Karachi, April 30, 2015 (PPI-OT): Pre-Budget Seminar 2015-2016 organized by Southern Regional Committee (SRC) of the Institute of Chartered Accountants of Pakistan (lCAP) recently at a local hotel at Karachi. Shahid Hussain Asad Member (Inland Revenue-Policy), FBR was the chief guest on the occasion.
Naeem Akhtar Sheikh, ICAP Council member and Chairman Committee on Taxation presented the proposals given by ICAP for the upcoming Federal Budget and shared his views as to how FBR could be reorganized to work effectively.
He said that most of the problems are stemming from the weakness in Federal Board of Revenue in their failure to effectively implement the fiscal laws and ensure compliance to taxation laws. There is an urgent need to upgrade the quality Human Resource of the FBR and the governance structure of the Board.
He suggested that the Policy Board should be entrusted with formulation of fiscal policy making as a support to legislative function. It should act as a forum to debate national tax policy in consultation with all the stakeholders. The Board should include the Minister for Planning and members from cross section of civil society.
The action of tax payers whether due to ignorance or deliberate evasion as well as weakness in a tax administration means that failure to comply with the laws is inevitable. Therefore the tax administration should have in place strategies and structures to ensure that non-compliance with the tax law is kept to the minimum.
He said that the solution lies in drawing a comprehensive risk based strategy and an effective Revenue authority to ensure implementation of the strategy and an effective monitoring of the same. The FBR Head Quarter needs to be reorganized with functional specialization. Four functional divisions need to be created in IR namely Operations/Enforcements, Tax payer’s audit, Registrations (broadening of tax base) and litigation support/legal at FBR with clear demarcated staff at field formation level.
Tax Audit is yet another weak side of the FBR. There is urgent need of capacity building of the field formation officers with specialised training to undertake the challenges of tax audit. An effective audit acts as a deterrent against misreporting, frauds and tax evasion.
Appellate process which has a vital role in facilitating the tax payers, need to be revamped and make it more independent and objective. Currently the tax payers are compelled to recourse to the higher courts for obtaining stay against the decision of the tax authorities.
Asif Siddiq Kasbati, member Committee presented ICAP proposals on indirect tax including provincial taxes and other levies. He said that the tax on services by provincial laws without attending to any intra provincial and federal issues has created further complications for the genuine tax payers in particular and for the economy in general. He emphasized on complete harmony among the federal and provincial sales tax laws to relieve the tax payers from undue hassles and unwarranted litigation with tax authorities.
Masood Ali Naqvi, Chairman Tax Reform Commission, the session chairman said that the tax system is marred by menace of tax evasion, under reporting, tax fraud, corruption, smuggling, and under invoicing. He suggested focus should be on how to bring non-filers into the tax net. If the enforcement and compliance level are increased the revenue can be doubled.
The chief guest applauded the ICAP’s continuous efforts for submitting valuable proposals and assured that these will get utmost attention during the budgetary process as the Government is committed to work for the prosperity of the country through equitable tax measures.
The Budget Proposals can be accessed from ICAP website at http://www.icap.net.pk/wpcontent/uploads/2013/12/Budget-Proposals-20 15-16. pdf
For more information, contact:
Institute of Chartered Accountants of Pakistan (ICAP)
Chartered Accountants Avenue, Clifton