ISLAMABAD: The government has decided to withdraw blanket immunity that the taxmen had secured in the previous political regime to protect themselves from adverse actions after they shared personal tax information of high-profile public officials with investigation agencies.
During any next legislative opportunity, the section 216 (T) of the Income Tax Ordinance will be withdrawn, said Finance Minister Dr Miftah Ismail on Wednesday.
Through an amendment in the tax law, the previous government had allowed the taxmen to share the personal information of the high public officials with National Accountability Bureau (NAB) and other investigation agencies with effect from 2001. Many then had questioned the motives of the amendment.
The action was seemingly aimed at giving protection to the taxmen for illegally sharing the information of a Supreme Court judge with the investigators and also handing over the taxpayers’ data to the National Database and Registration Authority (NADRA).
Former prime minister Imran Khan lamented this week that he should not have sent the reference against Justice Qazi Faez Isa to the Supreme Court.
Through another amendment, the government had also repealed section 198 to protect the taxmen from the punishment of sharing such classified information.
“Section 198 shall be omitted and shall always be deemed to have been so omitted since the commencement of the Income Tax Ordinance 2001,” according to the ordinance.
The previous government had also made two other critical amendments in the Income Tax Ordinance aimed at formally handing over taxpayers’ data to NADRA and arresting people in income tax evasion cases.
But despite making so much political noise, these legal powers remained untested.
During an informal conversation with media persons on Wednesday, FBR Chairman Dr Mohammad Ashfaq said that so far no tax recoveries have been made with the help of NADRA.
In fact, the data integration between the FBR and the NADRA has not yet been completed, said the chairman.
The previous PTI government had claimed that those one million filers who paid zero tax would have to pay actual tax liabilities based on NADRA data information.
The government had included a new section 175B in the Income Tax Ordinance to hand over all data of existing as well as non-existing taxpayers to NADRA to broaden the tax base.
Earlier, the powers were only limited to the extent of the unregistered persons.
But the FBR chairman said that NADRA’s aggregate tax numbers are not relevant to the FBR, as the tax machinery has to go deeper into every individual taxpayer’s case.
The PTI government had also inserted section 203A in the Income Tax Ordinance to get powers to arrest people for their failure to pay due taxes.
To a question, the FBR chairman said that no arrest has been made by invoking section 203A. He said that the section had been inserted in the law in a particular context but it was not used.
Former Finance Minister Shaukat Tarin had underlined that the government wanted to use the powers to arrest only for deterrence and did not intend to arrest more than 20 to 25 people.
The Tax Laws (Third Amendment) Ordinance 2021 had also empowered the FBR to disconnect mobile phone and electricity connections of the non-filers of the income tax returns, according to the ordinance. But even then the tax base could not be broadened.
Meanwhile, the FBR on Wednesday launched the Inland Revenue (IR) Strategic Reform Plan (2021-25) with the support of international donors including the World Bank, Foreign, Commonwealth and Development Office (FCDO), International Monetary Fund (IMF) and Asian Development Bank.
The FBR chairman said that the IR Strategic Reform Plan 2021-25 encapsulated FBR’s vision for the future.
The country’s premier revenue collection organisation aspires towards building a stronger and more modern institution, driven by the principles of integrity, efficiency and effective service delivery, he added.
Dr Ashfaq reiterated that the plan envisaged the transformation of IR into a world-class, technologically-savvy and taxpayer-centric service.
The FBR said that plan clearly sets the reform agenda for the four-year period from 2021-22 through to 2024-25.
The plan provides reform actions to improve tax administration in the four strategic reform areas, which include improving tax compliance, strengthening tax administration, building institutional capacity and reinforcing the legislative framework.
Furthermore, the IR plans to address the challenge of low tax compliance through implementing a compliance risk management capability; improving registration, filing, payment and reporting compliance; reducing the cost of compliance, strengthening the audit capability, streamlining processes, and procedures.
The IR Strategic Plan will be reviewed on an annual basis to ensure programme’s sustainability and viability.
The envisaged reforms have the potential to structurally improve the performance of the tax system and make significant contributions to revenue mobilisation.
