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CBR warns traders of action against tax non-payment

KARACHI (August 27 2005): Central Board of Revenue (CBR) Chairman Mohammed Abdullah Yousuf has warned traders, industrialists and corporate sector to start paying taxes voluntarily otherwise the government would take appropriate action.

Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Friday, he noted that there was a vide gap between the number of taxpayers and number of registered firms, traders and companies.

He said that the government had made reforms in economic policies, tax collecting procedure and reduced number of taxes but response of the business community was not positive in terms of tax payment.

He said that the government had gone out of its way to facilitate the business community and restore their confidence but the response of the business community was extremely poor and they were not coming forward to own their responsibilities.

He noted that there are 3 million traders in the country, but only 38,000 filed tax returns, and added that this situation would require some action on the part of CBR.

The CBR Chairman advised the chambers and trade bodies in the country to join hands with tax officials and pursue those who had not filed tax returns or paid taxes to clear their liabilities honestly.

Abdullah said that there are 1.2 million tax payers in the country, out of which 0.6 million belong to salaried class and 12,000 to 13,000 belong to corporate sector.

He said that there are 45,000 registered companies, out of which only 13,000 had filed returns. Out of these 13,000 companies, 3,000 showed losses and another 3000 showed no profit.

He said that out of total revenue collection of Rs 590 billion, the contribution of private sector was only Rs 8 billion.

He said that 9 percent tax-GDP ratio is the lowest. “Though we increased revenue collection from Rs 530 billion to Rs 590 billion but the tax-GDP ratio dropped. Agriculture sector contribution in this regard is almost nil, whereas manufacturing and services sectors performed well.”

Regarding wholesalers and retailers, he said that they contributed 16 percent to the GDP but their contribution to tax was less than 2 percent. Likewise, transport and communication share in GDP was 12 percent, but they contributed less than 2 percent in taxes.

He said that the government has brought five major sectors of export-oriented industry in zero rated regime.

He said that out of Rs 5 billion refund in 2004-05 these 5 sectors own 90 percent share. Making these five sectors zero rated would reduce the work load of the department and the hectic efforts of the business community to get refund etc.

He assured the business community that the government would soon facilitate accordingly the remaining 10 percent.

He said that tax imposed on withdrawal of more than Rs 25,000 cheques would not be withdrawn.

He said that SRO 410 was being misused and it is not meant for fabrics. The SRO was for only accessories. “We are going to amend the SRO,” he added.

About delay in refunds, he said that before the announcement of the 2005-06 budget, the business community had filed around Rs 12 billion refund claims instead of Rs 4 billion.

He said that the department was verifying each and every claim, and added that only those would be paid whose claims are verified and found true.

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