Revenue Board to share profiling parameters for various types of registered taxpayers

KARACHI (May 25 2003) : The Central Board of Revenue (CBR) will share profiling parameters for different types of registered taxpayers on the basis of which they are subjected to more than one audit in a year with the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

The decision was taken at the last meeting of the committee on irritants of sales tax (ST) held in the Federation House here in the late last month where Chairman of the committee had assured the participants of co-operation with a view to resolving the issues.

He was optimistic about the deliberations of the committee and expected that the committee would come up with the concrete ideas to remove the irritants of sales tax (ST).

While discussing the issue representatives of the FPCCI had opined that the rate of ST was very high in Pakistan and should be reduced.

The committee was, however, informed that current rate of sales tax in Pakistan is lower than that prevalent in many countries including some EU countries.

It was decided that lowering of sales tax rate, being outside the purview of the committee, may be taken up by FPCCI separately with the Central Board of Revenue.

The representatives of FPCCI pointed out that audit parameters were framed in a tripartite agreement, which should not be modified unilaterally by the Central Board of Revenue.

They, however, conceded that fraudulent cases are not covered under the tripartite agreement and department can always take action against those who commit frauds or indulge in tax evasion.

The committee agreed that tripartite agreement between Auditor General, CBR and FPCCI for conducting audit of a taxpayer once a year should be strictly adhered to.

However, the cases of fraud, tax evasion and DRRA will not be covered and collectors will take action against tax frauds and tax evasion cases according to the provisions of the Sales Tax Act.

With regard to Section 73 of Sales Tax Act in respect of time limit, the committee agreed to adopt the decision of the previous meeting where it was decided that a proposal for substitution of Section 73 will be considered in the budget.

The committee was further informed that the CBR would restrict to the amount of sales tax, which has been transacted through banks.

On the question that there should be no restriction for receipt of sales proceeds in foreign exchange from the country, to which goods have been exported, the committee was informed that condition of transfer of payment from the country of destination of shipment was only for those who indulge in transit trade.

Exports which are covered by L/C or for which sales proceeds are remitted from head office/regional office of the buyers (having multiple offices in various countries), will be treated as if received from the country to which the goods had been exported.

Discussing the agenda item that refund of 50 percent of sales tax on gold category be released within 72 hours and the rest within 15 days, the committee was informed that with the implementation of STARR system, the refund payment has already accelerated substantially.

Now the 1st instalment is generally being paid within seven days and the remaining 50 percent portion of refund to the manufacturer cum exporters is being paid within the period prescribed in the refund rules.

CBR is striving to reduce even this time limit to the minimum level in the near future.

After some time when more reliable data gets available with the STARR system, it will be possible for CBR to allow refund even in one go instead of breaking it into 1st and 2nd instalment.

The representatives of trade and industry openly appreciated that with the introduction of STARR system the refund payments have become faster and as such they do believe in the intentions of CBR as expressed by the Chairman of the committee.

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