Tag: tax evasion

  • Procedure to get registered as informer with tax authority

    Procedure to get registered as informer with tax authority

    ISLAMABAD: The income tax rules has described the procedure for a person to get registered as an informer with Federal Board of Revenue (FBR) in order to provide information of tax evasion and get reward as per law.

    The tax officials said that Income Tax Rules, 2002 has explained the criteria for a person to become informer.

    According to the rules, a person, other than a lunatic or idiot, may be registered as informer, if he fulfills the criteria of whistleblower as defined in the tax laws.

    A registered informer shall be liable to de-registration on such condition to be recorded in writing and as may be deemed fit by Chief Commissioner, member or Director General, as the case may be.

    Registration of informer

    (1) Subject to section 227B of the Income Tax Ordinance 2001 (XLIX of 2001), section 72D of the Sales Tax Act, 1990 and section 42D of the Federal Excise Act, 2005, as the case may be, any person desirous of getting himself registered as an informer may make an application to the Chief Commissioner for registration under this rule.

    (2) The application under sun-rule (1) shall be in the prescribed form and shall be verified in the prescribed manner.

    (3) The application shall be accompanied by the following documents, namely.-

    (a) copy of the Computerized National Identity Card of the applicant;

    (b) copy of national tax number (NTN) certificate; and

    (c) a duly sworn in affidavit stating therein that the information being provided is correct and nothing has been concealed there from and that in case any incorrect information is provided or any information is concealed he shall be liable to penal action under the laws for the time being in force.

    Submission of information and further action thereupon

    (1) An informer shall submit any information regarding concealment or evasion of tax leading to detection or collection of taxes, fraud, corruption or misconduct that is in his possession to the Chief Commissioner giving precise details of the alleged act along with all supporting evidences that are in his possession:

    Provided that no information shall be entertained unless it gives precise details of the alleged act and is accompanied with the supporting evidences.

    (2) On receipt of the information, the Chief Commissioner shall scrutinize the information and forward it to the concerned Commissioner.

    (3) On receipt of the information from the Chief Commissioner, the concerned Commissioner shall conduct such further enquiry as he may deem fit and submit his report to the Chief Commissioner.

    (4) On completion of the enquiry, the concerned Commissioner shall take such further action as may be required under the tax laws or any other law for the time being in force, as may be necessary on the basis of the facts of the case, and furnish his report to the Chief Commissioner.

    (5) Notwithstanding anything contained in these rules, an informer, who −

    (a) has knowingly provided false information under these rules; or

    (b) has provided the information under these rules with the intention to intimidate or blackmail a person, or to bring him into disrepute, or to otherwise cause him financial loss, shall be liable to punishment and fine under the tax laws and other laws for the time being in force.

  • FBR deploys IR officers at 20 sugar mills for monitoring of production, supplies

    FBR deploys IR officers at 20 sugar mills for monitoring of production, supplies

    ISLAMABAD: Federal Board of Revenue (FBR) has deployed officers of Inland Revenue at 20 sugar mills to monitor production and supply for checking tax evasion.

    The IR officers have been deployed at the premises of sugar mills under Section 40B of Sales Tax Act, 1990 for the monitoring of stock, production and supply.

    Sources told PkRevenue.com that Large Taxpayers Unit (LTU) Karachi had requested the FBR to allow monitoring of sugar mills as huge tax evasion was detected in the past.

    Recently, the FBR conducted analysis of sugar production of the last year which revealed huge tax evasion by sugar mills.

    The outcome of analysis showed that FBR and the Cane Commissioner of three provinces had a difference of 641,000 metric tons which showed that the sugar mills were under reporting their stock in order to evade tax payments.

    It is also identified that the local supplies during the tax period of July 2019 fell by 255 percent due to enhancement in tax rate from eight percent in June 2019 to 17 percent in July 2019.

    The analysis further revealed that the stock holding last year ending June 2018 was 3,147,000 metric tons where as closing stock of the year ending on June 2019 was only 2,230,778 metric tons, which showed 29 percent decline.

    It is also pointed out that sugar manufacturers had declared high quantity of supplies during June 2019 to evade sales tax as the tax rate was to increase in July 2019.

    The FBR analysis revealed that the sugarcane was the biggest raw material of sugar industry.

    The undocumented/under-documented nature of this agriculture sector poses a great challenge to accurately gauge the quantity of sugarcane produced and supplied to a particular mill.

    Considering the above facts the FBR allowed deployment of IR officers at the sugar mills.

    It is worth mentioning that the FBR Chairman through an official memorandum barred the tax offices for invoking Section 40B of the Sales Tax Act, 1990 without prior permission of the board or Member IR Operations.

