KARACHI: The field offices of Federal Board of Revenue (FBR) have been advised to focus on aggressive monitoring on corporate executives / directors with income above certain levels.
“Their [executives/directors] tax accounts are usually kept separate and not shared with even ordinary management,” according to an official document related to withholding taxes said.
“Enforcement should be ramped up in their cases for detecting the avoidance.”
Some sort of trigger management should also be exercised to select such cases with higher probability of producing additional revenue.
It said that there are certain businesses which are involved in high cash transactions.
“Cash withdrawals from banks could be one lead along with un-documented receivables or payables.”
Their reporting in the statements may not be complete. Details of vendors/suppliers are not provided either.
Such cases should be included in the risk for monitoring. Poor record keepers placing low priority on improving the documentation should be on priority of monitoring.
Basically, monitoring of withholding taxes is analysis of filed Statements and enforcement from non-filers.
Formal selection of case for monitoring of Withholding Taxes may not be required.
Yet, there are numerous aspects that can be considered for initiating the monitoring work.
The following factors are important in this regard:-
1. Incomplete or sloppy Statements;
2. Habitual non-filers/short filers;
3. Missing part of the Statements (where tax was not deducted);
4. Incorrect Statements/mathematical errors;
5. Exempt cases like Non-residents etc;
6. Matching of information from various documents/ sources;
7. Discrepancies in Income Tax; Sales Tax Statements and Returns;
8. Statistical analysis for policy formulation and Sectoral studies;
9. Un-desirable activities like continuous under reporting etc;
10. Monitoring on the basis of case studies and research works;
11. Statistical information collected to update the data sources;
12. Selection on random basis either electronically or manually;
13. Discrepancy in Withholding Taxes Statements and Annual Statements of Accounts;
14. Monitoring consequential to special enquiries, reports and judgments, etc;
15. Selection of specific cases e.g. large taxpayers and or other revenue potential Withholding Taxes Agents likely to yield substantial revenue for the government;
16. Risk based analysis of statements and other economic information;
17. Issue based monitoring;
18. Any other method or selection as decided by the concerned Commissioner in the individual cases or by the Board about specific classes.