~TRANSPARENCY 'w::IINTERNATIONAL-PAKISTAN
1 ih March, 201 7
Muhammad Nawaz Sharif, Prime Minister of Pakistan, Prime Minister House, Islamabad
4-C, Mezzanine Floor, Khayaban-e-lttehad, Phase VII, Defence Housing Authority, Karachi. Tel: (92-21) 35390408, 35311897-8, Fax: (92-21) 35390410 E-mail: [email protected] Website: www.transparency.org.pk
Sub: Recommendations of Transparency International Pakistan on Budget 2017-18 for Collection of annual Revenue of over Rs 10,000 Billion
Respected Prime Minister,
Transparency International Pakistan suggest that the n Budget 2017-18 shall include following recommendations which will ensure Collection of annual Revenue of over Rs 10,000 Billion, against Rs 3,600 billion of2016-17.
With efforts of Transparency International Pakistan in 2015, NAB formed a broad based Committee named Prevention Committee ofFBR in February 2015, under the Chairmanship of Dy Chairman NAB, Rear Adm (Rtd) . Saeed Ahmed Sargana, comprising of following members.
DG (A&P), NAB HQ, Mr. Sohail Ahmed, Ex-Chairman, FBR, Member (Tax Policy), FBR, Syed Adil Gilani- Consultant PMIC, Nominee of Governor State Bank of Pakistan, Nominee of President FPCCI, Nominee of APTBA, Legal Consultant as nominated by PGA NAB and Director (Ops), NAB HQ
The Committee finalized comprehensive recommendations which were sent to the Chairman FBR on 16.4.2015, which included following major steps.
1. The scheme of tax Appellate authorities should be brought in line with the provisions of the Constitution of the Islamic Republic of Pakistan, by removing adjudicating officers from subordination of FBR. Commissioner (Appeals)/Collector (Appeals) be appointed and directly work under the supervision of Ministry of Law and members of appellate tribunal should be appointed and work under the respective high courts. The officials of FBR once transferred to appellate forums should be transferred/or the balance period of their service without any option to come back to parent department. The tax machinery under the control of the executive side is an obvious impediment in providing fair and quick justice to the harassed and bonafide taxpayer.
2. The Federal Board of Revenue shall only be an implementing board, under finance ministry. It shall be relieved
from performing the role of a regulator.
3. An independent Pakistan Revenue Regulatory Authority (PRRA) shall be constituted, which shall make laws for revenue generation and report directly to the prime minister. It may comprise five professional members i.e. three economists, one law professional and one chartered accountant.
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A NON-PARTISAN, NON-PROFIT COALITION AGAINST CORRUPTION Donations exempted from tax U/S 2 (36) (c) of I. Tax Ordinance 2001
~TRANSPARENCY .::;1 INTERNATIONAL-PAKISTAN Continuation Sheet No ......... .
4. Introduction of an efficient, reliable and user-friendly automation system will help bring transparency in the
FBR system, confidence in the FBR working, minimise leakages/fraud of tax, provide confidence to honest and
willing taxpayer, broaden the tax base and minimise personal contact.
5. Enterprise Resource Plan (ERP) software be launched by the FBR in two phases, first by I st July, 2015 and
second by 31st December, 2015.
6. Exemption under Section Ill (4) of the IT Ordinance to the foreign exchange brought into Pakistan through
proper banking channel should be withdrawn.
7. Appropriate laws should be made to enable the government to seize local assets, in equivalent value, or levy
appropriate taxes, if any person holds any kind of assets outside the country for which source of income could
not be established. Pakistan should sign bilateral/multilateral agreements with countries where there is
suspicion of Pakistani citizens illegally maintaining bank accounts and other assets to bring back the untaxed
wealth from 'tax heavens' abroad as being done by USA, India with Switzerland.
8. Presently, State Bank of Pakistan is issuing bearer certificates/prize bonds of large denomination, which is not
only providing opportunity to tax evaders to park their black money under this mode of financial instruments,
but providing avenue to whiten black money at a reduced tax rate. Bearer certificates/prize bonds of Rs7,500/
and above denomination be issued by name.
9. Presently provinces are collecting stamp duty on transfer of immoveable properties at the values prescribed by
the respective revenue collectors, which mostly do not commensurate with the prevailing market rates. It helps black money getting whitened without any cost (tax). The federal government should work with provincial
governments to create biannual/annual market rate-based realistic table of evaluation and reduced rates of not
more than 1% of market rate as stamp duty and other levies for transfer of immovable properties.
I 0. To maximise documentation of economy and broadening of tax base, CNIC number shall be declared as
National Tax Number w. e.f 1st July, 20 15; all CNIC holders having income above taxable limit shall submit
annual tax return.
II. Federal government in consultation with provincial government should carry out assessment of the market rate
of properties by engaging 3rd party and should produce a reference document. The same should be revised and
issued every year on 1st July. Provincial excise departments should be engaged for the purpose. In this regard,
stamp duty and other levies for transfer of property should be between 0. 5% to 1%.
I2. All businessmen and retailers must be registered with licensing authority and with FBR.
I3. All receipt and payments above 50,0001- should be through only banking channel and other transaction should
be banned.
I4. Incentives should be provided to those retailers/wholesalers who install electronic cash register without any
turnover thresholds and connect with FBR database. They should also be absolved one time from payment of
previous sales tax liabilities.
I5. Sales Tax/VAT should be implemented in its true form through effective utilization ofNadra databasCi
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~TRANSPARENCY .. ~ INTERNATIONAL-PAKISTAN Contznuatton Sheet No ......... .
16. Complete details and database of all the ownerslholders/allottees of the property (including residential,
commercial, industrial), private vehicles, trucks, buses, international traveling, utilities with some threshold
(including residential, commercial and industrial), transactions above certain threshold made through credit
cards, debit cards/ATM, cross cheques, pay orders/ all other banking channels, investment infixed deposits,
national saving schemes and stocks be prepared and on the basis of that information, a complete profile may be
generated and used effectively.
17. Presently monthly or annual statements are required to be filed where withholding tax is affected. However, it
is suggested that the filing of such statements should also be made mandatory for the housing societies for
registration/transfer of immovable property (industrial, commercial, residential and agricultural). Motor
vehicle registration authorities, clubs (private and public), credit card issuing authorities, Central Depository
Company, National Clearing Company of Pakistan, large-scale private hospitals and schools and financial institutions distributing profit more than statutory taxable limit or granting commercia/loans, airline
companies, FIAfor traveling record and such information is crossed-matched with the existing data with FBR.
Withholding penalty should be minimised. In case the statements are filed within one week of the prescribed
time, defaulters may only be warned. However, if the default continues for more than one week penalty be
imposed.
18. The taxes must be equitable and fair between different classes of society. The payment of tax by all the segments
of the society must be convenient. The laws imposing taxes must be so precisely and clearly worded so as to make the taxpayer understand what the burden he is called upon to bear.
19. To give comfort and confidence to the existing honest diligent, taxpayer bonafide and increased tax collections
should not be made from them, but from those who are not reporting or under reporting. This will ensure a level
playingfieldfor all income earners and eliminate the incidence of income earners from other sectors parking
their wealth and income to avoid taxes.
20. Accountability in tax administration must be introduced. The rampant corruption, without any real
accountability of under-performers in delivering optimal collections from income tax, sales tax, customs and excise combined with misuse of powers are the reasons behind the inefficiency of the tax machinery and, therefore, this needs to be corrected.
21. Fiscal and taxation policies should be announced to remain static for at least three years. There should be
consistency in tax policy and a strong political will to enforce the law in letter and spirit leading way to three
year budget.