    Following is the list of sugar mills where IR officers have been deployed:

    01. M/s. Darya Khan Sugar Mills Limited.

    02. M/s. Popular Sugar Mills Limited.

    03. M/s. Deharki Sugar Mill Limited.

    04. M/s. Adam Sugar Mill Limited.

    05. M/s. Baba Farid Sugar Mill Limited.

    06. M/s. Digri Sugar Mill Limited.

    07. M/s. Mirpurkhas Sugar Mill Limited.

    08. M/s. Faran Sugar Mills Limited.

    09. M/s. Mehran Sugar Mills Limited.

    10. M/s. Dewan Sugar Mills Limited.

    11. M/s. Al-Abbas Sugar Mills Limited.

    12. M/s. Ansari Sugar Mills Limited.

    13. M/s. Bawany Sugar Mills Limited.

    14. M/s. Larr Sugar Mills Limited.

    15. M/s. New Dadu Sugar Mills Limited.

    16. M/s. Rani Sugar Mills (Pvt) Limited

    17. M/s. Al-Noor Sugar Mills Limited

    18. M/s. Tando Allahyar Sugar Mills Limited

    19. M/s. Habib Sugar Mills Limited

    20. M/s. Sindabadgar Sugar Mills Limited

  • Intelligence discovery of around Rs1bn evasion raises question on customs collectorates performance

    Intelligence discovery of around Rs1bn evasion raises question on customs collectorates performance

    KARACHI: Performance of customs officials in clearance of imported has become questionable following back to back detection of around Rs1 billion by intelligence wing.

    Directorate of Intelligence and Investigation (I&I) Customs pointed out tax avoidance of an amount of Rs221 million by Oil and Gas Development Company Limited (OGDCL) and recovered the same.

    In another case the intelligence directorate detected tax evasion of around Rs755 million by three importers of steel products.

    The sources said that the huge discovery of tax evasion and avoidance raised questions about the performance of customs officials posted at Customs collectorates in Karachi.

    The officials of customs intelligence have jurisdiction over those goods which were cleared by customs collectorates. The sources said that huge discovery of evasion and avoidance showed inefficiency of the customs staff posted at collectorates or something else.

    The sources said that in both the cases the intelligence was ascertaining the role of customs officials in evasion and avoidance.

    They said that in the case of OGDCL, the company wrongly claimed the exemption. However, the company paid the amount as pointed out by the intelligence directorate.

    However, in other case customs intelligence and investigation lodged around 26 FIRs two days ago against three importers for misusing SRO 655(I)/2006 dated June 26, 2006 for clearance of steel products.

    The said consignments were cleared by three model collectorates in Karachi where only one percent customs duty was paid instead actual payment of 20 percent duty.

    The sources said that the three importers jointly evaded around Rs755 million. They, however, said that the evasion was detected post clearance by the collectorates.

    The sources in customs intelligence and investigation said that they had jurisdiction over cases where consignments were allowed clearance after proper scrutiny of prevailing laws and applicable customs valuations.

    The sources further said that besides lodging FIRs against importers, the authorities had launched probe into the cases that why the consignments were not examined properly by the customs collectorates.

    As per the concessions the importers cum-manufactures had been allowed imports at reduced rate of duty for in-house value addition but in the instant cases the importers had sold the goods in the open market in the raw form.

    As per the FIRs the importers misdeclared the quality of steel products at the customs clearance stage.

  • LTU Karachi detects mega tax evasion of Rs18 billion by a company

    LTU Karachi detects mega tax evasion of Rs18 billion by a company

    KARACHI: Large Taxpayers Unit (LTU) Karachi has detected mega tax evasion to the tune of Rs18 billion by a company.

    The unit, which is the largest revenue contributor towards total Federal Board of Revenue (FBR)’s total collection, issued a statement on Monday saying that it had detected evasion of sales tax to the tune of Rs18 billion.

    “This discovery was made, when a taxpayer’s sales tax returns were scrutinized in depth revealing huge anomalies in declared sales.”

    The LTU Karachi further said that the taxpayer had been served with the statutory notice under the relevant provisions of Sales Tax Act, 1990.

    The unit further hoped to recover the evaded amount following the service of the notice and other legal formalities.

    The LTU Karachi has jurisdiction over companies having huge turnover and paying significant amount as tax revenue.

    The statement did not disclose the name of the taxpayer but the evaded amount shows the company might be belonged to one of those sectors on which the economy relied upon.

    The LTU Karachi has jurisdictions over companies active in sectors including: oil market companies, exploration and production companies, banks, insurance, sugar, textile, cement etc.

