ISLAMABAD: Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) has said that the government is taking all measures to broaden the tax base without hurting any sector of the economy.
Addressing a press conference on Friday, he said that the government had not imposed any tax on basic kitchen items including flour, ghee and any other item.
He said that the FBR was endeavoring to broaden the tax base. However, we will not take any decision that hurts our industry or trade, he added.
He further said the government has to increase the ratio of tax to GDP, which is currently very low.
Detailed negotiations have been held with the businessmen and the traders to address their concerns, he said and added there is no deadlock in negotiations with trade associations.
The FBR would consider suggestions from traders while finalising the policy for them.
He expressed satisfaction that the textile sector is on the path of development and it will be facilitated. He said that the government is ready to bring a fixed tax scheme for the small retailers.
He further said the government would desist from taking any decision that is counterproductive for the textile industry.
The board has been engaged in negotiations with the business community all across the country and is discussing mainly two issues including SRO 1125, which is related to zero-rating and requirement of Computerized National Identity Card (CNIC) for sales tax, he added.
The SRO 1125 is a law that deals with the zero-rating tax regime, whereby exporters pay zero tax but claim refunds from the government on certain items that are part of their costs.
The CNIC condition, on the other hand, is a sales tax law. It requires traders who purchase supplies or make sales of Rs50,000 or more to produce their CNICs while making the transaction so they can be registered with the FBR and brought into the tax net.
The FBR is facing a lot of resistance from traders for imposing the CNIC condition, which is aimed at increasing the tax net. This condition will not affect the general public, he explained.
The CNIC condition for traders is part of a larger campaign to fight tax evasion because the government is running a massive budget deficit (more than Rs3,000 billion) because of a low tax revenue.
There are about 381,000 trading units that fall in the sales tax jurisdiction, but only 47,000 of them are registered.
Worse still, of the registered trading businesses, only 17,000 pay sales tax to the government. The government wants to change that equation by bringing more traders into the tax net.
Responding to a question he said the FBR wanted to automate the tax system to have less human interference, which would make the board’s reform strategy successful.
Zaidi said that duty-free mobile importers wanted to come into the net but they were willing to pay less against the actual taxes.
“The government is committed to stopping the under-invoicing for documenting the country’s economy,” he added.