Wednesday January 19, 2022

FBR vows to do away with ‘excessive’ taxation

January 16, 2021

KARACHI: The Federal Board of Revenue (FBR) on Friday vowed to do away with excessive taxes and reduce compliance cost to help businesses bring down cost of production.

Ashfaq Ahmad, member Inland Revenue (Operations) FBR said the apex tax authority has 30 to 35 percent stake in whatever is being earned as it pulls in revenue in shape of sales, income and withholding taxes.

“It is in the FBR’s interest to make businesses successful and cut costs,” Ahmad said during a meeting with the office bearers of the Karachi Chamber of Commerce and Industry (KCCI).

The tax official said FBR receives thousands of budgetary proposals every year but they hardly get time to read them because of limited time available.

“Trade associations should immediately take their budget proposals to the technical committee formed by finance minister, get them refined and after due diligence, only doable recommendations should be forwarded to FBR,” he said. “We give you refunds and you don’t have to go to banks for borrowing working capital which jacks up the cost.”

Ahmad said tons of revenue remain blocked but if the FBR succeeds in recovering 20 percent of amount stuck in litigation, the revenue targets will be achieved and the country will not have to go to the lenders.

Shariq Vohra, president of KCCI said billions of rupees have been stuck since last so many years due to litigations and the recovery seems to be unlikely “whereas these litigations put the taxpayers in a state of torture and are also a burden on FBR’s resources.”

“Therefore, the tax-collecting authority will have to come up with some kind of incentive scheme in which the taxpayers in litigation should be provided with an option to pay around 25 to 30 percent more tax than their usual tax for the year which would settle all their previous tax issues being contested in the litigation since many years,” Vohra said.

KCCI president said a permanent desk should be established at the FBR, which must have close coordination with KCCI and all other chambers of the country to hunt new taxpayers, but this hunting should be based on cordial relations.

“We will help the FBR in identifying the hundreds of untaxed sectors where trade of up to billions of rupees is going on but no tax is being paid,” he said. “FBR has to divert its machinery towards such sectors while the frequent audits have to be minimised as such audits are not resulting in much recovery but are a waste of time for taxpayers and the FBR.”

Zubair Motiwala, chairman of Businessmen Group said FBR should disclose its priorities, what changes it wants and what will be focused in the budget so that KCCI and other trade associations could accordingly forward precise proposals only for inclusion in next year’s budget.

Motiwala said it is time to focus on smaller cadre and the small and medium enterprises whose income tax refunds remain stuck because small businesses are facing serious cash flow problems in the post-COVID circumstances and they do not have access to banking channels. “The FBR should start by fixing some amount like Rs50,000 or Rs100,000 for settling income tax refund claims which would bring some relief in the lives of small businessmen.”

Motiwala said it is highly unfair to penalise a person who already lost his industry and is surviving on the rental income.

“Number of audit notices sent during the last three years would exceed the number of audit notices issued during the last 20 years which clearly indicates the atmosphere of harassment,” he said. “The government has to provide an enabling atmosphere so that the business community could concentrate on its manufacturing and explore new markets.”