Unfortunately FBR in 2015 failed to accept these recommendations.
Transparency International Pakistan is of the view that the Prime Minister shall take up these recommendations seriously.
The fact is that public is paying taxes to government, but Tax Collectors ofWHT, GST and ED i.e. business, are not depositing the collected govt. revenue with FBR, and FBR is not taking any concrete action to address this situation.,
Transparency International Pakistan is of the view that by accepting NAB Committee Recommendation of 2015 Collection of annual Revenue of FBR will be over Rs 10,000 Billion in 2017-18, against Rs 3,600 billion of2016-17./--
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~TRANSPARENCY . ~ INTERNATIONAL-PAKISTAN Contmuation Sheet No ......... .
Transparency International Pakistan is striving for across the board application of Rule of Law, which is the only way to stop corruption.
Encl; Three Documents of Prevention Committee of FBR Recommendations.
Copies forwarded for the information with request to take action under their mandate to:
1. Chairman, NAB, Islamabad, 2.Minister of FGinanace, Islamabad, 3.Chairman, FBR, Islamabad, 4. Registrar, Supreme Court of Pakistan, Islamabad.
4
)
r ,I
GOVERNMENT OF PAKISTAN NATIONAL ACCOUNTABILITY BUREAU
ATTA TURK AVENUE, G-5/2
Awareness & Prevention Division
The Chairman Federal Board of Revenue, FBR Building, lsfamabad.
No: 3-2(1 )(46)S-IIMW-II/NAB HQ/CVC/31"/ April. 16 , 2015
Subject: Recommendations of the Prevention Committee on Tax Evasion
In pursuance of Section 33 C of National Accountability Ordinance 1999,
Ch~irman NAB constituted a Prevention Committee on Tax Evasion in order to study
the weaknesses in the taxation system and to suggest measures to plug such
loopholes. In order to augment the proposal I recommendation, representatives from
Federal Board of Revenue, State Bank of Pakistan, FPCCI, ICAP and TIP were
requested for participation in the meetings to contribute their valuable inputs. After
thorough and detailed discussions and brain storming, recommendations of the
committee have been finalized which are enclosed for due consideration and
implementation.
2. We hope that the collaboration with FBR will go a long way in eradicating the
corruption and corrupt practices and to broaden the tax net from the existence system.
3. We assure our assistance and cooperation in this regard.
With profound regards and best wishes.
Encl: As stated:
Copy for information to: a. PS to Federal Ministry for Finance, Islamabad b. PS to Secretary to Prime Minister, Islamabad c. PS to Governor State Bank, Karachi d. Chairman Transparency International Pakistan, Karachi e. Chairman Prime Minister Inspection Commission, Islamabad. f. Chairman FPCCI, Islamabad. g. Chairman ICAP, Karachi h. President PTBA, Karachi i. AD (Coord) Cn. Sectt, NAB HQ j. Sr. PS to Dy. Chairman, NAB HQ k. All members of Prevention Committee.
Recommendations of
Prevention Committee on Tax Evasion
The meetings of Prevention Committee on Tax Evasion were held on 161h March and
14111 April, 2015 at NAB HQ, presided by the Rear Admiral (R) Saeed Ahmed Sargana,
Deputy Chairman NAB. (List of Prevention Committee on Tax Evasion is attached as
Annex-A). After detailed discussion, the following recommendations were agreed upon
by the members:-
Point -1: USE OF AUTOMATION
RECOMMENDATIONS:
a. The committee considered that an efficient, reliable and user friendly automation system will help to achieve the following important objectives :-
(i) To bring transparency in the FBR system:
(ii) To bring confidence in the FBR working;
(iii) To minimize leakages/fraud of tax;
(iv) To provide confidence to honest and willing taxpayers;
(v) Broaden the tax base; and
(vi) To minimize personal contact
b. It Is expected that the national goals would be realized if the following recommendations are implemented in letter and spirit:-
!) Compilation/integration of following data information available within the Database of FBR and other Government or Semi-Government departments:-
{a) Transaction conducted or expenditure incurred carrying CNIC or Passport number;
(b) Transaction conducted between the parties carrying National Tax Number, Sales Tax Registration number, Company Registration Number etc.
ii) Reconciliation of data compiled be made with the information available with FBR in the shape of Withholding Statements, Return of Income and Purchase/Sale Summaries of Sales Tax Returns, with SECP data bank with listed companies distributed dividends, with Banks and National Saving
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Centers for distribution of profit and Vehicle registration authorities, with Stock Exchanges of shares sale and purchase transactions. with immovable property registration authorities for sale and purchase of properties etc. to unearth new taxpayers and tax the untaxed income.
iii) Enterprise Resource Plan (ERP) software is committed to be launched by FBR in two phases first by 1111 July, 2015 and second by 31st December, 2015.
Point- 2: SEPARATION OF REGULATORY AND IMPLEMENTATION FUNCTION FROM FBR
RECOMMENDATIONS:
a. The scheme of tax Appellate authorities should be brought in line with the provisions of the Constitution of the Islamic Republic of Pakistan, by removing adjudicating officers from subordination of FBR. Commissioner (Appeals) I Collector (Appeals) be appointed and directly work under the supervision of Ministry of Law and members of appellate tribunal should be appointed and work under the respective High courts. The officials of FBR once transferred to Appellate forums should be transferred for the balance period of their service without any option to come back to parent department. The tax machinery under the control of the executive side is an obvious impediment in providing fair and quick justice to the harassed and bonafide taxpayer.
b. Federal Board of Revenue shall only be an implementing Board, under Finance Ministry. It shall be relieved from performing the role of a Regulator.
c. An Independent Pakistan Revenue Regulatory Authority PRRA shall be constituted, which shall make laws for revenue generation and report directly to the Prime Minister. It may comprise of five professional members i.e. three economists, one law professional and one chartered accountant.
Point- 3: FOREIGN REMITTANCE I FOR.EIGN ASSETS AND WITHDRAWAL OF SECTION 111 (4).
RECOMMENDATIONS
a. Section 111 of the Income Tax Ordinance, 2001 (the IT Ordinance) provides that where any person invest any amount or incurred any expenditure and such person offers no satisfactory explanation about the nature and source of the amount credited or invested or funds from which the expenditure was made, the same amount shall be included in the person's Income chargeable to tax to the
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extent it is not adequately explained. However foreign remittance from the identified source should not be questioned.
b. Therefore, it is proposed that the exemption under Section 111 (4) of the IT Ordinance to the foreign exchange brought into Pakistan through proper banking channel should be withdrawn, except to the extent as explained above.
c. Section 5 of the Protection of Economic Reform Act 1992 may be amended accordingly.
d. Appropriate laws should be made to enable the government to seize local assets, in equivalent value, or levy appropriate taxes, if any person holds any kind of assets outside the country for which source of income could not be established. Pakistan should sign bilateral I multilateral agreements with countries where there is suspicion of Pakistani Citizens illegally maintaining bank accounts and other assets to bring back the untaxed wealth from 'tax heavens" abroad as being done by USA,. India with Switzerland.
Point -4: ISSUANCE OF BEARER CERTIFICATE/PRIZE BONOS ETC.
RECOMMENDATIONS
a. Presently State Bank of Pakistan is issuing bearer certificates/prize bonds of large denomination, which is not only providing opportunity to tax evaders to park their black money under this mode of financial tnstruments, but providing avenue to whiten black money at a reduced tax rate. Bearer certificates I prize bonds of Rs.7500/- and above denomination be issued by name.