    The statement also pointed out another big case of illegal/unauthorized brought forward losses by a company in order to reduce the income tax liability.

    The LTU Karachi detected huge tax evasion by the taxpayer, who claimed unauthorized/illegal brought forward losses to the tune of Rs21 billion.

    “This revelation was made, when taxpayer’s past assessment record was probed in detail, whereby it transpired that against actual assessed losses of Rs10 billion, the taxpayer claimed losses to the tune of Rs21 billion resulting into over claim of losses to the tune of Rs11 billion.”

    This disclosure would result into huge tax payments by the taxpayer during current and future tax years, the statement added.

  • FBR to initiate criminal proceedings in tax evasion above Rs10 million

    FBR to initiate criminal proceedings in tax evasion above Rs10 million

    ISLAMABAD: Federal Board of Revenue (FBR) will initiate criminal proceedings in those cases where tax evasion above Rs10 million is detected.

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  • Finance Bill 2019: severe punishment proposed for offshore tax evasion

    Finance Bill 2019: severe punishment proposed for offshore tax evasion

    ISLAMABAD: The government has proposed severe punishment for tax evasion through Finance Bill 2019.

    According to commentary on Finance Bill, 2019 by EY Ford Rhodes Chartered Accountants, the country in the recent past had witnessed a lot of hue and cry in respect of undeclared assets / wealth accumulated and held abroad by resident of Pakistan.

    Such non-declaration was exposed to severe criticism both on print and electronic media, ultimately resulting in media trial of persons involved.

    “While the existing penalty and prosecution provision may generally cater such tax evasions, the Bill now proposes to severely punish taxpayers involved in offshore tax evasions.”

    Although, the term offshore tax evasion has not been particularly defined either by the Bill or the Ordinance, internationally the concept refers to a situation where a taxpayer avoids paying taxes in the home jurisdiction in respect of foreign / offshore assets and income.

    Hence, if a Pakistan resident evades paying taxes on its foreign source assets and income, it may be regarded as indulging in offshore tax evasion.

    In this back drop following definitions are proposed to be inserted in Section 2 of the Ordinance –

    — “Offshore asset” in relation to a person, incudes any movable or immovable asset held, any gain, profit, or income derived, or any expenditure incurred outside Pakistan;

    — “Offshore enabler” includes any person who, enables, assists, or advises any person to plan, design, arrange or manage a transaction or declaration relating to an offshore asset, which has resulted or may result in tax evasion;

    — “Offshore evader” means a person who owns, possesses, controls, or is the beneficial owner of an offshore asset and does not declare, or under declares or provides inaccurate particulars of such asset to the Commissioner;

    — “specified jurisdiction” means any jurisdiction which has committed to automatically exchange information under the Common Reporting Standard with Pakistan;

    — “unspecified jurisdiction” means a jurisdiction which is not a specified jurisdictions.

    — “asset move” means the transfer of an offshore asset to an unspecified jurisdiction by or on behalf of a person who owns, possesses, controls, or is the beneficial owner of such offshore asset for the purpose of tax evasion; Corresponding penalties, in respect of offshore tax evasion have also been proposed as under:

    — Where an offshore tax evader is involved in offshore tax evasion, a penalty of Rs100,000 or an amount equal to 200 percent of the tax which the person sought to evade, whichever is higher, would be applicable.

    — Where, in the course of any transaction or declaration made by a person, an enabler has enabled, guided, advised or managed any person to design, arrange or manage that transaction or declaration in such a manner which has resulted or may result in offshore tax evasion, a penalty of Rs300,000 or an amount equal to 200 percent of the tax which was sought to be evaded, whichever is higher, would be applicable.

    — Any person, who is involved in the transfer of an offshore asset to an unspecified jurisdiction by or on behalf of a person who owns, possesses, controls, or is the beneficial owner of such offshore asset for the purpose of tax evasion, from one specified territory to an un-specified territory, shall pay a penalty of Rs100,000 or an amount equal to 100 percent of the tax whichever is higher.

    In addition to the above penal exposures, in order to deter the concealment of offshore assets and to maintain effective monitoring of offshore tax evasion, the Bill also proposes to prosecute the tax evader, as provided for under the newly proposed Sections 192B and 195B.

    In terms of Section 192B, any person who fails to declare an offshore asset or furnishes inaccurate particulars of an offshore asset where the financial impact of such concealment or furnishing of inaccurate particulars is Rs100,000 or more, the same shall be treated as an offence, punishable on conviction with imprisonment up to 7 years or a fine up to 200 percent of the amount of tax evaded, or both.

