FBR seeks Benami accounts’ details from SBP

ISLAMABAD: The Federal Board of Revenue (FBR) has sought details about thousands of Benami accounts from the State Bank of Pakistan (SBP) where transactions were made over cut off limit of Rs10 million and Suspicious Transaction Reports (STRs) were issued by the Special Intelligence Unit (SIU) on account of money laundering.

The FBR sent out tax notice to Asif Ali Zardari on account of vehicles and proceedings in this regard were underway in Karachi. The former president was not required to appear before the tax authorities but his counsel could represent him for replying the questions in the FBR notice.

Briefing reporters here at the Board’s Headquarters on Thursday, FBR Member (Revenue) Hamid Ateeq Sarwar and Seema Shakil stated that the tax machinery halted raiding premises of any business outlet as goodwill gesture as Chamber of Commerce and Industries assured the FBR chairman that they would ensure compliance on notices sent out by the FBR.

“We are going to launch scheme for small traders from the federal capital as they will have to pay 2 percent of their turnover or fixed tax amount of Rs15,000 to Rs30,000 for shops at 2 to 3 marlas,” FBR’s Member Inland Revenue (Policy) Hamid Ateeq Sarwar said.

To another query regarding making provisional assessment against offshore assets, he replied that the provisional assessment would be made operational from April 1, 2019.

He said that it would be hard for any government to reverse tax incentives given by earlier government and pointed out that there was always dip in tax collection in the aftermath of election year and cited example of 2008 and 2013 and explained that the revenue collection dropped in the first year after the elections. He said the government would broaden the tax base in the coming budget through various measures and efforts would be made to expand the tax net up to 5 million filers from existing 1.7 million.

He said that the tax shortfall faced by the FBR stood at Rs236 billion in the first eight months (July-Feb) period of the current fiscal year as the tax machinery collected Rs2,330 billion against the set target of Rs2,566 billion. The FBR’s total fixed target stood at Rs4,398 billion for whole financial year 2018-19 ending on June 30, 2019.

After the briefing, when asked about projected massive shortfall for the whole fiscal year, he replied that the FBR was making plans to net an additional Rs260 billion in the last quarter (April-June) period and special campaign was on the cards to achieve the objectives.

Sharing reasons for tax shortfall of Rs236 billion in the first eight months, the FBR members said that the tax reduction on POL products, LNG and furnace oil made the FBR face shortfall to the tune of Rs75 billion. Moreover, jacking up of income tax ceiling from Rs0.4 million to Rs1.2 million and reduction in tax rates resulted in revenue loss of Rs35 billion, slashing the Public Sector Development Programme (PSDP) caused loss of Rs55 billion, suspension of tax on telecom by the Supreme Court cast negative impact of Rs35 billion, import compression nosedived by Rs20 billion and others Rs15 billion so far in the current fiscal year.

On issuance of Promissory Notes for release of refunds, he said that 78 claimants opted for Rs15 billion and now the FBR had decided to release small refunds in case of 50,000 cases, especially for salaried class where the refund amount is up to Rs50,000. It is estimated that the FBR will have to give Rs175 million refunds to small taxpayers.

Regarding the enforcement campaign, the FBR’s Member Inland Revenues (IR) Operation Seema Shakil said that the FBR took enforcement action in 424 cases and generated tax demand of Rs8.2 billion out of which the recovered amount stood at Rs3.8 billion. The FBR, she said, took action in Karachi, Lahore and Islamabad and the biggest case of Rs450 million was in Karachi. The Regional Taxpayer Office (RTO) Lahore recovered Rs582 million.

The FBR has stopped raids on premises of businesses as goodwill gestures for next 15 days to gauge the positive role of Chambers of Commerce and Industries as the FBR would send tax notice and would bring into the knowledge of the business leaders in a bid to remove element of harassment.

Regarding the recovery drive, she said the FBR issued two arrest warrants, attached 4,400 bank accounts, and attached 78 properties and 46 vehicles.

In the ongoing campaign against high net worth individuals, the FBR said it sent out notices to 6,400 non-filers out of which 2,671 filed their returns and generated tax demand of Rs2.1 billion.

So far, the FBR received total 1.762 million returns along with collection of Rs29.726 billion as the FBR was receiving 30,000 returns a day in the last few days after extending the deadline till March 31, 2019.