Point -5 RATIONALIZATION OF COLLECTORATE RATES FOR PURPOSES OF STAMP DUTY AND OTHER LEVIES ON IMMOVEABLE PROPERTY.
a. Presently provinces are collecting stamp duty on transfer of immoveable properties at the values prescribed by the respective Revenue Collectors; which mostly do not commensurate with the prevailing market rates.
b. The above mechanism is resulting in the following disadvantages to the Government exchequers, economy of the country and to the bonafide taxpayers:-
i. Black money is being parked at virtually no cost:
ii. Gain computed is far less than actual gain which result in lower tax revenue for the exchequer;
iii. Economy is not being documented properly and accurately; and
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,
iv. The taxpayer who purchases property out of bank loans; black their white money by paying the difference amount out of books.
RECOMMENDATIONS
a) That Federal Government should work with Provincial Governments to create biannual I annual market rate based realistic table of valuation and reduced rates of not more than 1% of Market rate as stamp duty and other levies for transfer of immovable properties:
OR Alternatively
b) Collect such tax on behalf of Provinces on the basis of biannual I annual market rate realistic table of valuation and reduced rates of stamp duty and other levies.
Point- 6 Measures to maximize documentation of economy and broadening of tax base.
a. It may be appreciated that following three sectors of the economy are not contributing taxes in the ratio of their share in the GDP; which is not only defeating the Government's efforts of generating fair revenues, but it is great impediment in enhancing tax-to-GOP ratio and documentation of economy:-
i. Traders and businessman related to the agricultures product;
li. Transport sector; and
iii. Wholesale and Retail sector.
Therefore, there is need to bring these sectors into tax net in order to document the economy of the country and to broaden the tax base.
RECOMMENDATIONS
a. CNIC number shall be declared as National Tax Number w ,e.f 1st July, 2015.
b. All CNIC holders having income above taxable limit shall submit annual tax return.
c. Federal Government In consultation with Provincial Government should carry out assessment of the market rate of properties by engaging 3rd party and should
,,
produce a reference document. The same should be revised and issue every year on 1$1 July. Provincial Excise Department should be engaged for the subject purpose. In this regard, stamp duty and other levies for transfer of property should be between 0.5% to 1 %.
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d. AU businessman and retailers must be registered with Licensing Authority and with FBR.
e. All receipt and payments above 50,000/- should be through only banking channel and other transaction should be banned;
f. Incentives should be provided to those retailers/wholesalers who install electronic cash register without any turnover thresholds and connect with FBR database. They should also be absolved one time from payment of previous sales tax liabilities;
g. Sales TaxNAT should be implemented in its true form;
h. Effective utilization of NADRA database should be made;
i. Effective enforcement of provisions of Section 114 of the IT Ordinance should be ensured;
j. Complete details and database of all the owners/ holders/allottee of the property (including residential, commercial, industrial), private vehicles, trucks, buses, international traveling, utiliti.es with some threshold (including residential, commercial and industrial), transactions above certain threshold made through credit cards, debit cards I ATM, cross cheques, pay orders I all other banking channels, in,vestment in fixed deposits, national saving schemes and stocks be prepared and on the basis of that information, a complete Profile may be generated and used effectively;
k. Presently monthly or annual statements are required to be filed where withholdtng of tax is affected. However, it is suggested that the filing of such statements should also be made mandatory for the Housing Societies for registration/ transfer of Immovable Property (Industrial, Commercial, Residential and Agricultural), Motor Vehicle Registration Authorities, Clubs (Private and Public), Credit Card issuing authorities, Central Depository Company, National Clearing Company of Pakistan, large scale private hospitals and schools and Financial Institutions distributing profit more than statutory taxable limit or granting commercial loans, airline companies, FIA for travelling record and such information is crossed matched with the existing data with FBR. Withholding penalty should be minimized. In case the statements are filed within one week of the prescribed time defaulters may only be warned. However, if the default continues of more than one week penalty be imposed.
L The taxes must be equitable and fair between different classes of society. The payment of tax by all the segments of the society must be convenient. The laws imposing taxes must be so precisely and clearly worded as to make the taxpayer .understand what the burden he is called upon to bear;
m. To give comfort and confidence to the existing honest diligent, taxpayer bonafide and increased tax collections should not be made from them, but from those who are not reporting or under reporting. This will ensure a level playing field for all
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,"""'"''""
income earners and eliminate the incidence of income earners from other sectors parking their wealth and income to avoid taxes;
n. Accountability in tax administration must be introduced. The rampant corruption, without any real accountability of underperformers in delivering optimal collections from I nco me tax, Sales tax, Customs and Excise combined with misuse O·f powers are the reasons behind the inefficiency of the tax machinery and therefore, this needs to be corrected.
o. To execute bilateral/multilateral agreements with different countries for sharing information related to investment made by Pakistanis in such countries and untaxed in Pakistan;
p. Fiscal and taxation policies should be announced to remain static for at least three years.
q. There should be consistency ln tax policy and a strong political will to enforce the law in letter and spirit leading way to three year budget.
Point -7 ELIMINATION OF EXEMPTION PROVIDED THROUGH SROS
RECOMMENDATIONS
a. The FBR is currently evaluating the impact of SRO's on the revenue collection and their repercussions of overall economy. The committee of the view there are numbers of SRO's which are of beneficial and provide benefit and promote local manufacturing by allowing concessionary Customs duty on raw material and bringing new FDI In Pakistan. However there are large of number of SRO's which are being misused and duties I taxes are being avoided through them. We therefore, recommend that those positive SROs should be made part of law, i.e. annual budget, and SRO culture should be terminated w.e.f 111 July 2015.
Point- 8 INTRODUCTION O:F FOOLPROOF SYSTEM TO COLLECT TAX FROM PROFESSIONALS AND OTHERS
RECOMMENDATIONS
a. A very encouraging step in this direction was taken by the Government through the Finance Act, 2013 by insertion of Clause (ix) in Section 114 of the IT Ordinance for mandatory filing of returns by the professionals. There is a big group of artists, dress designers, models, event managers, sales and marketing people running different businesses from their homes or offices ln the back streets or just through the cell system, etc. are generating significant untaxed revenues. However, it is a bitter truth that FBR has failed to make any significant
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:
progress in this direction to bring them into the tax net All professionals like Doctors, Lawyers, Engineers, Attorneys, Architects, Chartered Accountants, and Consultants etc misreporting their income be treated as criminal offenders which should constitute criminal penalty. Amendments be made in respective law. All professi:onals be required to receive their fee through banking channels i.e, cheques, pay orders, demand drafts etc.
b. It is therefore recommended that a separate zone in each city with required strength be created responsible for the following:-
i) Ensure members of various professional bodies and known potential prospective taxpayers are registered with tax department;
ii) Work in co-ordination with FBR IT team to generate profiles of such professionals and Others Assets, Revenue and Expenditure information and match with information available through filing of Return of Income and Wealth Statement; and
iii) To carry out sting operation by the officials of FBR or I and any other agency {3rd party) at specialist clinics, big hotels, Expo centres, Building Control Authorities for Architects, Courts for lawyers or at their business premises in the big cities to check their receipts. Obtain data of foreign bank accounts of professionals to investigate whether any fee related to services in extended in Pakistan are received I deposited in such accounts.
This action will create a great deterrence for huge evasion of taxes in this area.
