FBR needs capacity building & efficiency improvement lessons

KARACHI: The Ministry of Industries and Production (MoI&P) held a meeting on 7th June 2021 presided by its minister Khusro Bakhtiar to discuss income tax, sales tax and matters connected with the Federal Board of Revenue.
The participants belonging to various segments highlighted the issues exceedingly well.
President UNISAME Zulfikar Thaver told the organizers he failed to understand the purpose of the meeting with the budget so close. The budget is to be announced in the parliament on the 11th June 2021. How would it be possible for the finance minister Shaukat Tarin to incorporate the very valuable suggestions of the participants.
Nevertheless because of lengthy deliberations of the participants and very short time available he emailed it to the MoI&P, SMEDA and of course the finance minister directly.
Thaver pointed out that the FBR needs capacity building lessons Secondly it has to improve its efficiency. Thirdly it has to do its homework and minimise errors and make the notifications free of ambiguities. Fourthly all forms and formats must be issued in good time. The downloading system must be made very efficient.
Regarding income tax the exemption limit of Rs 400,000 is unfair considering the inflation, lost value of rupee and the pandemic. The sales tax needs to be in single digit.
The fix turnover tax of SME shopkeepers and units must be not more than 0.25%.
He said the tax policy must be friendly, which means it has to be fair, simple, enabling, facilitating and not scaring or threatening.
The FBR said the CNIC would be good enough and no NTN will be required. It has not implemented this so far said Zeeshan Ally.
He also said the SRO culture must be done away with. Zeeshan also urged for the appellate forum to be made independent and not influenced by the departments in any way.
The minister said the long-awaited SME policy would be declared next month. The participants urged him to expedite the policy.
The participants spoke very effectively on the need of Special Economic Zones and the irrational import duties
It is to be noted that the income tax on small companies comes to 22 % it should be not more than 15%.
Secondly income tax on partnerships and Associations of Persons (AOP) also comes to 35% which is too much, it should not exceed 20 %.
The withholding tax is also to be collected by the firms and not only collected but deposited in time and be subjected to audit.
The collection of WHT is the duty of the state and not the buyer or seller as the case may be.
The FBR has given status to the non-filers and the big mafias are enjoying this status and they do not mind paying additional tax under certain transactions but go scot-free for many undisclosed transactions. The FBR must get after them.
Regarding broadening of the tax-net no serious effort has been made. The political will is not there.