    Similarly, through Section 195B, the Bill seeks to hold any enabler who enables, guides or advises any person to design, arrange or manage a transaction or declaration in such a manner which results in an offshore tax evasion, the same will be treated as an offence punishable on conviction with imprisonment for a term not exceeding 7 years or with a fine up to Rs5 million or both.

    The Bill further proposes to insert a new Sub-section in Section 145 of the Ordinance in terms of which the Commissioner is empowered to freeze any domestic asset of a person including any asset beneficially owned by him, where he has reason to believe that such person who is likely to leave Pakistan may be involved in offshore tax evasion or such person is about to dispose of any such asset.

    The asset frozen can be held by the Commissioner for a period of one hundred and twenty days or till the finalization of proceedings including but not limited to recovery proceedings under the Ordinance whichever is earlier.

    Finally, the Bill proposes to insert Sub-sections (6B) and (6C) in Section 216 of the Ordinance whereby FBR is empowered to publish the names of offshore evaders and offshore enablers in the electronic and print media.

  • Taxation not widely considered as civic duty in Pakistan

    Taxation not widely considered as civic duty in Pakistan

    ISLAMABAD: The taxation has not been widely considered as civic duty in Pakistan, the World Bank said in a report issued recently.

    The World Bank said that tax evasion is pervasive due to low tax morale and legal loopholes that enable high-value individuals to conceal their incomes.

    Few Pakistani citizens think of themselves as taxpayers, even though they pay indirect taxes on their consumption. “Therefore, taxation is not widely considered as a civic duty and essential to finance public services.”

    The report said that in turn, better-off households generally do not rely on public education or health services and have little stake in paying taxes to finance better public service provision.

    At the same time, tax evasion is facilitated by legal loopholes.

    The Law on Benami Transactions of 2016, which prohibits anonymous transactions, could have closed one of the major loopholes.

    It has not however been implemented because secondary regulations have not been approved.

    Prize bonds, a large source of domestic borrowing for the government, have hitherto been both anonymous and tax exempt, making them an instrument of choice for investing funds of unexplained origin.

    Likewise, foreign remittances are tax exempt and widely used to repatriate illegally exported capital.

    Low taxes on immovable property also offer opportunities for tax evasion and money laundering.

  • Monitoring of Withholding Tax: FBR launches mega operation against textile, sugar companies for tax evasion

    Monitoring of Withholding Tax: FBR launches mega operation against textile, sugar companies for tax evasion

    ISLAMABAD: Federal Board of Revenue (FBR) has launched mega crackdown against textile and sugar sectors for suppressing sales and evading tax by issuing fake and flying invoices.

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  • Amnesty Scheme 2019 unveiled; 4pc tax for documenting hidden assets; applicable till June 30

    Amnesty Scheme 2019 unveiled; 4pc tax for documenting hidden assets; applicable till June 30

    ISLAMABAD: The federal government finally announced tax amnesty scheme 2019 for people having undisclosed assets to become part of documented economy. The scheme has been announced at four percent of tax to declared hidden assets other than immovable properties.

    The scheme is available for Pakistani citizens who have evaded taxes other than public office holders.

    The scheme will be applicable till June 30, 2019, Advisor to Prime Minister Finance, Dr Abdul Hafeez Shaikh said at a press conference while announcing the scheme after its formal approval by the federal cabinet on Tuesday.

    The advisor was accompanied by Special Assistant to the Prime Minister on Information and Broadcasting, Dr Firdous Ashiq Awan, State Minister for Revenues, Hammad Azhar and Federal Board of Revenue Chairman Syed Shabbar Zaidi.

    “Basic purpose of the scheme is not to generate revenue but to document economy and make the dead assets functional to promote economy,” Shaikh said.

    The advisor urged the business community to participate in this amnesty scheme to document their concealed assets.

    Inviting all such people who had their undeclared assets to take benefit from this scheme, the Advisor said this was the last chance as the government had already imposed the Benami Law under which all such benami properties would be confiscated by the government.

    He said efforts have been made to make the scheme easy in understanding as well as implementing.

    He said all assets were included in the scheme inside or outside Pakistan. All assets other than real estate, would have to pay four percent to get these legalized.

    In case of real estate, it would be evaluated at 1.5-time on existing FBR value, to bring it to market value he said.

    For Pakistanis living abroad, the advisor said that they can pay four percent to legalize their money subject to bringing cash or other kind into Pakistan.

    Otherwise they would have to pay 6 percent to legalize their assets, he added.

    Minister of State for Revenue Hammad Azhar said there was a lot of difference between the current and previous amnesty schemes as for the first time there was a condition for all asset declarer to become tax filer besides giving option to all such people to revise their balance sheet in their tax returns.