PTBA suggests outsourcing data mining to net potential taxpayers

KARACHI: Pakistan Tax Bar Association (PTBA) has suggested the Federal Board of Revenue (FBR) to outsource the assignment of profiling potential taxpayers to a data mining company as it was done in the case of National Clearing Company of Pakistan Limited (NCCPL).

A delegation of the association met Haroon Akhtar, Special Assistant to Prime Minister on Revenue the other day and presented its budget proposals for 2018/2019, Abdul Qadir Memon, president, PTBA said on Friday .

He said the NCCPL maintained the information about the transactions of Pakistan Stock Exchange (PSX) and provided all the details to the FBR. Memon said a data mining company should be given the assignment of maintaining a database of all persons owning properties and motor vehicles, having credit cards and utility connections, purchasing air tickets and stocks etc.

It is suggested that submission of quarterly statements should be made mandatory for: registrars and housing societies for registration or transfer of all immovable property, including industrial and agriculture; motor vehicle registration authorities, clubs, credit card issuing authorities; Central Depository Company; NCCPL, large scale private hospitals and schools and financial institutions distributing profit more than statutory taxable limit or granted commercial loans.

Memon said that one of the key proposals of PTBA for broadening of tax base had been incorporated in the tax package announced by the prime minister a day earlier. He said the PTBA recommended that exemption from taxation as unexplained income under Section 11(4) of the Income Tax Ordinance, 2001 to the foreign exchange brought into Pakistan through proper banking channel should be restricted to home remittances by overseas Pakistanis up to $100,000 and only for fresh industrial investment.

The PM announced that under the new tax package up to $100,000 foreign remittance would be exempt from questioning. However, remittances above $100,000 would be subject to explaining the source.

The PTBA informed Haroon Akhtar that for the past many years Pakistan’s registered tax base has remained stable at less than one percent of the total population. The concept of higher rates for non-filers was introduced about three years back. However, the amendments have not been able to increase the tax base.

The apex tax bar suggested simplification of withholding regime and said that at present withholding tax agents are working like an Inland Revenue Officer.

To remove hardship to the organisations/class of taxpayers, who are exempt from tax on their income, from claiming of refunds, the bar suggested that instead of allowing them exemption from collection/withholding of tax under the specific provisions of withholding/collection, they may be allowed blanket exemption from withholding/collection of tax under all the provisions of the ordinance.

The PTBA said that at present different sections including 231A, 231AA and 236P are applied for collection of tax on various cash and banking transactions from filers and non-filers.

To simplify the regime of withholding tax on cash and banking transactions it proposed that filers should be taken out from the ambit of these provisions and a single provision may be introduced in the ordinance.

The PTBA recommended gradual phasing of final tax regime; easing cost of doing business; rationalising corporate tax rates; rationalising direct tax regime; and harmonising federal and provincial services tax.