There’s a need to address the tax system to allow for equal distribution of tax: FBR

January 21, 2020 (MLN): Chairman of Federal Board of Revenue, Shabbar Zaidi on Tuesday addressed a seminar arranged by the All Pakistan Chambers, wherein he told the attendees that he understood the problems and difficulties faced by traders.

During the occasion, he informed that there are four main sectors according to the tax structure of Pakistan, namely agriculture, manufacturing, retail, and service. He informed that each of these four sectors should contribute 25 percent to the overall tax revenue.

Shedding some light on the current stats, he stated that around 70 percent of the tax collections come from the manufacturing sector, and due to the fact that this particular sector faces most of the tax burden, investors are trying to shift to another sector in order to avoid paying heavy taxes.

Those who do not leave the sector simply adopt the tax evasion strategy, he added.

Due to this problem of tax imbalance, the Chairman stated that there is a need to address the tax system to allow for equal distribution of tax.

One of the solutions to this problem, he suggested, is to circulate source of tax collection around the import stage. Besides that, he felt there was a need for an automated tax system as it will prevent tax evasion and subsequently improve collection.

Further stressing on the point, he said that most of the countries make use of automated platforms whereas Pakistan is still stuck on a manual system. Nonetheless, he assured that the FBR is making efforts to simplify the online tax returns.

Furthermore, he informed that the FBR was working to eliminate the intervention from sales tax officials, trying to ease rules and regulations for registration, and tapping avenues to reduce the volume of black money in the economy.

He also told the onlookers that the audit of firms shall be reduced during the next fiscal year. Once the audit has been done, there wouldn’t be any need for it for three years, he added.

He also shared some insight regarding the amount collected during the last fiscal year, which according to him, stood at Rs. 3,850 billion. Out of this total amount, around Rs. 70 to 80 billion were taken as advances.

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