People Are Giving Only 5 to 10% of Tax Voluntarily: FBR Chairman

Chairman Federal Board of Revenue (FBR) Shabbar Zaidi has said that FBR is collecting 90 percent taxes in the shape of withholding taxes and deduction at source while only 5 to 10 percent is coming through voluntary compliance.

This is his first public appearance since returning from leave over health issues. The chairman was addressing All Pakistan Chambers Presidents Conclave.

He was of the view that the voluntary tax system has failed to deliver and such a system cannot run on a sustained basis. Secondly, the FBR is collecting 45 percent of imports.

The FBR cannot be fixed with sacking and transfers of officers but it will have to be automated to minimize human interaction as much as possible.

He said the FBR has so far collected Rs. 2,085 billion in the first half (July-Dec) of 2019-20 and is confident that it depicts the true picture on account of actual tax collection. Last year, the FBR had collected Rs. 70 to 80 billion in the form of advance taxes.

Without mentioning the name of the country, he stated that the FBR is facing one major problem on the customs side as there is still a difference of $1.7 billion in bilateral trade figures, which shows that under-invoicing is still present that once stood in the range of $6 billion per annum.

Automation is Key

He said that it is not possible for a human to check 8,000 containers daily so the solution is installing the latest scanners. “We need to place automation as there is no other solution,” he added.

The solution lies in automation as the FBR will make efforts to slash down the number of audits. “We need faceless FBR that is required to be converted into ‘Friendly Board of Revenue'”, he added.

He believes that real estate is still the preferred avenue for whitening ‘grey money’, along with bearer prize bonds and dollars remitted abroad to purchase properties. However, he said, the government has taken some measures to curb these practice

Zaidi added that there is a lot of black money and untaxed and grey money is parked into real estate.

There should be ownership of chambers of commerce and industries and there must be the demand of the business community to automate the FBR.

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