Get ready to face the music, FBR chief tells tax dodgers

Saturday, December 19, 2009
By our correspondent

ISLAMABAD: Habitual tax offenders should come clean up to December 2009, otherwise, get ready to face the music as the government is quite serious to make tax dodgers, tax evaders or short filers to pay their due share in the national kitty, said Sohail Ahmed, Chairman Federal Board of Revenue on Friday.

Addressing the business community at the Islamabad Chamber of Commerce & Industry, he said the FBR will salute those who come clean by the given date and the businessmen are partners of the FBR in improving country’s revenues and assured them that persuasion, instead of harassment, will be the approach of the FBR to woo people towards tax net, said an ICCI release.

The FBR chairman said no country could survive for long and provide better facilities to its people without generating sufficient tax revenue from internal resources. Therefore, people should realise their responsibility and come forward to pay due tax so that the government could improve the quality of life of poor people.

Sohail Ahmed clarified that tax reforms like creation of Inland Revenue Service, enforcement, audit and VAT have not been thrust upon the country by the IMF or any other external pressure, rather these measures are being taken to broaden the tax base, improve fiscal deficit and bring down inflation, paving the way for lower interest rate to stimulate business activities in the country.

Speaking about VAT, Chairman FBR said that one federal law and four provincial laws will be made for VAT and added that federation will impose VAT on goods while provinces will levy VAT on services. He said Finance Ministry would decide the VAT distribution formula between federation and provinces. He said initial draft of VAT is almost ready while final law will be made after getting thorough input from all stakeholders including business community.

The VAT is not a new thing for our country as it is already enforced in about 130 countries who are enjoying tax-to-GDP ratio of 15-23 per cent. He hoped that with the imposition of VAT in Pakistan, country’s tax-to-GDP ratio would be improved to 12-15 per cent within three to five years from the current just nine per cent, which is abysmally low when compared to international standards, he added.

Speaking on the occasion, Zahid Maqbool, President, Islamabad Chamber of Commerce & Industry (ICCI) said that ICCI encourages businessmen to pay tax by making it mandatory for them to get NTN before applying for Chamber’s membership. He said ICCI has formed different sub-committees to guide businessmen on tax matters. These committees educate members on tax laws compliance by holding seminars and workshops.

He suggested that FBR should offer amnesty to those who voluntarily come into tax net and they should be exempted from audit of previous years. He stressed for the need of creating an environment of trust between taxpayers and tax machinery by eliminating the element of harassment.

He also emphasized for close coordination of LTU and RTO with ICCI for removing irritants and launching joint efforts to improve tax revenue.

Zahid Maqbool said before implementing VAT, FBR should launch proper awareness campaign about this tax through chambers and associations so that taxpayers could fully understand all aspects of VAT. He said sometimes audit cases of past years are reopened which creates annoyance in business circles and demanded abolition of this practice.