FBR seeks to place curbs on immunity
SOHAIL SARFRAZ
ISLAMABAD: Federal Board of Revenue (FBR) Chairman Tariq Bajwa Thursday said that the Board will propose to the Cabinet to impose a few restrictions on the immunity available to the foreign remittances under Section 111 of the Income Tax Ordinance 2001. The FBR Chairman informed Senate Standing Committee on Finance here on Thursday that the economic managers of government are brainstorming to put in place a methodology for imposing some restrictions on the foreign remittances for which the State Bank of Pakistan (SBP) has been consulted.
The proposal would be moved to the federal cabinet to check massive misuse of the scheme. The FBR will also propose amendments to section 111 (4) of Income Tax Ordinance for imposing certain restrictions on bigger transactions of remittances, a method being used for tax evasion. The section 111 of the Income Tax Ordinance, 2001 deals with the unexplained assets and income. However, under sub-section 4 of section 111, tax officials cannot probe foreign remittances. The sub-section 1 of the section 111 of Income Tax Ordinance would not apply to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is encashed in rupees by a scheduled bank and a certificate from such bank is produced to that effect.
He said that the section 111(4) of the Income Tax Ordinance has been used for tax evasion and whitening of undeclared assets and income. The FBR has consulted the SBP on the possible amendments in the said scheme.
Referring to past amnesty schemes, FBR Chairman said that the FBR had offered three amnesty schemes in the recent decades but all of them failed to yield the desired result as the government had collected only Rs 10 billion, Rs 6 billion and Rs 2 billion respectively in last three schemes. “It will be difficult decision for any government because certain pro and cons exist such as those who argued against it said that why all those were penalized who were honest taxpayers and why incentives were provided to tax evaders?
Tariq Bajwa said that the government would reduce the number of general tariff slabs of Pakistan Customs Tariff (PCT) from 6 to 5 percent in coming budget (2015-16) and maximum general slab of 25 percent would also be brought down under tariff rationalization plan.
Last year maximum general slab of 30 percent has been reduced to 25%. The maximum tariff slabs were also reduced from 7 to 6. In next budget (2015-16), tariff slabs would be reduced from 6 to 5 percent and peak slab would also be brought down from 25 percent to a lower level.
When asked about the exact peak slab in 2015-16, FBR Chairman said that the FBR will make recommendations to the Cabinet for reduction in the maximum rate of peak slab.
Responding to queries, he said that the FBR is also taking steps to check the under valuation of immovable properties.
The FBR Chairman said that the FBR has chalked out basic principals for taxation side of the budget. Taxation budget would be presented in the Cabinet based on eight principals for 2015-16.
Firstly, the FBR will continue with the policy of withdrawal of concessions and exemptions granted through statutory regulatory orders (SROs). The FBR had withdrawn concessionary SROs of Rs 103 billion in 2014-15 and SROs worth same amount is expected to be taken away in coming budget.
Secondly, the FBR will continue increasing shares of direct taxes and reducing indirect taxes, he added.
He said that the FBR would propose abolishing of more tax exemptions in the coming budget 2015-16.
Thirdly, last year the concept of differential in tax rates was introduced in last budget (2014-15). The FBR will continue with the policy of different withholding tax rates for filers and non-filers of income tax returns in budget (2015-16). The FBR will also impose higher rates of withholding tax on non-filers of income tax returns in areas presently not covered under the WHT regime. Form next fiscal, tax rates would be increased for non-filers. Fourthly, the government has decided that the computerized national identity card numbers would be declared as National Tax Numbers (NTNs) for the tax purposes. This is a major measure to facilitate the taxpayers to file returns and pay taxes on the basis of CNICs. The FBR will be able to easily access the CNIC based database of the taxpayers. The FBR has repeatedly approached NADRA to share data of potential persons in the format which could be effectively used by the tax department for broadening the tax base.
Fifthly, the income tax return filers would be further facilitated. The tax rates would be decreased for compliant taxpayers who are not operating under the Final Tax Regime. Sixthly, the FBR will also be able to achieve the target of the Broadening the tax base by adding one lakh new taxpayers every year. The broadening of tax base was underway and it had gone up from 0.7 million to 0.9 million during the ongoing fiscal year. Seventhly, the FBR is also working on the new income tax return forms to facilitate the taxpayers.
The FBR will seek comments of the stakeholders on the new return form to delete unnecessary information from the columns of the new form. The information would be sought in June 2015 through newspapers. The guidelines on the new forms would also be issued in Urdu language whereas English would be used for legal purposes.
The FBR Chairman requested the Senate Standing Committee to see the formal budget recommendations of the National Assembly standing committee for 2015-16.
