ISLAMABAD: After getting approval from Federal Cabinet, Tax Registration and Enforcement Initiative (TREI) 2012 is set to be presented before National Assembly (NA) in the shape of Finance (Amendment) Bill 2012.
A fixed tax is proposed and provides cover to undeclared income/assets up to Rs5m.
According to sources, a significant segment of Pakistan’s economy is undocumented. The growing size of the underground economy is not only depriving the national exchequer of its due share but is also hindering economic planning and development.
A large number of businesses and individuals who are regularly filing their income tax returns are avoiding their legal obligations by either under-declaring or not correctly declaring their assets and income.
On the other hand, a large number of businesses and individuals who are required to be registered with the Federal Board of Revenue (FBR) and to regularly file their income tax returns are avoiding their legal obligations.
The FBR along with National Database Registration Authority (NADRA) has data about the multiple bank accounts, travels, assets and other details of these non-filers. Based on this data two tax incentive schemes are being proposed by FBR.
The past attempts by FBR to register them failed as the FBR’s field units unfortunately compromised the data.
Sources said the TREI 2012 has been devised to make an attempt through a simple scheme, which will be administered through Banks along with NADRA under proposed section 120B of Income Tax Ordinance 2001 to register and bring into tax net these non-filers of tax returns.
A fixed tax is proposed and provides cover to undeclared income/assets upto Rs5m.
Investment Tax Scheme, 2012 is being proposed to be enacted under authority given in the section 120A of Income Tax Ordinance 2001, which will attempt through a simple scheme to provide a mechanism and cover to regular filers in addition to non-filers of income tax returns to declare undeclared income assets/expenditure up to the value of Rs5m by payment of token tax and additional assets/income by payment of investment tax as per proposed slab.
The scheme will be administered through establishing special counters with the help of banks along with NADRA, sources said.
The persons availing the schemes shall also have immunity under the National Accountability Ordinance, 1999, Federal Investigation Agency Act, 1974, Companies Ordinance 1984 and Foreign Exchange Ordinance, 2002.
Sources said up to five percent of the tax revenue through these schemes was proposed for expenditure on the publicity and advertisement for the launch of schemes, in accordance with prescribed procedure of Press Information Department and the Federal Government and 1.5 percent of the revenue receipts from the Tax Registration Scheme is proposed as share of the NADRA.
The proposed amendments in the Customs Act, 1969, Sales Tax Act, 1990, Income Tax Ordinance 2001 and Federal Excise Act, 2005 to take effect immediately can be made by the National Assembly through a Money Bill to be called Finance (Amendment) Bill 2012.