ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the Federal Board of Revenue (FBR) to restore audit immunity to commercial importers who pay an advance sales Tax of 3 per cent under special procedure for payment of sales tax by Commercial Importers Rules, 2006 and income tax of 6 per cent under Section 148 of the Income Tax Ordinance 2001 at the customs stage as full in final discharge of their tax liability.
The proposal is a part of an FPCCI presentation being prepared under the chairmanship of FPCCI Senior Vice President Syed Mazhar Ali Nasir that would be presented to the high-ups of concerned ministries, FBR, etc., for incorporation in the upcoming federal budget.
The proposal elaborated that the exemption from audit granted to the commercial importers vide clause 58-E(2) of the Special Procedure Rules was withdrawn a couple of years back, however, FBR had assured to restore the exemption, and up to that time, alternatively, it would exclude commercial importers under the audit policy till 2015.
In the current year’s audit policy, the exclusion was not extended to commercial importers from a selection of their cases for audit. Resultantly, field formation has started selection and issuance of notice to commercial importers under section 25 of the Sales Tax Act 1990.
The FPCCI’s Budget Advisory Council contended, “This is against the agreement made between commercial importers and FBR, and the government policy to minimise direct contact between a tax collector and taxpayer as it leads to corruption and tax evasion.
The commercial importers agreed to pay the advance tax at a higher rate just to avoid the lengthy and cumbersome process of Sales Tax audit, the proposal urged. Similarly, it disclosed that the importers working under full in final discharge of tax liability regime under Section 148 of Income Tax Ordinance 2001 were also served with the income tax audit notices.
In another proposal, the FPCCI has also urged the government to do away with discretionary powers given to the tax officials to raid, enter, and search the taxpayers’ business premises under Income Tax Ordinance 2001 and Sales Tax Act, 1990 and termed it as arm-twisting tactics of officials from the Inland Revenue department against businessmen.
It elaborated that some unscrupulous officials have been harassing and oppressing the business community, especially tax filers by making undue raids on their business premises.
The discretionary powers allowed under Sections 38B and 40B of the Sales Tax Act, 1990 and under Section 175(1) and (2) of the Income Tax Ordinance 2001 empower officials to enter and search the premises to obtain information under Section 176 of the Income Tax Ordinance 2001.
“It is observed that every year before the end of fiscal years tax, officials start using these tactics to force genuine taxpayers to make undue payment in order to meet their fiscal targets. This sort of practice is causing a trust deficit among the business community over the revenue collection department and is one of the prime reasons for a narrow tax base in Pakistan”, the proposal concluded.