s population.
To broaden the tax base and to improve tax-to-GDP ratio, the FBR should get information from all the persons / authorities such as registrars and cooperative housing societies responsible for allocation / registration / transfer of immovable properties (industrial, commercial, residential and agricultural), motor vehicles registration authorities, clubs (private & public), credit card issuing authorities, Central Depository Company (CDC), National Clearing Company of Pakistan (NCCPL), large scale private hospitals, educational institutions, electricity distribution companies, granting commercial and industrial power connections, marriage halls / hotels providing catering services to all types of events, financial institutions distributing profits / interest on investments, (including national saving schemes), mutual funds, immigration officer for international travel, etc. According to the proposals, the FPCCI said such measures would help increase the desired tax base and remove the disparity among the existing taxpayers, according to their share in GDP under the key sectors of the economy.
The proposed amendments would also result in bringing more persons to the tax net by motivating them to get registered with the tax authorities instead of increasing the burden on the existing taxpayers.
The national chamber also advised the FBR to maintain a database of third party information and generate complete profile for cross-verification and identification of new taxpayers.
It was proposed that under the provisions of the Income Tax Ordinance, 2001 regarding concealment of assets, the immunity should only be allowed on foreign remittances brought into Pakistan through proper banking channels by the overseas Pakistanis for maintenance of their families or for Balancing, Modernization, Replacement (BMR) of the existing industrial undertakings or for making fresh industrial investment.
It should be ensured that persons having above threshold income should file income tax returns on an annual basis, it suggested. Presently, the share of tax collected by the provinces in comparison to their contribution to the GDP is very low.
The federal government is required to help and assist provincial governments strengthen their tax collection mechanism, it said, adding, in case a provincial government does not have proper infrastructure to collect provincial taxes, than the federal government may be authorised to collect tax on its behalf.
The federal government should also ensure that all provinces are collecting due tax on agriculture income. It is also proposed that the FBR should remove disparity between collectors, rates, FBR rates and the actual value of the immovable properties. It recommended the jurisdiction of Regional Tax Offices (RTOs) should be fixed for five years on territorial basis in order to avoid slippages in the tax revenue.