Islamabad:
The federal government has issued new instructions to make the protesting business and decided to gradually prohibit major purchases, would treat cash deposits such as digital transactions and attached the use of enforcement powers with the consent of the complaints’ complaints committee.
The Federal Board of Revenue (FBR) has issued two separate circulars to explain the tax measures introduced in the budget and give effect to the understanding that has been reached with business. The government has tried to tackle the concerns of the traders by softening the harsh provisions of the tax laws in connection with enforcement measures with subordinate legislation.
According to the explanatory circular, the FBR claimed that “the Board of Directors will also ensure that the provisions of enforcement are carried out in a sensible way with depressal committees, consisting of business representatives and the board of directors”.
The merchants closed stores in Lahore and Karachi last month against the government measures, including giving the FBR dationsareting powers in tax fraud cases, enabling it to process half of the cash expenses over RS200,000 as income, insert taxmen into commercial premises and authorize them to randomly reduce the requirements for tax refunds.
The FBR has now changed its attitude towards cash expenses and stated that “when a person, regardless of whether a national tax holder or otherwise deposits the cash against invoices in the seller’s bank account, the payment must be treated as having taken place through the bank channel and no rejection of the expenses will be made in this connection during this clause”.
The explanation through subordinate legislation suggests a significant change in FBR’s previous attitude.
However, FBR added that the cost of rejection of power was aimed at enabling the formal sector to capture more market share compared to the informal sector. It also said that this provision will not apply to agricultural products unless it is sold by middlemen.
This provision also authorizes the Board of Directors to exempt any class of persons subject to conditions and restrictions as it seems appropriate.
While explaining the powers to arrest in tax fraud cases, FBR said the powers and procedure for investigation and investigation in the event of turnover tax fraud and other offenses guaranteeing legal persecution under the Turnover Tax Act has been streamlined.
Quanti for arrest can only be issued after the approval of a committee consisting of three members of the FBR, which the chairman can be communicated, and this is also only in cases where fraud involves amounts of overstent RS50 million. And the nature of fraud falls within the framework of any of the first six under clauses in the clause (37) in section 2, it added.
FBR said the officer can only arrest a person if there is a chance that the defendant can manipulate documents, the defendant may be absconded and the defendant does not help with investigations despite three agreements messages
However, the explanatory circular also emphasized that the Tax Commissioner may be given the subscriber’s information relating to the Internet protocol in connection with any investigation or investigation into tax fraud stock from any ISP, telecommunications companies and Pakistan Telecommunication Authority (PTA).
FBR also said that sufficient protective measures have been introduced and more approvals are required at the study stage as well as stage of study to prevent abuse of the provisions of prosecution.
FBR has also changed the mechanisms it had defined to use artificial intelligence for the purpose of identifying tax evasion by authorizing its officers to reduce the amount of claim for repayment of sales tax. The FBR had taken the authority to set a specific limit for adjusting input tax based on Compliance Risk Management (CRM).
FBR said that now “input restrictions and conditions must not be changed without meaningful consultation with business and trade representatives related to the sector for which such action is intended”.
The explanation implies that if FBR is in doubt about the attempt to avoid taxes by demanding higher refund, it would first consult chambers before making any decision.
Last month, FBR had given nearly 11,000 nudging messages on turnover tax anomalies identified through the CRM system.
FBR also explained its enforcement powers against difficulty tax persons and promoting documentation of the economy. It added that these measures include bar on the operation of bank accounts, bar on the transfer of real estate, sealing business premises, seizure of real estate and appointing a recipient.
“However, these enforcement measures must be carried out in accordance with natural principles of justice and in a sequential way to avoid unnecessary difficulties,” FBR explained.
It also stated that before taking an extreme measure such as freezing bank accounts or business premises, a public consultation announcement will be issued and the consultation will be conducted jointly by a concerned representative of the Chamber of Commerce and Trade and Concered Officer for Inland Revenue.
Such decisions will also be published by location on FBR’s website and newspapers, it added.
