FBR barred from issuing notices to taxpayers from July; no DLTL

KARACHI: The government has barred the Federal Board of Revenue (FBR) from issuing notices from next fiscal year with the taxpayers enabled to carry out self-assessment, finance minister said on Thursday.

Finance Minister Shaukat Tarin said only 4 to 5 percent of the cases will be forwarded to audit that will be done by third party instead of the FBR.

“I want to remove harassment by FBR,” Tarin said addressing an online meeting with the office bearers Karachi Chamber of Commerce and Industry. “We have agreed upon universal tax self-assessment and the audits by third party only.”

Tarin said wrongdoing found through audit will lead to investigation and ‘punitive’ action.

“We have created a section to review all the bills, number of deposits and travel history of individuals and if any person is found liable to pay taxes but is a defaulter, such cases will be sent to third-party auditors,” he said. “Defaulters will be put behind bars. Laws will be devised to put such persons behind bars responsible for willful default.”

Finance minister further said the government is focused on rationalising the turnover tax. He agreed that when three percent penalty is charged in case of unregistered persons, the CNIC condition should not be there.

The minister directed the FBR to look into this matter and stop demanding CNIC from traders.

Tarin said a call center will also be established at the FBR to record complaints, “which I will personally review on daily basis to ensure accountability.”

The minister said the FBR will also be directed not to stop refunds of businesses. “We will clear all the backlog of refunds within a few months by issuing tradeable bonds so that the businesses could have sufficient amount of liquidity available with them and a smarter mechanism will be introduced to clear refunds within 60 to 90 days.”

On Rs58 billion refunds pending under duty drawback on local taxes and levies (DLTL) scheme, Tarin directed the FBR to expedite the clearance and barred it from collecting DLTL this year as the it already owes huge amount.

Finance minister said reforms are being introduced at the revenue side to ensure that no harassment takes place and there will be no double taxation.

“The IMF [International Monetary Fund] has been pushing us to stop all exemptions and impose additional tax of Rs140 billion on existing taxpayers which I denied,” Tarin said.

“Only blatant exemptions will be dealt otherwise the rest will continue. We are broadening the tax base by making good use of technology and innovation, which will be devised in consultation with the business community.”

The finance minister said he would take up the business community’s concerns about Rs900 billion package allocated under public sector development program for Karachi, which has not been finalised.

Tarin further said the government is trying its best to facilitate small and medium enterprises (SMEs), which will be provided ‘clean credit’ facility with no security.

“For this purpose, the government will be providing huge amount of funds to banks at 8 percent which will be given to SMEs at 9 percent while credit insurance will be provided by the government,” he said. “It is a matter of grave concerns that out of a total of 6 to 8 million SMEs, only 180,000 SMEs have access to credit, hence efforts will be made to extend credit facility to at least 1 million SMEs in the next two years.”

Businessmen Group Chairman Zubair Motiwala said Karachi showed 18 percent growth in exports despite the outbreak of COVID-19. “The federal government must take Karachi’s robustness into consideration and accordingly give its due share which has unfortunately not been given so far.”