FBR to go after under-filers in a big way: chairman

ISLAMABAD: The Federal Board of Revenue (FBR) chief Thursday said that the tax machinery would go against potential under-filers in a big way. Those making significant transactions will not be able to buy property and vehicles and operate bank accounts, he added.

In an exclusive interview in Geo News programme ‘Aaj Shahzeb Khanzada Kay Sath’, FBR Chairman Rashid Mehmood Langrial said that common man would be able to buy plots and used vehicles but anyone involved in significant transactions would not be able to purchase a property or a new vehicle. He said that the tax return date of October 14 would be the last due date for filing return after which the government would take the principled decision to abolish category of non-filers. The non-filers, he said, would be barred from major transactions. The government might slap a ban on air travel. In some countries, there are 15 types of bans but the government was considering slapping ban on a few things such as purchasing plots of more than Rs10 million, buying a new vehicle and freezing bank accounts.

Under-filing is a major issue in tax system of Pakistan, he said, and added that the government was also enhancing audit capacity of tax machinery. There are three million individuals who are liable to pay taxes. There are four million households who installed air-conditioners. A narrative is built that there are only two percent people who pay their taxes. The level of poverty is huge so there are less number of potential people who are liable to pay taxes. He said that there is a chunk of people who are involved in under-filing as they don’t pay their due taxes fully.

He said the FBR analysed the data and found that there was a company which is paying seven percent tax but there was another company in the same sector paying 21 percent tax. If the two companies in the same sector are paying taxes with such wide margin, one is evading its due taxes.

In case of cement sector, he cited an example that coal is used for production of cement but there is a company which shows that it used coal of Rs3,500 per ton but the second one claims that it costs Rs5,000 per ton, so both could not be right in their claims. The company showing coal price of Rs5,000 per ton is involved in suppressing its sale. He said that the level of truth was minimal in our society.

He said that the FBR analysed the whole textile chain and found several discrepancies, showing massive tax evasion. In beverages, there is a company showing sugar input less than three to four percent but there is another showing sugar usage more than 16 percent. How both could prove their claims are genuine?

The sharing of wrong data is a criminal act just like plunging into robbery, he said, adding that there is no right of any tax amnesty. He said that field officers are drawing very minimal salary package and he has requested the prime minister to ensure their mobility. The field formation officers draw salary package of Rs111,000 per month.

Smuggling, he said, is a major issue. He said the FBR’s reforms plan got approval in principle but it could not be done in a single day, or a few months. The procedural and legislative changes will take a few months period, he added.

In Pakistan, the FBR’s tax-to-GDP ratio could be jacked up to 15 percent along with petroleum levy while the provinces could increase their taxation contribution up to three percent of GDP, so overall the country could touch 18 percent mark in total.