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System for tracing new units proposed

ISLAMABAD (September 09 2003) : To trace new taxpayers and enhance GST collection, foreign consultant Maxwell Stamps has proposed 'Sales Tax Information System' for effective registration, targeted audit, increased compliance by taxpayers and use of industrial units profiles for hunting other un-registered persons of same sectors.

Sources said here on Monday that the Central Board of Revenue (CBR) has received proposal of tax consultant pertaining to up-gradation of existing databank containing tax profiles and taxpayer data on sales tax.

The new mechanism would revamp the whole sales tax process starting from registration, submission of returns, reconciliation of unit accounts (sales/purchases), risk-based and system analysed targeted audit, refund, enforcement, appeal/legal proceedings and adjudication.

In this connection, tax managers are studying the feasibility of the proposal, taking into account business environment and tax culture in Pakistan.

Excluding persons registered under survey or voluntary registration, the CBR will devise a system to register taxpayers using transaction information made available at the end of each audit. The system would also rely upon the information from other sources like sales tax returns, customs and direct taxes.

To effectively manage both internal/external risks and select units for post-audits and enhance sales tax net, the consultant has suggested that the auditors would collect and feed 'aggregated purchase information' into the system against each registered and unregistered unit.

This would include name, address, registration number (if any) and total amount of purchase in the month.

The system, using above registration, return and audit information, will develop a unit profile and transaction account register to (a) compare it with other similar units within a geographical area, (b) analyse the monthly transaction (sales vs purchase ratio) and (c) reconcile purchase information against returns submitted by registered firms to determine anomalies for possible audit(s) and register unregistered units.

It will also provide modules to enter, retrieve and track audit findings, appeal and adjudication information.

Moreover, the system will be used to produce most pre-formatted standard communications to taxpayers, such as notices, and will track taxpayer compliance, prompting tax authorities for next action.

The system will also be used for audit and enforcement resource allocation and will replace manual audit, enforcement and adjudication for low revenue compliance/impact units.

It is proposed that all relevant sections of Collectorate of Sales Tax should be connected so that all concerned officials should simultaneously have access to the data.

The system will also require offline access to the central system located at the CBR to post or retrieve unit profile information to and from other restricted users such as Collectorates, Direct Taxes and Customs.

The effective targeting of taxpayers for post-audit based risk analysis will require a minimum level of information on all taxpayers.

The said information would be supplied from the information bank of each sales tax unit and start with registration.

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