Point- 9: Admissibility of Input Sales Tax
RECOMMENDATIONS
a. Introduction of rational GST at all stages and elimination of refunds. It has been advocated that single stage sales tax at a lower rate may be imposed without any claim of refund in place of present GST in value added mode. There are reservations against proposal of Single stage Sales tax (SSST) at a lower rate of GST at every stage; Nowadays the VAT model is implemented in 8 of the 10 major economies and in 140 of the approximately 170 countries around the world working well for large economies (such as Germany) and in small countries (like Mauritius) and not a single country ever tried to convert from VAT to a single stage sales tax system (SSST).
b. Clause 8(1)(ca) of the Sales Tax Act 1990 states that input tax may not be · claimed by a registered person on the goods in respect of which sales tax has
not been deposited in the Government treasury by the respective supplier. In the current environment of payment of taxes in time, it is difficult for a buyer to ensure the deposit of the sales tax into Government Treasury by the seller, as
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the buyer does not have any enforcement power over the seller. FBR is trying to transfer its own burden to taxpayers and trying to hide its inefficiencies. This provision should be withdrawn as the court has also declared this section as ultra vires.
c. To eliminate culture of fake invoices, PCT Code identification shall be incorporated in Sales Tax Return Form STR -7.
d Ce.llular Companies tax Collection.
i. Income tax @ 14% under section 236 of Income Tax Ordinance 2001 is deducted at source of the amount of bill price of prepaid telephone card which is adjustable. Federal Excise duty @ 18.5% of the charges is collected only in Islamabad and Baluchi.stan by FBR. Whereas, Provincial authorities of Sindh, Punjab and KPK are charging sales tax @ 19.5% on telecom services due to 18th amendment.
ii. A combined audit of all telecom companies on behalf of all revenue agencies I.e; FBR, Provincial Revenue authorities (SRB, PRA and KPRA) and PTA to plug loopholes and revenue leakages (Income tax, FED and Sales Tax) may be conducted.
iii. Payment through Pre Paid Cards shall be the only mode (even If dealers get ' such cards from companies, it should be the responsibility of the Service
Provider to collect and deposit tax).
iv. The Pre Paid Cards shall be printed only at the Pakistan Security Printing Corporation or under secure I controlled environment.
v. Top up shall also be made through pre paid card, sold to cell company's agents, shopkeepers.
vi. Cellular Phone Companies and Internet Provider Companies shall place orders , (with payment of the PSPC charges) of printing with PSPC for provide/print/supply of pre paid cards of various denominators , with printed matter to be provided by the respective companies.
vii. Pakistan Security Printing Corporation PVT Ltd will print the Pre Paid Cards, with "15% WHT and 19.5% GST Paid" on each card.
viii. Cellular Phone Companies and Internet Provider Companies will deposit the total amount of GST and WTH in FBR account at NBP, and provide the paid voucher, certified by FBR through PRAL System, to PSPC and collect the pre paid cards.
ix. As GST on services is a provincial tax, Cards will be printed separately with name of province I federal territory for sale in Punjab, Sindh, KPK. Baluchistan and Federal territory. This will enable transferring GST to the respective provinces collected by FBR.
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x. The printing of Pre Paid Cards suggested only at the Pakistan Security Printing Corporation PVT Ltd, due to security reasons, to eliminate fraudulent duplication of Pre Paid Cards. In fact security level provided for Currency notes printing is required to eliminate possibility of duplicate cards.
xi. On line access to the system of telecom companies should be given to FBR.
xii. Similarly, tax collection mechanism (forensic audit} for other sectors of economy i.e. Textile, Manufacturing etc be reviewed and Improved
Point- 10: CUSTOMS CONTROL TO BE IMPROVED FOR TRANSPARENCY AND FAIRNESS
RECOMMENDATIONS
a. The menace of unauthorized and under invoiced imports is impacting negatively on the growth of organized sector and it is impediment to provide level playing field to all the business houses. Therefore, in order to improve Custom controls following recommendations are made:-
i. The fixation of value is measure through which the mis-declaration or under declaration by importers can be check and discouraged. In order to institutionalize the valuation system, we recommend that it should be outsourced to third party to ensure proper and realistic determination of value for levy O·f Custom Duty and other taxes. It will help the appraisement department of Customs in assessing the fair value of goods imported;
li. Duty and tax structure should be reviewed in order to rationalize its impact on legal imports;
iii. The enforcement arm of customs should be strengthened with appropriate legal powers to stop the sale of unauthorized imported goods;
iv. Counterfeit imported products should be effectively checked;
v. Penalties for mis-declaration and under-invoicing to be made more stringent:
vi. Re-Export or temporarily imported goods shall be cleared against a security in the form of a post dated cheque for the differential amount between the statutory rate of customs duty and sales tax and the amount payable under the notifications, along with an undertaking to pay the customs duty and sales tax at the statutory rates in case such goods are not re-exported on conclusion of the project; and
vii. Afghan Transit Trade shall be regulated for Tracking. No monopoly shall be allowed by FBR for a sing.le tracking company, and Tracking Company shall be the bailee of the cargo.
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•
b, Following recommendations made by the Sub-Committee of the Revenue Advisory Council in the matters of Custom Valuation vide report dated 18th Jan, 2010 be adopted:-
i) That high level Government effort should be made to ensure proper implementation of agreements executed with Governments of the Republic of China and United Arab Emirates for cooperation and mutual assistance in Customs matters;
ii} The FBR should make further effort to execute similar agreements with such exporting countries from where the value of goods declared by the importers are unreliable and inaccurate;
iii) A proper study should be made to analyze the viability and effectiveness of posttng Customs Valuation Counselors at Commercial mission in such trading partner countries; where risk of underreporting and mis-declaration is high and rampant;
iv) It should be made mandatory for the Authorized Dealers to put condition in the LC or Contract that the Exporter of the goods will manually sign commercial invoice (in quadruplicate) indicating LC/Contract number, importer's National Tax Number, Description of goods, H.S. Code, Country of Origin, actual amount paid or payable and submit the same along with other original documents for approval of the designated bank In Pakistan;
v) Paragraphs {23) and (24) of the Chapter XIII of the Foreign Exchange Manual be amended; whereby it should be made mandatory for the Authorized Dealers to send the copies of Form 'I' along with copy of manually signed Invoice to the Customs Valuation Department on real time basis;
vi) It should be made mandatory for the importer to instruct exporters of the goods to keep one copy each of the commercial invoice, packing list and certificate of origin duly signed manually in the Container;
vii) The FBR should emphasize on strengthening Post Clearance Audit (PCA) as it is in line with the best international practices;
viii) Skilled and fully dedicated team of auditors also having expertise in the financial accounting and are well conversant with audit techniques may be posted/hired/recruited for the PCA;
ix) Registration process (ID issuance) in Custom's automation system may be made more stringent to ensure that fake importers/exporters do not enter in the system. This will help in their post clearance audit;
x) The services of external auditors having sector specializations for example chemical, textile etc. be acquired for PCA;
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----iiiil-iiiii·iii'iili'' -.o.--==·---··-'"" -·-·----"·. -----------------
xi) There should be more emphasis on entity and product based audit instead of transaction based audit.
xii) That an experienced and dedicated team of present and former Custom Officers should be formed to study the following and keeping in view the best practices in the world and local demands; make appropriate recommendations in this regard:-
(1) Items currently listed on the exemption list and persons registered under the DTRE;
(2) Importance for allowability of exemptions and granting registration under the DTRE Scheme;
(3) Benefits achieved by the stack-holders and GOP;
(4) Study of Cost benefits versus Revenue losses suffered by the GOP;
(5} Alternative available;
(6) Monitoring and auditing of the transactions; and
(7) Recommendations for establishment of appropriate mechanism for allowability of exemptions and granting registration under the DTRE Scheme.
xiii) That keeping in view the global commitment tariff reforms with respect to Customs Duty have already been carried out; however in order to deincentivize under and mis-declaration; reasonable reforms should also be made in other taxes viz. income tax, sales tax and federal excise duty;
xiv) Capacity building of Customs Officers should be enhanced for detection of under declaration and mis-declaration of goods; and
xv) That keeping in view the international obligations and guldel.ines provided by the 'NTO and WCO; Customs Duty should be levied on the Transaction Value, except in the identified circumstances.
