The Federal Board of Revenue (FBR) has taken a strong exception to a news story captioned “Tax Collection on Demand falls 41%” published in Express Tribune on December 19, 2021.
In a media release, the FBR called the story “malicious in intent and suspicious in content”. The FBR said that the story’s claim that “Income Tax collection with taxmen’s own efforts has gone down by 41% and its share in total domestic income tax collection has shrunk to less than 2% in the current fiscal year,” is unfounded, misleading and far from facts.
While clarifying its position, FBR has stated that the contention of the news item is out of context and reflects a lack of understanding of legal requirements for the recovery of the tax demand created against the assessed income.
Firstly, FBR has explained that previously, coercive tax recovery measures including bank attachments were taken immediately at the conclusion of the statutory time of 30 days after issuance of the assessment order. However, in order to ensure harmony and calm in the business and industry and bridge the trust deficit between citizens and the state, the Federal Board of Revenue has issued instructions not to take coercive measures until the case has at least passed the test of first appeal. Due to these soft instructions, such decrease in the collection from demand created is quite normal and this aspect has been ignored in the said news item.
Secondly, the tax recovery process against the demand created is a long and tedious exercise and FBR believes in the due process of law while ensuring that every penny due towards taxpayers is collected in a transparent manner. The institution believes that the worst revenue collection is the one that weakens the relationship between the citizen and the state.
Thirdly, this year the date for filing of tax return was September 30, 2021, which was further extended till October 15, 2021, due to extraordinary pressure created on the FBR’s IT system. This placed return filing on track and led to the realization of maximum revenue collection in the earlier months in comparison with last year when the due date for filing of return was December 8, 2020. The important analogy in the news item has conveniently been ignored which takes a visible departure from the standard principle of apple for apple comparison. Likewise, the overall collection has increased manifold which could cause a possible decrease while drawing a comparison with the same period, last year.
Furthermore, it is pertinent to highlight that the new leadership of FBR strongly believes in a culture of voluntary compliance and ease of doing business through digitization, transparency and minimum human contact between FBR and taxpayers. Pursuing its new vision, FBR has introduced a number of innovative interventions both at the policy and operational level which aim at maximizing tax compliance through due process of law and non-coercive measures.
This is a paradigm shift that is manifested in clean taxation by timely issuance of refunds which has not only contributed significantly to ensuring the liquidity flow in the business but also bridged the trust deficit between FBR and taxpayers. The amount of refunds disbursed during July-November 2021 was Rs. 123 billion compared to Rs. 88 billion last year, showing an increase of 40.5 percent.
Likewise, FBR continues to create sizable judicious demand in direct taxes and during the first five months of the current financial year, demand created stands at Rs. 491.03 billion as against Rs. 439.88 billion in the same period last year, registering an increase of 12 percent.
FBR is promoting its policy of due tax collection with not a penny received from taxpayers in advance. It believes that superior most revenue is the one that is collected without tinkering with business and industry and that is increasing in Pakistan due to a wide array of out-of-box measures taken by FBR which aim at facilitating taxpayers through a digitized, reliable and transparent tax system.
Some of the key digital interventions made by FBR include the launch of Track and Trace System on key sectors of Large Scale Manufacturing (LSM), Point of Sale System to digitally monitor the Tier-1 retailers, automation of processes and preparation of Single Sales Tax Portal.
FBR is collecting the bulk of its revenue through withholding taxes and at the import stage to facilitate the taxpayers and minimize the cost of tax collection. Unlike in the past, these innovative interventions are increasing voluntary tax compliance and minimizing harassment, coercion and high-handedness.
The new vision enshrined in voluntary compliance and transparency is already showing its results through consistent revenue growth. While chasing a staggering revenue target of over Rs. 5.8 trillion, FBR has not only achieved the target fixed for the first five months of the current financial year but has also collected Rs. 304 Billion in excess of the assigned revenue target for the period. This is a monumental success that can by no means be downplayed. This news item has been published at a time when FBR’s outstanding performance is being widely acclaimed by all including Prime Minister Imran Khan who acknowledged and appreciated FBR on regular basis.
The FBR further reiterated that the subject news report is based on an incorrect appraisal of facts.
Source: Pro Pakistani
