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FBR finds tax evasion by fashion designers

By Our Correspondent
February 20, 2020

KARACHI: The Federal Boar of Revenue (FBR) has found massive tax evasion by fashion designers after an initial investigation into their returns filing revealed they misreported their sales, a senior tax official said on Wednesday.

Sardar Ali Solangi, deputy commissioner (Inland Revenue) of Regional Tax Office-II, Karachi said there is sector of marriage dress designers who charge exorbitant amount for the bridal dress making.

“Some of the designers even charge millions for a single dress but when their income tax returns were analysed it was found that quite a large number of these dress designers were paying very meager amount of tax i.e. their declared income does not commensurate with their receipts,” Solangi said in a letter to the commissioner Inland Revenue.

The tax department initially detected anomalies in financials associated with at least 24 dress designers, according to the letter available with The News. The department is currently issuing notices to apparel makers.

The findings followed a series of disclosure recently made by the tax authorities related to underreporting or concealment of income or sales by various professionals and business entities.

Tax managers have accelerated efforts to mobilise tax revenue to meet the Rs5.23 trillion revenue target of the current fiscal year of 2019/20, which seems ambitious amid stunted economic growth.

The tax official said the department is currently analysing returns filed by marriage dress designers and conducting desk audit of their financials. Further progress would be disclosed next week. “The information obtained about their income would be cross-matched with declared income and wealth statement filed and withholding statements filed by withholding agents,” Solangi said. “It is estimated that a huge loss of revenue would be detected.” The FBR has been issuing notices to high net-worth individuals since last year in response to findings about tax evasion.