Point- 11; RECONCILIATION AND STREAMLINING OF FEDERAL AND PROVINCIAL TAX LAWS
RECOMMENDATIONS
b. Conflicting issues related to chargeability of taxes on services emanated due to legislation after the 181
h Constitutional amendment, must be resolved without any further delay. This has resulted in undesired litigation and disappointment to lot of large and bonafide taxpayers.
Page 11 of 14
Point -1.2: DEVELOP CAPACITY TO FORMULATE AND IMPLEMENT TRANSFER PRICING
RECOMMENDATIONS
a. The globalization of economic activity and the increasing volume of international transactions of multinational enterprises (MNEs) imply that transfer pricing for tax purposes already is and - in the near future - will remain one of the most important tax issues. Coupled with the growing type and number of cross-border transfers of intangible assets, concerns arise about the adequacy of transfer pricing rules as they are currently provided by many national tax authorities including Pakistan.
b. The key question of transfer pricing is how prices for goods, services and intangibles that are transferred across borders. but within multinational networks should be established. Thus, the success of the local operation is the only interest of national taxing authorities. The arm's length rule, which has formed a core value in international taxation for most of the twentieth century, serves two functions in this context. Firstly, it provides national taxing authorities with a mechanism for fair allocation of profits as between local operations of a multinational 'group and other parts of the group. Secondly, as nation states compete with each other for tax revenues, it provides a mechanism for fair allocation of taxing jurisdiction among nation states ..
c. Section 108 of the IT Ordinance, deals with the powers of the Commissioner Inland Revenue with regards to the determination of the arm's length value of any transaction between associates. In order to determine the arm's length result of any such transaction, the Income Tax Rules, 2002 state that the following methods may be applied by the Commissioner. These methods are identical to the methods available under the OECD Guidelines:-
i. The Comparable Uncontrolled Price Method (CUP)
The price quoted for a transaction between uncontrolled parties on similar terms and conditions wiU be considered.
ii. The Resale Price Method
Difference in the resale gross margin of the two transactions would be considered and compared for determining whether the transaction between controlled parties is on arm's length basis or not.
iii. The Cost Plus Method
Page 12 of 14
The cost plus markup realized in an uncontrolled transaction will be considered as a basis to determine whether a similar transaction between controlled parties is on arm's length basis or not.
iv. The Profit Split Method
Where group of associates is formed and the transactions are so interrelated that a separate basis is not possible to identify the arm's length results for a similar transaction between uncontrolled persons, the profit sharing basis agreed between independent persons forming an association would be considered.
It should be noted that between clauses (a), (b) and {c), the method that, having regard to all the facts and circumstances, provides the most reliable measure of arm's length result as in the opinion of the Commissioner shall be applled. The method in clause (d) shall apply only where the methods in clauses (a), (b) and (c) cannot reliably be applied.
Pakistan has concluded around 63 income tax treaties which contain an article which resembles Article 9 OECD Model Tax Convention on "Associated Enterprises." Over 60 governments have adopted transfer pricing rules. Transfer pricing rules in most countries are based on the "arm's length principle" - that is to establish transfer prices based on analysis of pricing in comparable transactions between two or more unrelated parties dealing at arm's length. The OECD has published guidelines based on the arm's length principle, which are followed, in whole or in part., by many of its member countries in adopting rules.
However, in Pakistan it is observed that the above provisions of income tax law and Custom's valuation method have not provided significant results in this regard.
The committee therefore recommend that trained team of Revenue Officer should be deployed at income tax and custom offices to carefully examine and ensure that MNEs to value cross-border transfers between related party firms by applying the arm's length standard (ALS), on tangible products and intangible assets resulting in the universally recognized method for the fair allocation of profits across borders between related parties, In respect of manufacturer, distributor and setvice provider.
f. The discretionary powers extended to tax authorities in Income Tax Ordinance, 2001 through continuous amendments in the Ordinance should be removed to bring the Ordinance In its original form and objectivity when introduced in 2002;
g. IT system of PARAL should be enabled to capture all purchase and business transaction by taxpayers, we should honestly and carefully examine whether the existing system or the system in its refined form is providing the desired results or would be capable to provide the desired results;
Page 13 of 14
h. Collect data of stock exchange transactions and enquire the source of investment, without fear of fall of market;
i. Deverop capacity of FBR to check under invoicing while improving this capacity, 3rd party may be used.
j. Denomination of highest money bill (note) be reduced to Rs. 1,000 instead of Rs. 5,000.
k. FBR be given powers to perform forensic audit of taxpayers where fraud in payment of government revenue is detected and proved.
Page 14 of 14
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2)
3)
4)
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7)
8)
9)
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11)
12)
List of Members of Prevention Committee on Tax Evasion
Rear Admiral Saeed Ahmed Sargana President Dy Chairman NAB
Ms .. Aiiya Rashid Vice President DG (A&P)
Syed .Adil Gilani Member Consultant TIP
Mr. Sohail Ahmed Member Ex-Chairman FBR
Mr. Badar-ud-Ofn Member Chief Sales Tax I FE (Policy) FBR
Or. Saeed Ahmed Member Director (AC & MFD) I Rep: of State Bank of Pakistan
Syed Asad Mashadi Member Representative of FPCCI
Mr. Rashid Ibrahim Member FCA Representative of I CAP
Mr. Munawar Hussain Shaikh Member President PTBA
Mr. Abdul Hafeez Khan Member Director Ops NAB HQ
Mr. Shumayl AzJz Member ADPGA NAB
Mr. Muhammad Tahir Secretary Addl. Dir (A&P) NAB
Annex-A
-
I !: !'
GOVERNMENT OF PAKISTAN NATIONAL ACCOUNTABILITY BUREAU
ATTA TURK AVENUE, G-5/2
Awareness & Prevention Division
Subject: Prevention Committee on FBR
No. 3-2(1 )(46)S-I/MW-IIINAB HQ/14/CVc/17;7' .;).. 7 February, 2015
Further to this Bureau letter of even number dated 191h February 2015 on the subject
cited above, the first meeting is scheduled on 16th March, 2015 at 1030 hrs at Conference
Room, NAB(HQ). Deputy Chairman NAB being President of the subject committee wfll chair
the meeting. All members are requested to kindly make it convenient to attend the meeting
along with suggestions and written proposals on the mandate of the subject committee.
2. Some suggestions related to the subject Committee have been prepared by Syed Adil
Gillani, Consultant PMIC/ Member which are enclosed herewith for perusal and further
suggestions and proposals by your good self.
3. Kindly forward your written proposals, suggestions and any other n
101, March 2015 for perusal of the President Prevention Committee, please.
. (MJm:d Tahir)
Distribution: a. Chairman, Federal Board of Revenue, Islamabad. b. Governor, State Bank of Pakistan, K:arachi.
Additional Director (A&P) NAB HQ Secretary Prevention Committee
cJ/ · Syed Adil Gillanl, Advisor, Transparency International Pakistan, Karachi d. Mr. Sohail Ahmed, Ex-Chairman, 239-FF, St.# 6, Phase-IV, DHA, Lahore. (Member of
the Committee). e. Mian Muhammad !dress, President, FPCCI, Karachi. f. • Mr. Munawar Hussain Sheikh, president, All Pakistan Tax Bar Association (APTBA),
Room No. 509, 5th Floor, Progressive Square, Plot 11-A, Block-6 PECHS, Shahra-eFaisal, Near Hotel Faran, Karachi.
g. President, Institute of Chartered Accountant of Pakistan (!CAP), G-10/4, Mauve Area, 191amabad.
