FBR recovers Rs245mln from high net worth non-filers

ISLAMABAD: The Federal Board of Revenue (FBR) recovered Rs245 million from high net worth individuals since its crackdown against concealed assets that caught speed earlier this year, a senior official said on Wednesday.

Jehanzeb Khan, chairman of the Federal Board of Revenue (FBR) said the revenue body issued noticed to 6,451 high net-worth non-filers, recovered Rs245 million, identified 4,961 potentially undeclared properties abroad, and unearthed 152,201 Pakistani nationals with undeclared assets abroad.

Khan was briefing the first meeting of the FBR Policy Board, presided over by the Finance Minister Asad Umar, according to an official statement.

The FBR chief said the revenue body took several actions to improve its performance, including separation of tax policy and administration, formulation of a draft of FBR transformation plan, ratifying Swiss treaty on avoidance of double taxation, electronically linking retailers with the FBR, and setting up integrity management unit.

The meeting decided to ask the senate standing committee on law and justice to review FBR laws where criminal investigation agencies have an overlapping jurisdiction with the FBR to ascertain the revenue body’s authority.

The National Database and Registration Authority (Nadra) was directed to start working on the proposals to broaden the tax base through the use of data already available with the Nadra’s database. The policy board will review the recommendations for further action.

Abdullah Yousaf, ex-chairman FBR underscored need for systemisation through automation to minimise the elements of harassment and use of discretionary powers.

It was decided that the policy board would hold its regular meetings on quarterly basis and the next meeting would be held in mid of March.

A tax official at Large Taxpayers Unit (LTU) Karachi, the biggest revenue collecting arm of the FBR, said the unit detected huge amount of concealment by the high net worth individuals.

The official said the scrutiny is still underway to find out the undeclared income by the individuals.

Sources said the FBR has started questioning high net worth individuals on suspicions of concealing undocumented money.

A large number of individuals have been called in-person by tax offices.

They were asked about the undeclared income or assets.

Last month, it was decided at a meeting chaired by Member Inland Revenue Operations to select top 20 non-compliant high net worth individuals from each tax office for scrutiny of their tax affairs.

The official said the tax authorities sent notices to them to seek details of undeclared income. “On failure, the individuals have been asked to visit the concerned tax offices to explain about the undeclared income.”

A number of taxpayers are seen visiting tax offices along with their lawyers to respond the notices sent by the FBR.

In April last year, last government announced tax amnesty scheme, which expired in July, to give residents one-off tax benefits for repatriating undeclared local liquid assets with a five percent penalty, undeclared foreign liquid assets with a two percent penalty (if repatriated, or a five percent penalty if remaining abroad or in foreign currencies),

and undeclared fixed assets – whether held locally or abroad – with a three percent penalty.

Tax practitioners resented the ongoing scrutiny in several cases.

They said the FBR have also issued notices to the taxpayers, who already declared income in annual returns or availed amnesty schemes.

They termed the crackdown as harassment of the taxpayers. The exercise would prove as a failure.

Zeeshan Merchant, vice president of Karachi Tax Bar Association (KTBA) said tax notices were even sent to the taxpayers who had clean profile.

“Some of my clients have also received such notices. Those taxpayers are filing income tax returns annually,” Merchant said. “In one case the FBR sent notice to an ex-employee from the private sector who’s left his job three years ago.”

KTBA official advised the FBR to avoid action against the genuine taxpayers and focus on broadening the tax base.

The FBR initiated the exercise on the basis of undeclared expenses identified through details of luxury vehicle purchases, high value purchase of immovable properties, banking transfers and frequent foreign travels.