Islamabad:
The Federal Income Board (FBR) has served the notices of ‘pushing’ almost 11,000 companies and individuals, advising them to fix anomalies in their latest sales tax statements or that they are ready for consequences such as sanctions, freezing of bank accounts and sealed companies.
The notices were issued last month in the midst of the negotiations between the business community and the government, which underlines the resolution of the authorities to recover those due to sales and income taxes of individuals and companies.
The president of FBR, Langial Rashid, believes that existing taxpayers are paying much less than their due taxes. It has begun to apply a risk management system to identify lagoons in the tax declarations presented by these entities and individuals in the last five years. The sources said that in the first phase, around 11,000 thrust notices were served by corporate tax offices in Karachi, Lahore and Islamabad. The merchants in Karachi and Lahore also observed a strike last month against the government’s decision to grant arrest powers to the FBR and add half of more than RS200,000 in cash expenses in income tax calculations.
When it was contacted, the FBR said that these “non -intrusive and legally non -binding push warnings” were served to promote behavioral and social changes among taxpayers.
“Correct the anomalies in their sales declaration. His lack of action will be seen as an option of not complying,” he warned the FBR in his notices to companies and individuals in Lahore. The FBR warned that not addressing anomalies and presenting precise returns in the future could lead to financial sanctions, the placement of FBR staff within companies for monitoring and the best trial evaluations by the tax commissioners, which can result in strong fines.
He also advised thousands of people that his bank accounts could freeze and the commercial facilities sealed for breach. Taxpayers were informed that the FBR used advanced data analysis to examine returns and compare them with peer companies and jurisdictions. The analysis was completely automated without human participation. The FBR said that for the fiscal years 2019 to 2024, its system identified anomalies in the yields of 2024. These included unusually high sales claimed as exempt or low categories of reduced rate and low addition of value based on the comparison of sales with purchases.
“To avoid compliance actions, make sure these anomalies do not happen again in subsequent statements and submit the correct statements of sales taxes for the next periods of expiration,” the FBR warned. Jawed Bilwani, president of the Karachi Chamber of Commerce and Industry (Kcci), criticized the FBR decision to comply with the notices during the ongoing conversations. He said that many KCCI members received notices without any prior awareness campaign.
Bilwani also criticized the FBR method to compare the sales patterns of a store with competitors, arguing that sales and additional value depend on brand and quality and are not uniform. “A customer can buy a shoe for RS100 or RS1,000. The FBR has no right to treat both values in the same way,” he said.
The FBR, however, said that the handle notices helped increase the number of statements filed in July. A final analysis will be carried out after the end of the submission deadline extended on August 4. In another type of thrust notice, the FBR warned that reduced rate sales were unusually high in relation to national sales, with many sales affirmed as exempt or low categories of reduced rate instead of taxable.
“Your informed production tax is significantly lower than expected for companies in their sector and location,” the notice said.
However, the business community argued that it is not justified to compare similar companies without taking into account the differences in efficiency, cost structures and management. The FBR also marked excessive refund requests derived from high entry taxes and an unusually high number of credit and debit notes. “Correct the anomalies in their sales declaration to avoid strict compliance actions,” said another notice. The FBR added that compliance actions, such as the publication of inspectors in commercial sites, particularly in cement factories, have significantly improved collections despite low sales.
The president of FBR has also transferred more than 250 fiscal officers of grades 17 to 22 as part of a strategy to place only category A and B officers, classified by several agencies, in key field positions.
