ISLAMABAD (July 28 2004): In a major move to expand the tax net, the Central Board of Revenue (CBR) has sought data of 48,000 companies from the Securities and Exchange Commission of Pakistan (SECP) to identify non-filers of income tax returns in the corporate sector. The CBR has decided to issue notices to non-filers in the corporate sector under Income Tax Ordinance 2001.
The exercise is expected to bring about 20,000 companies in the tax net.
Official sources told Business Recorder here on Tuesday that the tax authorities have record of 18,310 companies whereas only 11,578 filed income tax returns during 'tax year 2003'. However, the tax record of 18,310 companies does not give updated information about the companies whether closed or operative.
SECP has the data of 48,000 registered companies, which have to file return every year. But the data revealed that a large number of companies are neither filing their income tax returns nor obtained national tax numbers (NTN) as only 11,578 companies filed income tax returns in 2003.
The CBR will reconcile the number of SECP registered companies with the NTN database available with the tax authorities to search for new taxpayers.
According to CBR analysis, when a company is registered with the SECP, the corporate watchdog dispatches the monthly report of the company to the income tax department. Thus, out of total companies registered with the SECP, it is not clear how many companies are actually closed which are no more required to file income tax return. Similarly, there are many companies which got registration using different names and carry out business with only one name. Therefore, these companies will not file returns for their registered concerns, which actually do not exist.
Officials said that if the CBR excludes the names of all those companies not required to file returns, even then over 20,000 companies should file their income tax returns. Obviously, there is 100 percent gap between the registered companies, which have NTN numbers and those who are non-filers of income tax returns.
The CBR officials are optimistic that the tax net would expand as a result of this exercise in consultation with the commission