FBR proposes six actions against nil, non-filers

ISLAMABAD: After approving decision to hire independent experts for collection of taxes from ten major revenue spinner sectors after identifying Rs7.1 trillion tax evasion, the Federal Board of Revenue (FBR) plans six major actions against nil-, null- and non-filers including taking over the premises of factories having turnover of over Rs250 million.

The FBR has proposed the appointment of receiver if the revenue collector found non-registration in case of manufacturer and imposition of Rs1 million penalty from manufacturer, wholesaler/ distributors and retailers.

Ten major revenue spinner sectors which have been identified for hiring independent experts included textile, financial & insurance, chemical and fertilizer, petroleum, tobacco, iron & steel, beverages, tea, cement and real estate activities.

The FBR has estimated that there is a tax gap of Rs700 billion in textile sector in all the three major taxes -- sales tax, income tax and Customs duty. In cement sector, the FBR estimates show that the tax gap stands at Rs100 billion.

For enforcement measures for non-registration against manufacturer, wholesaler/ distributors and retailers, the FBR proposed stern action against those manufacturers who possessed turnover of Rs250 million, wholesaler/ distributor Rs250 million turnover, and retailers whose turnover exceeded Rs100 million.

The first action exists in the tax laws and going to be implemented by the FBR would be blocking utilities for all the three categories. Out of the remaining five proposed actions, the freezing of bank accounts would be implemented. The FBR proposed attachment of properties on non-registration from manufacturer and wholesale/ distributors. The attachment of property has not been proposed for retailers. The sealing of premises for tax evasion and non-registration has been proposed for manufacturers and wholesalers/ distributors while retailers will remain exempted from this step.

The fifth stern action has been proposed for imposition of new penalty of Rs1 million for the three categories. The FBR also proposed appointment of receiver only for manufacturers whose turnover exceeded Rs250 million on per annum basis.

For appointment of independent experts for ten selected sectors, the FBR official said the tax authorities would find out former CFOs of respective ten selected sectors to ascertain alleged wrongdoings and generate desired tax revenues in accordance with their real/ actual potential.

The FBR presentation given to the prime minister showed that despite raising tax rates, abolishing tax exemptions and special regimes, the tax collection remains stagnant showing there was massive tax evasion even in case of those who are so called registered sectors or individuals.

The FBR established model taxpayer office in Karachi which alone collects 32 percent of total revenues collected by the revenue body. Currently, FBR’s 68 percent revenues are generated through these large taxpayer offices located in Karachi, Lahore, Islamabad and Multan. There is a gap of 1,559 auditors across the FBR which would be filled in three phases.