Copy for information to: a. SPS to Deputy Chairman, NAB HQ, (President of the Committee). b. APS to Director General (A&P), NAB HQ c. SPS to Director General (Ops), NAB HQ. d. PS to PGA, .NAB HQ.
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. ' ','\tr&'f\ H~t,\~ir $t~n 'w,proviCI~.il·rO\lgll.'fle~~~ ¢.C:ilm1lialle#kage in eollcttio'rt of·FBR .. ~~!\;~"~1~ .. ~~~, ... ~. ,"•·: ~.1 ''tV ~~ ,· • · · ' rev~rnue .. (' · · '., · . · , ·, ., : . .,., . . · . . . .
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T~1e ~·l;J?t~H~~. ·.~' ··~yi~5·Jnforhie.d t,¥! ~ublk is p~ying kl:<is •. ~uttbe busfuessmeJ1 are npt t\llly depos~ting"·tl,ie•'. . .... "*~)u¥-ln tl1!asiJcy;.
:.:.:::,;•;.'·'··:.· )',\··,:;.:F_·: ·: ·. . · .. · ... ·.. . ·.· . . . .··. . .. TJP:~i(~::;be¢*•1U,ifp\'1'l\~(i -that dtle to th;e malice of Hying· invoices, the .o~T adjusunents .a.re l))?~\f.Yt,9\:i:f~.~~ tJqc~iit~ems. _ · --- · ~·.· ... _i~ ..... -r~>·~~:··~-->:;/.3·.<"-._. . .. ·. ....... . _· · .. _ ··. ·. ·.. _ . . ~~t~;g:~e*~!~:#~::~~~~~t . ,.hX ;tll~J;}l.l.~.r J'l.!stic~.":?fP~~a,;tl"/~~ \>lh,aC _m.ca~ure .~,Ollld .b,e take11. to. .. pl98•Jhi~!JN~¢!t*~t~~#'~·'J;.~~· ~Q.yl$o.T:J: Pi@_S.®\ sta:tee}·tttntWtt:t<' p§l iti4al W1ll oft he govc~ienr · a~~~Ph:~r~iji~·~·g · ·:'.~"~JM~t;: ·~.e, .. ~91lP11t.e;: f9r ~~6 r~y~J* · ~~~.:~~~1 o:t ze-~3 · .,:.9f~f4nce ·~lil$t ~9tri,lg}!en:;~~~M . :.~It~:b'y 'J'l) ;ga)9~ttirt .. J\h~· tJ~.tit'•tllit$,cJl~#Je . ~v.m c~~\ll~Q the TUX: qDP hl~i9:J9.';l~~~~fi . ~h~,~~: to_ Mo~:~i!i' ~n~ year. Th~ . ChiefJusiice 'of Pakistan directed n J>a~ist~n~ti,fpt¢p~p. ·*:-p(bposals fintl:s~bttdt it ii1 the 'ap~x court on 30t11 October 2013.
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Th~ pq~J??~~J·i~~3s1~,9i~f~~~4 Qri::39•·l~:;iq.t~~::~V~!oh needs toQ~· Jinplen1~11te~tin. totQ. ~nd wHl g~\\~rl.Hii.'(~PPi:i?~~~j)*,~~Ji' ~.c!.~Un<>.na! .R~ 2,QQO b.i!Ho~~ 1ax .. Tl~c jJJo,¢!!,q~.r41 lacunas if ne~ds ~ •. a,ddr~#9d .. ·\~ithi.ri ~ll.oit •litu~. ~Kuuox~A. Loss of one d!ly niay i.cs~.lt toss .of Rs 6 ·biJlmu. revehti~: ,, ~::. ·. :: ';;,·:·.ti'' .. , •.•. : .. :,:··. . . . . . ' . . . . . .·· ;. . . : . . • .
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· '(~~~·gr!'?~ .. ~!~~~;~~!¥)'~~~~~~~ .. t~~ t~.e' .ti.Ji?1i,c!late.,n;ensure to.~x.riinine: ~1pleme,:;ntio~.·or,th1~· · s.eh~fP~~~ a,s;;~h.~:~~~fl:?~~1:J'~Il·.~~Y ~~'~9:,bt!Hrort addi~onn( ~even~e ~!' t~~n~· aouon on·ti~e. Tl . ~a-~ts~ll ~~.m~,;,.;~:f.#.~'tij,ck .~c_~I9J1~ :~% needt;ld ~o ~ct upon lh!s scheme,. hl.·th~· •1a~!?1,1lll llltC~;Stl ; . . . . . :+ .· 1T.~~klstrln iS;~~,~~ to JJ~v~ Rt1ie of Law in Pakistan, which is the only wny to eliminate com.:~pliOii and h.aYe.:good, govei-riance in' country. ,,
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1/ L Ol:lt s(i.u'f¢ihg~6fthe valuaiioi1 ofirnports, to third party to be 11dopted. ' . .
· z. 'F~1lo\V~}$:~ecoifu.n:end~ions qff'l'O;( Dr. Muhamniad. SApai~ ~~ddle) Commlssloli:Report of 1.0 Jamliacy 201 h o.n page 68• shall be implemented .
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l\,rcpi~c~$J~g()ti~9lt~~g-g~!giti¢er~~I?~tt?.q;-_r,~~vyer~;,;~l}9~tly t~kes their W¢$.JnCash from:J?rlvat~·periO'n~;·'tiridin'O'tt,ofih~{titbc~ve.n.frotribus:in~si~iel'i/corripanics.
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. FBJ.(~.~b~i~i~·~~yi®.·.n1ecMtti.S.¥'to;inopi'tor:Ulese: pr~fesslonal. to C(.)Uect rdil ta;x.
~~ f$~~i.::~#~ttti\~whoJ~~~$li~psltll).ts) :ate: valv~Ci: a~ E8I{ q¢iemtitJed 'r;ollectc)r'~ r.ate~ j 'W.hicll'l~ ipqt~;yeD:~ tO$. ,o'fth~ re~l m~r:~et :vWijet Oov~1Jlme,1tl¢vie~ in ~-~~J~~~i~~~~:tth~ AA~~/)irtflii -~;u1g~: of;3; .t4· ij %,_ dep~liding· ~onj ptt,vi;J.ce ~0 PfOY~OQ. Blnc¥-!!l'9~,~J~'~q~ijt~14lnt~~~fQ[lfl~ 'ge~~.in~.sellet, ::l1nd. cof!~p.tioq· ~1id t~~. ~wade4 mqi:I~Y.l~J~v.~~ed · ln the r~~~ estate. This is a state 1.,1-enerated black c~oncmysy5tenl.
