Corporate income tax returns filing dropped by 47 percent

KARACHI: The Federal Board of Revenue (FBR) has faced an alarming drop in the number of taxpayers reporting their income at the last date of filing income tax returns, official data showed on Thursday.
The number of compliant taxpayers has declined by 47 percent in the category of corporate and seven percent in non-corporate sectors, it showed
Sources at the FBR said the corporate returns received by the revenue authority for the tax year 2014 filed by December 31 was 13,500 against around 25,500 in the tax year 2013.
Similarly, the returns filed by business individuals, salaried class, associations of persons and taxpayers fall under special tax year and calendar year was around 797,000 against 856,000 last year, the sources said.
FBR Member Inland Revenue (Policy) Shahid Hussain Asad has confirmed the figure and hoped that the number would increase in the coming days, as thousands of corporate taxpayers had applied for extension in the date for filing the returns.
Recently, tax practitioners had requested the FBR chairman to extend the date, but it was not given due consideration, the sources said.
Tax professional attributed the failure to the major problems in FBR e-filing platform IRIS that is developed by the Pakistan Revenue Automation Ltd (PRAL).
In September 2014, PRAL had introduced new e-filing returns platform, which was named IRIS. This new e-filing platform was introduced without consultations with the stakeholders and was full of legal and technical glitches.
The tax practitioners at Pakistan Tax Bar Association, Karachi Tax Bar Association and the business community at the platform of chambers and associations have highlighted such issues on several occasions.
According to them, hardly any taxpayer education material was available prior to the launching of IRIS.
Since September 2014 to-date, IRIS has undergone numerous changes, which are not documented by PRAL and the changes are being made without prior information to the stakeholders.
IRIS platform for e-filing of tax returns has been a constant source of problems for the taxpayers and the tax consultants.
According to a leading tax consultant, over 60 percent of the current problems and challenges being faced by the revenue authority are due to shortcomings in PRAL.
The consultant also said IRIS tax return “forms are nothing more than the government’s quiz programme.”
When contacted, tax officials have similar opinion about Pakistan Revenue Automation Ltd .
Tax consultants and practitioners are of the view that PRAL is unresponsive and not delivering quality service, the PRAL helpline is of very little help and even the CEO of PRAL is not prepared to help and resolve the issues of bona fide taxpayer.
It is common observations at regional tax offices that Sales Tax Registration of manufacturing units which is granted by PRAL takes over three months and there is a huge cost, Sales tax Refunds of taxpayers are stuck up for six months or more due to in-efficiency in PRAL.
In a recent World Bank supported study on Paying Taxes 2015, Pakistan has been ranked at 172 out of 189 countries surveyed. In 2012 Pakistan was ranked 158. This clearly shows that tax compliance in Pakistan is amongst the most difficult in the world.