FBR obtains information of motor vehicle buyers

FBR obtains information of motor vehicle buyers

The Federal Board of Revenue (FBR) is taking significant steps to obtain detailed information about motor vehicle buyers from manufacturers.

This move, outlined in the recently updated Income Tax Rules, 2002 (dated September 08, 2020), aims to assess the source of funds used for vehicle purchases and utilize the collected data for effective tax administration.

According to the updated rules, motor vehicle manufacturers are now obligated to furnish statements regarding the sale of motor vehicles. This requirement marks a pivotal shift in the FBR’s approach to gather comprehensive information, involving various stakeholders in the automotive industry, to facilitate a more robust taxation system.

The FBR’s directive mandates that every manufacturer, dealer of motor vehicles, registration authority, bank, or leasing company must provide a monthly statement to the commissioner or any designated officer. This statement will contain detailed information regarding the sale or lease of motor vehicles, offering a granular view of the transactions taking place in the automotive market.

The information to be provided by the stakeholders includes key details about the buyers or lessees, such as their names, addresses, National Tax Number (NTN) or Computerized National Identity Card (CNIC) details. Additionally, the statement will encompass specific details about the vehicles, including the registration number, make/model/engine capacity, year of manufacture, date of the first registration of the vehicle in Pakistan, registered capacity/laden weight, and the ex-factory price of the motor vehicle.

This comprehensive data collection process is aimed at achieving multiple objectives. Firstly, it enables the FBR to scrutinize the sources of funds used by individuals to purchase motor vehicles, contributing to the broader efforts to curb potential tax evasion or illicit financial activities. Secondly, the information gathered will assist in creating a more accurate and updated database of motor vehicle transactions, allowing for improved tax assessments and revenue collection.

The move aligns with global best practices where tax authorities leverage technology and comprehensive data analysis to ensure tax compliance and curb potential loopholes. By involving multiple stakeholders in the process, the FBR aims to create a more interconnected and efficient system that facilitates better communication and coordination between relevant entities.

This initiative reflects the FBR’s commitment to modernize its practices, leverage technology, and proactively address challenges in tax administration. The collaboration with motor vehicle manufacturers and other stakeholders in the automotive sector is expected to contribute significantly to the FBR’s ability to make informed decisions, strengthen compliance measures, and ultimately enhance revenue collection for the betterment of the national economy.

Stakeholders in the automotive industry are urged to comply with the new reporting requirements, recognizing the importance of contributing to a more transparent and accountable taxation system. As the FBR moves towards a data-driven approach, such initiatives are crucial in adapting to evolving economic landscapes and ensuring a fair and equitable tax environment.