September 28, 2020

Government Will Not Back Away From Taxing Traders And Service Providers: Shabbar Zaidi

On Wednesday 28th of August, while addressing a convention organized by the Management Association of Pakistan, Shabbar Zaidi highlighted the efforts of the government to document the economy and said that he would not step back from this mission. He commented on several documentation efforts, such as the documentation of service providers, documenting the Benami properties, investigating undeclared assets, curbing smuggling activities, CNIC based invoicing policy and bringing foreign accounts of Pakistani Nationals into the taxation net.

Zaidi while commenting on the smuggling issue said that from September 1 onwards he will ‘declare war’ on the smugglers and would do all in his capacity to stop smuggled goods from reaching the market.

He further commented on the government’s efforts to document the service sector. He said that FBR is working aggressively to bring the doctors, lawyers, schools, hospitals, restaurants and other service providers into the tax net. He added that the manufacturing sector has been the focus of tax collection until yet but now these service providers would have to pay their due taxes. He added that 100,000 notices have been issued to the service providers and many restaurants have been contacted for tax collection.

Commenting on the oversees wealth owned by Pakistani nationals, Zaidi said that Pakistanis abroad have a huge amount stacked in their foreign accounts. According to the data shared between FBR and the Organization for Economic Corporation and Development (OECD), 378 Pakistanis have $5 billion in their foreign accounts. Ishaq Da, in May 2014 claimed that Pakistanis have $200 billion in Swiss accounts, but he could never provide any evidence for his claim. However, the Swiss government has still not released any data of wealth kept in Swiss accounts by Pakistanis under the OECD tax treaty or the bilateral avoidance of double taxation treaty.

Commenting on Benami assets, the Chairman said that the government is increasing it’s efforts to register Benami properties but the task is a difficult one. The PM has also recently directed the deputy commissioners to point out any Benami and undeclared assets in their respective jurisdictions.

While addressing the issue of taxing traders, he said that the CNIC based invoicing policy would not be removed but it’s implementation will start from September 1. He added that the traders have been briefed about the simplified tax regime and negotiations between traders and the government are also taking place to discuss the proposed tax schemes. He added that the FBR is launching software for filing returns and payments of sales tax and excise duties, which will further simplify income tax filing.

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