Govt sets up high-powered committee to broaden tax base

ISLAMABAD: In a bid to expand the tax base via technology, Federal Finance Minister Shaukat Tarin has constituted a high-powered committee under chairmanship of Aneeq Khawar from the private sector, with a mandate to simplify business integration processes for broadening the tax net.

Khawar, who has served at Silk Bank as the chief operating officer in the past, would help the Federal Board of Revenue (FBR) to expand its tax base. The installation of Point of Sale (POS) at branded retailers was another major assignment on which the FBR would rely upon for bringing retailers into the tax net.

The FBR has been assigned with the gigantic task to achieve a highly ambitious tax collection target of Rs5,829 billion for the current fiscal year 2021-22 against revised tax collection of Rs4732 billion in the last financial year.

The FBR requires a growth of around 24 percent for materialising its assigned target and without expanding the narrow tax base and effective enforcement, this target would become impossible to achieve. The increased import bills would provide cushion to FBR for achieving higher revenue growth, but the latest outbreak of Covid-19 pandemic posed a potential threat to economic activities and could negatively impact revenue mobilisation efforts.

The FBR on Tuesday issued a notification for the constitution of the committee for integration of businesses, which was formed by the federal minister for finance and revenue.

Khawar, who has been appointed as the Chairman of the committee, would report directly to the finance minister, while working closely and in collaboration with the Members and key staff of FBR and major stakeholders in the private sector, the notification added. The FBR had identified 7.4 million potential tax dodgers with the help of withholding tax (WHT) data. These tax evaders made substantial transactions, but never bothered to come into the tax net.

When contacted, FBR’s official spokesman Nadeem Rizvi said that the government constituted the committee with the mandate to streamline business processes under the existing tax laws in a bid to broaden the tax base.

He said the FBR sent polite letters to identified potential non-filers, and so far around 300,000 responded and became filers. “The FBR identified non-filers with the help of WHT data, so potential data would be utilised to expand the tax base in Pakistan,” he added.

Last week, Tarin chaired a high-level meeting at the FBR with NADRA high-ups where different options were explored to expand the narrow tax base.

The appointment of Khawar has shown that the private sector would be involved in the expansion of the tax base, as this task could not be left on the shoulders of the existing tax machinery working in the FBR.

The FBR has not notified any time limit or target, but there are over 4 to 4.5 million potential tax dodgers, who should be brought into the tax net for achieving the ambitious tax collection target envisaged for the current fiscal year.