FBR seeks details of non-compliant lawyers

KARACHI: The Federal Board of Revenue (FBR) started gathering details of lawyers who are not filing returns after discovering that huge financial transactions in the legal profession remain undocumented, officials said on Friday.

The officials said Regional Tax Office (RTO-II) Karachi asked bar councils to provide details of their registered members as part of its broadening of tax base (BTB) campaign. “The FBR asked bar councils to provide lists of their members,” an official at RTO-II, Karachi said. The individuals detected through broadening of tax base monitoring would be asked to file their returns. “In case they refuse to file their returns then their assessment will be made as per the law to bring them into the tax net,” the official said.

The FBR decided to bring lawyers community into tax net after realising huge cash transactions in the profession. Sources said every member of national bar council or provincial bar council is required to file annual income tax returns under a law (section 114 of Income Tax Ordinance 2001).

The sources said the tax authorities found that cash transactions between lawyers and their clients were not part of the documented economy. They said some lawyers who made huge expenses were found not filing their income tax returns.

The sources said that the FBR would seek help from the ministry of law and justice to ask bar councils to ensure compliance by their members. The sources said the RTO-II asked Pakistan Tax Bar, Karachi Tax Bar, Institute of Chartered Accountants of Pakistan and Institute of Cost of Management Accountants of Pakistan to urge their registered members to file their returns.

The BTB campaign catches momentum following the directives issued by the Prime Minister Imran Khan to net high profile cases in various segments of the society.

The RTO-II launched a comprehensive campaign to bring the potential taxpayers into the tax net. In the first phase, the tax office issued notices to non-compliant 16,000 salaried individuals and buyers of 2,000 high value properties to ensure annual income tax returns.

The tax office also launched survey of shopping plazas and markets to identify potential taxpayers. The World Bank estimated workforce in Pakistan at 50 million; of that, 10 million are clerks, technicians, professionals, senior officials and managers. The World Bank issued the numbers on the basis of data of 2008. The bank, in a report, also expressed reservations on the compliance level of the country.