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Govt will not back away from taxing trade: FBR Chairman

29 August, 2019

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ISLAMABAD: Federal Board of Revenue (FBR) Chairman Shabbar Zaidi on Wednesday reiterated that government will not back away from taxing trade, services as part of the move to broaden country’s narrow tax base.

Zaidi seems in no mood to back down from the aggressive documentation drive launched by the FBR under his stewardship.

He emphasised these points while speaking at the 21st Management Association of Pakistan (MAP) Convention: Challenging Times, Winning Strategies, organised by the MAP in Karachi.

A press release issued by MAP said that Zaidi is also “declaring war” on smuggling rackets starting Sept 1. Smuggled goods are flooding retail market untaxed and must be stopped, he said. The manufacturing sector, he said, was bearing the brunt of taxation while the trade and unorganised services sector was getting off scot-free the MAP press release quoted Zaidi as saying.

The tax machinery is aggressively pursuing broadening of the tax base to some important services like educational institutions, hospitals, doctors and teachers. “We have issued notices to these sectors to bring them under the tax net,” Zaidi said.

Ahead of the last budget, FBR chairman announced that all professional services -- doctors, educationists, chartered accountants, lawyers and engineers will be brought under the tax net. However, the FBR has only issued notices to doctors and educational institutions so far.

Zaidi said that so far, 100,000 notices have been issued to bring these professionals into the tax net while adding that several restaurants have also been notified to pay taxes. “All those sectors, which make money will now have to pay their due taxes”, the chairman remarked.

However, the FBR in a recent exercise conducted a similar exercise using the data received from 41 countries under the Organisation for Economic Cooperation and Development (OECD) tax treaty and found that 378 Pakistani residents hold foreign assets worth only $5bn abroad.

In May 2014, the then finance minister Ishaq Dar in a written reply to the National Assembly revealed that at least $200bn of Pakistani money is stashed away in Swiss banks. The claim was never substantiated by Dar during his tenure as the finance minister.

It is worth mentioning that Swiss government is yet to provide information to the government about Pakistani assets held in Swiss banks under the bilateral avoidance of double taxation treaty and the OECD multilateral tax convention.

On the issue of benami assets, the FBR chairman said that it was not easy to get details on benami properties. “We have received information about the benami assets which came through courts’ decisions”, he said, adding that the government has intensified the drive against these properties.

The chairman said the PM Imran Khan has also ordered provincial governments to identify such properties.

On the issue of bringing traders into tax net, Zaidi said that government will not reverse its decision of seeking CNIC details on sales and purchase of goods more than Rs50,000. “We have relaxed the condition until Sept 30”, he said.

He said the traders have already been advised about the simplified tax scheme. “We are discussing the proposed tax schemes with the representatives of trade bodies”, he said.

The FBR, he said, has launched digital software to facilitate filing of tax returns and tax payments of sales tax and federal excise duty. “We are going to further simplify income tax return”, the chairman said.

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