KARACHI: The Federal Board of Revenue (FBR) has admitted its failure to check frauds through fake and flying invoices and elimination of corruption within the department.
Raza Baqir, Member Inland Revenue, admitted the inability of the revenue body at a meeting with members of the Karachi Chamber of Commerce and Industry (KCCI), a statement issued by the chamber said on Wednesday.
“Fake and flying invoices and corruption cannot be eliminated as the FBR lacks the capacity to stop or eliminate frauds,” Baqir said.
He said that the refunds were on the higher side than collection, which points out to loopholes in the system and indulgence of some FBR officials in corruption.
The meeting discussed the recently issued statutory regulatory orders (SROs). The business leaders expressed concerns over the SROs, saying those were issued unilaterally by the FBR, keeping the genuine stakeholders in isolation and taking on board only a few non-representatives with whom the FBR officials meet at their homes at luncheon meetings and make decisions.
Baqir refused any immediate changes in the SROs, however, he said that the KCCI proposals would be taken up in the upcoming budget.
The Member IR said that if trade bodies take the responsibility and verify genuine cases, the revenue body can release refund claims and relevant system can be installed at the KCCI.
The tax-to-GDP ratio is very low; of 180 million population, the taxpayers’ percentage is only 0.7 percent, he said, adding that 25 percent revenue is collected from taxes levied on petroleum products.
Baqir said that 50 percent of exports were from the textile sector, which is zero-rated. There are 130 to 140 items falling under zero-rated regime, he said.
The FBR has collected data of six million tax evaders to whom notices will be served and the names will be made public under “Name and shame programme” if they don’t pay the minimum taxes under the amnesty scheme.
The FBR has no other choice but to give amnesty and the department does not hold the capacity to handle new six million taxpayers, he said.
Haroon Agar, president of the KCCI, said that the business community has rejected the controversial SROs 212(I)/2013, 154(I)/2013 and 98(I)/2013 and strongly believed that the revenue body may have some ulterior motives behind such anti-business move, which like in the past, would increase fraudulent business practices, providing an opportunity to the unscrupulous elements to enjoy edge over the genuine businesspersons.
The FBR has recently issued an SRO to provide amnesty to such fraudulent elements, allowing them to pay two percent sales tax instead of five percent as levied under the previous SRO, he said.
The discriminatory SROs being issued one after another tantamount to adding up further to the sufferings and multiple threats already faced by the business community in this city, Agar said.
He demanded to rescind the SROs and immediately consult all the stakeholders. “Sweeping changes in the taxation policy and rules through the number aforementioned and other SROs have caused a negative impact on business and industrial activities due to higher rates of sales tax and assigning the role of withholding agent to exporters, importers, suppliers and processors,” he added.