:1:ij~:.,Q~~~~-ij~~~t}.~t!~~ ;iil: r~~!ftg~lo~,df ~11~ ·-~ate;s hal.Lt~erci~w:,bc· ~e9 u9ed. ~~ O .• s~~ _ , l.~.r;~\~~rt:~ -~l'~'~.t\a~ ~-~,q~.~V:~l.lu~~:~~P:w~o~ o,f):op~f!Y• El'~.l~ shnl!: ~e:~ro~e~ t?:JWt,Jl¥i· ,,, Jt~~~q~t:the:;pfiC,~ \?~ ~v~u:;lJ,. ~eller l~ reg1stenqg the ~saJe. By ta~mg.#tJs nt~U~~f~~: '· < .• \Vij:{) ~1\~prq;v!o.ginl:rivet\\l:C \iJitl incr~~SC>. Oi1d the black Jrioriey hide· (:)Wf':fii ·,~Sti\t~,:-.:vtu.~::~_uhiinatea: · · ·
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' 3 •. ~f.lt¢::~R~U::~r; d¢lat¢'t~ N.~ i.tt;Ulibe.r; ~!.ld. aU ~iti~en sht~ll b.eJu~cf" to file IT ··· -·--·-- -··--· ... R~!Pt111:;§y~~.;~t ~~~(,9 jri~oJ~~;;~Bi;t s'Q_41l facilitate th.os~ ,.Jbo cari no~ ft le lT f~etums alI·
o,ve~ ~?~~~g~.~n S.".l~ p\i~h~~~ 1rt~~it.!9n$ ~bqye .~~ l 0.000 ~hglJ be m~.de throus1) <;;f9s:$):~l)~ucs~ .· 41l4 :p:Q R; <H?o.rtk\J shill he rnade effective to ro gister alltransltlons 111 Pakls~4ii;. · .
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•
Nt\.P,.RA ~'ll.I:\Y:~~entt4$~~~t# pr,f~:p~re;s~ftware fur. PBR tor .~~~s 2.YD~9.~<:, .wi lh in a define~fii&fioy}§~y 3)11i'&1ibi~~:·· · · ·· · · · ··-- -
4. -~Iti;i~;ct4t;iWWP~~4:~ (.al·~-~~~J~t it.i~-:~·S'W to ~%) shall• bl}'l~ladeJ1na1, on all .Profe~slq'i:;ili~·hitd·.-coqttac.toW,.:~uppHcrs> · . · · .··· ,
,<~ ·<····.~· ... ,'<·.·<.·; ':.- · ... ·' ··.·.···.;.,., .. ::<.'./• .· ,. ·. : . . '·.·. '·.··" 1"'~~W~~~~-~~~~~}~~t~::AF~ty.~9:f!'W.~ -~Y~~\pn"'~:fa cr.~me_~~at~s,~ ·~w~s,and
· _porjJ-$.litn;.n$.$.&~'MY1f!:~e~·tly. %!Utl!f WltlUH 4 defined pcnod; sa.y 90 days.
- - .. .· :: ~ -~~t4:ttw~i.~~ iw~~; · . .·· . ~:~;~ I:9,Uliol}, :\Y!~,t~f~i-~~¢t:~~y~z;.ifi~P~ . ~:·r~- · . · .. i;~f~u. ~cQW!i~~l~~~Rf~~~~G~!iif:~~~r~
·.· ;:~:~1.'';.:~::--~··!l:•_;'~':.,\7:.~•.:;l·~.: ,"f,'•'·'·:·:., ··',' .···'" .' ,•·'-<_;.j .. l~(c1 ,, •. ~.·:· - .. • . . '· _ :, .•" : .... , ,· ,
·•·.· ',
. . ' . . .
. As ,qp;;~~l,igf~ftt'~~h-~t~g§tl)t:~Y~ra~rJ~~.!~tl~s J~ ~-P.~W~l9.)n~jor s11Jl.re ts palQ liirq~~9W~i.9Sttheilf~,:\if'.s~te~.t.a~p,a14'9Ji;QI~cp~#.Vlo~ ~Fii~~; _ . . · ·. .· The adjusf41ents of~(esJaX~a19:ntpt~·y.iou#Utgeat~ all~rwed this is the.l)'lajPJ- . sot1rc.e•Porl'\.igtiop;1l~~.t~,l~tlqit is.,t?;~#iSI)i~h9. ,~grr~~~t, o.(~djustm(!t~t.Sfte.t\!ji<:f· b.Y ·~PP.~~~il1P~!~i~~~~,p.1~~:g.f:M.~~~~.~~M~~l~:~.v~ry.. ~~~;\1i~~~~n~ ·nqi~~t Ire~~ fp)nl pre,VJ9,tW,$t~~e.v:fN~·.W~.~J; t~P.49e~-9.1TUP.~.~qf.i tg· ,nt~j~~l·l~~(s .. ~~ 0 .s.~ IS,% s.ales 1a."< at-. , ~Y.~~:~t~:~.~~~~l'l'a\t~;·n~ill_c~p,.HY.e.f9'r sat~ :t~ ¢vusion . . . . . .
T.~~··;:~~~b~~fi~~~l.it$Mv.~i;~$#',A~t9 ~t#~JM~~~ny·_~ f:~11d ·• )Y~n P~'?9m~ non ;~,t_:l{;lc{t8~~'iQH.~:~)I_s~n~·IULtSt~·b¢1~npo~edg~thfot mdustry ~tnd unporters;
r{~~'*:~~~~;~~I,~&y9c;a~l~~P?li~y qfN.9_Rgr~tJNDS NO ADJUSTMENTS ·total·asr·, .Ie~t<~g&s. by. Traudsteva~loas; .\~JHr btistopped.
'1W~;-~f~~J~~(-_b'ifll<ri~.JJsc.oiiift G~Tili;u\Vat ~a ~~Paid Curd ·' ' ' • ; ,. ,\- .. c • ··:.'. ~.( ; ' • ' ' . : •
· Prcp~,f~:¢.~~~ ~~e~ml~fphoil:tni~4 ~r9vtder~( lnt.ernet :and cor.dt~ssphone.
~.i~1,~1:_9t~·; ~i'·;~;~V#tJ~--~; ,~;i{~£~41;; .. ~~:-~~~~K t>t ~t~: tu~.:~9t ().~1- .-~~ll¢:,Slip~~K 9~:" 1 Pt~~q~,~}- ·-,,~, ~#~t.r~tl~r t!ie·t~.(lderlytug goqds or serv~e:s to wh1ch 1t :catties an enlJtl~m , ... :·' •.. ~~q1oill,f-H:Ietaxer;!, ··-
'rlle. -;ci~iibl~J~i~-~ti~tJor,·t'lie$upply ¢fgq¢ds or services should' betpes~rn patd:!)y the. P-!~~} P~.ir~hP~.erli.~lrig tl!e. pr:o. p~:id .S!ll'P• · ·
. .
ohn't't ·. "~t .. p~~. _·[$,
.·. an~: (c) 1fitOu.tJt~on¢ acc~o(lnltlru~e:re~~· a,c~::out:rt.·
. t~x.~~({fd.~.~~t$f&cHt;9.h .· · · s~vie~ :Provr~~ :¢"'Il~er,
A . . p~lJ4fal' .. ,Phpn,e 9Pmu~~~~? ·'<,ind }lJ.J~filC~ Pooyid~r . C.ompanie.s sl)n,U p~ :qr:tl~~. ('{\yl~lJi P:~Y~ri:~t\r. 'O:f.th~ PSPO· cbar~es) of printing with g~PC. tor · :#ovi4~1~itnt/~tlj?p~ . ,:9£' prep . paJ4 ,cards of Varlous .. denolriluators ' wlth print<:d
:?~.~~r~,1,}%.f~f'~~Kf'~~;.~~;~t~e,ci.tt~e,golnraht~s~ . . . .. . . .. . . . . ~··~·;·!~i~Rl~(~;~e~~'fi~:: ¥r~ti~.Ul~ yi:>.WCIF~f~9n .'l>y.T ~1d;V(l11 Prillt th~ .Pre 'P~!d·b~ds, .)~l1ttJ~'·r~~!,~~-~·Wfl'r 'W-.a ~g~~~~~$1: :e:ntd:1' w~~acb <:~d. .
