Implementation committee for tax reforms likely

KARACHI: The finance ministry is likely to constitute a committee in order to implement the recommendations forwarded by Tax Reform Commission (TRC) considering the past failures of such programs, sources said on Tuesday.
A team of TRC headed by Chairman Masood Naqvi met Finance Minister Muhammad Ishaq Dar last week and apprised him of the status of the recommendations.
The minister agreed to constitute the implementation committee saying that the recommendations would be implemented in three phases.
The TRC was constituted by the minister in Sep 2014 for review and rationalization of direct and indirect taxes, customs tariff rationalization, review of autonomy and administrative structure of FBR, creation of border force to deal with illegal movement of persons and goods across international borders and other related issues.
The commission already presented its interim report to the finance minister in May 2015, which was partially incorporated in the budget 2015/2016.
One of the major steps taken in the budget on the recommendations of the TRC was monitoring the working of FBR officials, which was only incorporated in Inland Revenue laws.
When contacted, Chairman TRC said the government would amend the laws to bring working of customs officials under the policy as well.
The TRC in its preliminary report highlighted the weaknesses of Federal Board of Revenue (FBR) and recommended the FBR Act 2007 to be amended allowing employment of high calibre professionals at market based salaries to augment and strengthen the management.
The report said as tax administration has to deal with state of the art aggressive tax planning schemes involving cross border financial transactions, a tax audit solely comprising of internally promoted auditors could encounter difficulties detecting and analyzing these schemes effectively.
“Therefore FBR can also alternatively think of induction of mid-career recruitment of experienced tax consultants with experience in law and accounting directly into higher grades,” it suggested.
The TRC pinpointed the deficiencies in training of tax officials and recommended that the period of specialized training should be extended to at-least three years to cater for modern external economic challenges.
The report also questioned the performance of IT system and forwarded suggestions to improve it. Further, the TRC recommended changes in tax laws in both direct and indirect taxes.
The TRC further requested the minister to extend time for completion of the final report on which a further 90 days were allowed from August 15, 2015.