ISLAMABAD: The government has constituted two committees to prepare a comprehensive plan by the end of current month for expansion of tax base through identification of new taxpayers.

The committees [will work] on broadening of tax base and incentivising consumers through a system of prizes on sales tax receipts by the end of July, Special Assistant to the Prime Minister (SAPM) on Finance and Revenue Dr Waqar Masood Khan told Dawn on Saturday.

He said the recommendations shared by the committees would be presented at the Economic Advisory Council’s meeting.

The government already took several measures in the last budget to broaden the tax base of the country, the SAPM added.

Proposed policy will identify new taxpayers, aim for removal of exemptions

The proposed policy will emphasise on expansion of tax base through identification of new taxpayers, gradual removal of exemptions and concessionary provisions and reduction in tax rates. “We would also protect the existing taxpayers so that no further burden is placed on their tax liabilities,” he said.

The income tax returns for tax year 2020 have reached 3.01 million compared to 2.67m in Tax Year 2019, showing an increase of 12.5 per cent. The government has already announced that it will have over 7m taxpayers’ data which will be traced to bring them under the tax net.

Data compiled by the National Database and Registration Authority will also be used in broadening of tax base, the SAPM added.

“Besides, a major plank of government strategy would be the expansion of the GST base. In this regard, the Federal Board of Revenue (FBR) would bring into the tax net all retail and wholesale transactions which are using emerging and evolving digital and electronic payment systems,” he explained.

“To this effect, we would help traders install the point-of-sale (POS) equipment and link it up to the FBR system So far 11,100 point-of-sale terminals have been integrated with real-time reporting system of the FBR,” he added.

The FBR has already finalised the operational Terms of Reference (TORs) for integration of retailers into the POS system in consultation with key stakeholders.

The FBR will also gather data by undertaking interim measures such as ‘Mystery Shopping’ exercise to identify anomalies as well as adding new entrants into the system to yield efficient results.

Mr Khan said the FBR would incentivise consumers through a system of prizes on sales tax receipts through an open ballot every month. The committee will give its recommendation for the implementation of this scheme, he added.

In this regard, a special cell has been set up in the FBR headquarter comprising experienced retail business experts and young officers who would be engaged in rolling out the plan and ensuring its efficient operations.

The number of registered sales taxpayers in the FBR data portal was approximately 150,000 for Tax year 2019. Only 20pc of registered sales tax units in the country actually paid any tax, with the rest filing either null or nil returns.

Published in Dawn, July 18th, 2021