~;:q#Jt~·i.~~-(·~.~9.1\~. :9A~P~~ies: .. "nt1~,:,tot~et Pr?Yi~er_ . _G,o~~u~e~. ~"l!I. ~epo~t. IJ\.~.~.tptfll:W¥r?.~t:~.f.G:SX~an~ )V1'If Jtl fB~ a~c;ount !l; ·NBP) n~4 f.lY?~J.d~ ¢e ~iii· vq~~h~r~ i.!ertified hy·FBR ~ti@ P.RAL System, to PSPC and. oo1leot the; pte-;~laid. cams}; . , . . ' . ' .
6~ _, ·. :as,,OS!f.dn.~~r,vi~es_lsa-pr.oYl:ficial. ta,;:; eardS '<viU. ~e prtit_ted~eJ?ar.ately"wi~· Mm¢-·~fptc~V.Ini::~/fe'derul,l~rdt,p~;y.for.sale.l!J. Pl.lru® .. Sindh. KPK,:-Ba{u~hi$tll4.~ F:¢M:~,iJ J~rr~t9i:y;' "this: wilt -4:!~~-~ ~~li$C~idng: OST . to th~ iesp~ctlvc;pfbvihce$c c.o!lcr'i*'dl!>r:lia~.: • • · N9t.~:/rh~ pdJi~i.Qg p,f ~re, .. P~i(i Car4s • sug~~~ted only at the· Pn~Istzm S'e~uiity fii.nt;i)lg ¢ciitlQi~th)ll PVT Ltd, (luc; to s~oi1ri~ rci!Scns,_ to ellriiinZ~tl': fraudi.d~i\t dot:>lf~tie>~ ~(~i:~·: l?~·rd Caras .. ·In f;~qr seou:rlty re~i p~ovid.ed for ·c~.rrenoy ·uotes p#rttiiw:i.s rci.qqix~d. ·:t:(;r¢Jimirinte pos~ibitf~ ofcfuplicai~ cards. · · ·
. '
'·,:...: .l
~~·~:.~~.9,11.~~~~!!l.·.~~..:.!'!l••k.t!!:)!. .... r...\~'~"·. while tptal stuck ·up. amount qfthe federal Board •. ~ • .--.. ~ '"·' "'··~·~Rs22S billion in cliftereot·coill1s including the
·· tribunals of the country .
Mca;sut:~s:tccom.an~ntlcd. '
~ lll#~e ofapp®}~ lltrgatii'Jit ti:g<l:i~ FBR assessments , Nadomil Saving Certificates shall be depoSited:·b.yili~ litlgnnt, in the court.
b.ln..~as¢ t!+e'CP?ltPVe®hl,S: t.h~ fl)Ra~essment, strict admhli~tr.<ltjve ~ctlonshall .~k ~~-.~~iQ,li,~·l¥· .Pt¥~e~· P~:F.I,llt f~~timwsingwro~~ 1ax. Tlll~.~~p.wt~:~.g~~~ ti:te;:~~~~~t ( fl)r ta~m~.ptibe.Yntregedro be tlienialn purpo,s¢ ofniltldng the:'flii&C·
· n~:SQ.Ssl\tenl'S by F:SR, QiliC¢r$ • . , __ : .
-~''> ... ·.· ... e:fo~cus~otllq~es,,rm~ .p~l\:Y~.9,rs.~ot-.p~y tl,le;~es. n()rm~ any~ppeal; .· · Q1er . t~e,d gqods. shaUb·~nuc:tione.dwt~llm l w<:ektune, after-expu.y oftbettllowed . Ji~#tr~'~ ~Y.. . . .. ·. . . . .
'd:lh: .ell.~ ofany FBR~ tax d\!faults. c:<itiris shall announce judgmeots within 90. day~
•·: . ·~f~'.,~~~Jan :~:~ttiVjn~ ti> have R11!~ .of Law in Pak~srnn, which is the· only wny to eHromat~ .~9rt~P.Fiqrf~~;;tj~:ve good govemunc;e in couMry. ·
.. . '', j;. :·: ··.'' ~;~y.: ,- 1 ,. ·' •
. r
GOVERNMENT OF PAKISTAN NATIONAL ACCOUNTABILITY BUREAU
ATTA TURK AVENUE, G-5/2 ISLAMABAD
To Syed Adil Gillani Advisor
No. 3-2(1 )(46}S-1/MN-II/NAB HQ/14/CVC /J !' f l "'\. ~ebruary 2015
Transparency International Pakistan Karachi.
Subject: Nomination of Representative for Prevention Committee on FBR
You are well aware of the fact that significantly large number of economic activities are not reported to formal economy in Pakistan and thus remain out of the tax net. The existence of a large underground economy results in high tax rates, reduction in government services, unfair competition and uneven playing field for honest business. Tax evasion is a significant determinant of underground economy largely due to the loopholes in tax policy. Our country is rampant with tax evasion and citizens have been living tax free for many decades. It is the need of the hour to bring reformation in the Tax system of the country.
2. Keeping the above in view, a Prevention Committee under the mandate of Section 33C of National Accountability Ordinance 1999 has been constituted by Chairman NAB to prepare and finalize recommendations I measures, to stop leakages and evasion of billion of rupees in taxes.
3 Chairman NAB has nominated you as member of the Prevention Committee to play your role as an active member of the Committee and being a part of the team for introducing reforms in the Taxation regime in the country.
4. You are requested to accept this challenging assignment for creating a better tax structure in the country .
5 Time and schedule of the meeting will be communicated later on, please.
Encl: Copy of Notification of Prevention Committee
Gopy to: AD(Coord) Chairman Sectt.
(Aiiya Rashid) Director General (A&P)
NAB HQ
I
National Accountability Bureau Attaturk Avenue, G-5/2,
Islamabad
--
No. 3-2(1)(46)8-1/MW-11/NAB HQ /2014/CVC _g_ February, 2015
NOTIFICATION
Prevention Committee to Identify Loopholes in the Taxation Rules. Regulations &
Procedures of FBR- Recommend Measures to plug the heavy leakages caused
through Corrupt Practices
ft I hereby constitute the following committee under section 33-C and Sec 2l of NAO with the
composition and mandate as under:-
''
a. Composition of the Committee
(1) President Deputy Chairman NAB
(2) Vice President DG (A&P), NAB HQ
(3) Members
( 4) Secretary
Mr. Sohail Ahmed, Ex-Chairman, FBR
Member (Tax Policy), FBR
Syed Adil Gillani - Consultant PMIC
Nominee of Governor State Bank of Pakistan
Nominee of President FPCCI
Nominee of ICAP
Nominee of APTBA
Legal Consultant as nominated by PGA NAB
Director (Ops), NAB HQ
Additional Director (A&P Division)
Page 1 of2
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b. Mandate
(1) Focus on the loopholes of those laws, rules, regulations and procedures of
taxation which are misused and give rise to corruption and corrupt practices.
Systemic weaknesses have to be identified to recommend proposed
measures for stopping leakages and evasion of government revenue.
(2) Tile Committee may refer observations of glaring corrupt practices and the
incidents of corruption to tile enforcement Division NAB.
(3) Committee to submit completion report to Chairman NAB in form of
recommendations formulated for consideration and execution by FBR and
relevant departments.
2. The committee is authorized to seek full and complete assistance for all or any
documents and information relevant to the subject matter from any department, Federa~ Govt.,
Provincial Govt., financial Institution, Person or Authority as enunciated in NAO Sec 27.
3. The committee to complete the proceedings in 180 days and recommendations be
put up to Chairman NAB. The implementation committee under NAO 33-c(e) may later on be
formed.
Page 2 of2
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