Efforts to broaden the tax base: Nadra will be granted entry to the FBR database

ISLAMABAD: The government plans to give the National Database and Registration Authority (Nadra) access to the Federal Taxpayer’s data in order to expand the tax base and accurately declare the assets / income of existing and non-filing income based on their tax returns Spending pattern.

Sources told Business Recorder here on Sunday that through the promulgation of the (third) amendment to the tax laws of 2021, Nadra can be granted access to all FBR databases, including existing income tax returns and asset returns. Under the proposed regulation, Nadra would have the authority to obtain all data available from the FBR.

Tax Laws (Third Party) Amendment Ordinance 2021 was created to amend the Sales Tax Act 1990, Income Tax Ordinance 2001, and Customs Act 1969. The ordinance will be announced in the coming days.

The Tax Laws (Third) Amendment Regulation 2021 would also remove some procedural and technical anomalies in the 2021 Finance Law, including changes to the Pakistani Customs Tariff Codes (PCT) of various articles.

Expansion of the tax base: FBR, Nadra plans plans: Tarin

According to the 2001 Income Tax Ordinance, taxpayers’ income tax returns and statements of assets are confidential. However, in accordance with Section 216 (official information) of the 2001 Income Tax Ordinance, the FBR can provide Nadra with information about the declarations in order to broaden the tax base. Apparently, Nadra’s powers to have real-time access to FBR information and databases would be ensured by the Tax Law Amendment (Third Party) Ordinance of 2021.

If the Nadra is given access to all types of FBR taxpayer databases, the process of determining the actual tax liability and predicting future tax liability can be worked out by the Nadra. The third party audits would be based on information available from both the FBR and Nadra. The agency may be empowered to send notices / announcements or emails to prospective taxpayers or non-registrants to share their actual expenses, assets, assets and income for payment of taxes due and to file declarations. Existing taxpayers and claimants involved in disguising incomes and wealth would also be targeted under the new exercise. Those who have concealed their assets or income can also receive communications / emails / announcements from Nadra.

Another suggestion being considered is to use some new web portals or portals from FBR or Nadra for this purpose. The external auditors would be tasked with checking and verifying the data in order to expand the tax network. There is tremendous potential for identifying individuals who are either outside the tax net or hiding their income and assets, sources say.

FBR access to databases of Nadra, others: Proposed change could be illegal

In the past, Nadra had asked the FBR to provide third-party data, including property / property data, vehicle / supplier information, telecommunications, banking / stock exchange data, etc -filers.

Currently, Section 175A of the Income Tax Ordinance 2001 deals with real-time access to information and databases. According to this section, precautions must be taken to enable the FBR to have real-time access to information and databases in the form and manner prescribed by Nadra; Federal Investigation Agency and the Bureau of Emigration and Overseas Employment; Capital Territory of Islamabad and Provincial and Local Land Registry and Development Authorities; all electricity suppliers and gas transport and distribution companies. The Committee shall make arrangements for the establishment of the infrastructure for real-time access to information and databases and their alignment with its own database in the required manner.

During his recent visit to the Chambers of Commerce and Industry for Foreign Investors (OICCI) and the Federation of Pakistani Chambers of Commerce and Industry (FPCCI) in Karachi, Finance Minister Shaukat Tarin said the government is trying to broaden the tax base and has reached as high as 15 million Profiles including unregistered voters on Nadra and 7.2 million names on FBR. With the help of this technology, the authorities are now able to determine exactly 80 to 90 percent of their income levels and how much taxes they have to pay. “We use individual data from a variety of sources such as utility bills, phone bills, deposit data, and travel, etc. We have identified profiles of customers and unregistered voters – 15 million names in the National Database and Registration Authority (Nadra) and 7.2 million names with the Federal Board of Revenue (FBR) through artificial intelligence and comparison with registered taxpayers’ behavior. We would use the services of 1,500 professionals from the Institute of Chartered Accountants of Pakistan (ICAP) to review messages and payment reminders sent by taxes and if they didn’t, action would be taken against them under the law, ”he added.

Copyright Business Recorder, 2021