A.   Background (BG)

This refers to the related Important TLQCs in trail, blue, italic and double line (a) 3025of 4.2.25 about BTB: 5 years' Car Data & Crackdown shortly - Be ready with Tax Courses (b) 2991 of Tax gap Rs 7+ Trillion & Mini-Budget VS Offshore Rs 67 Trillion & Fraud Rs 21 Trillion

2.   We also refer to several Other TLQC including (a) 2952 of 19.11.24 about BTB Advanced Stock Register Launch - Good for Organized Sector (b) 2847 of 26.7.24 about BTB: PM directed for 4.5M more on ATL & KC Prediction of 10M becoming true (c) 2713 of of 19.4.24 about BTB - Kasbati Recommendations for Organized Sector before their Supplier & Buyers Sims blocking. (d) 2597 of 9.1.24 about ST ATL of 207K only while IT ATL at 5.4M which was reported in Business Recorder of 14.1.24 Huge Difference in Current Income Tax ATL 5.4M & Sales Tax ATL 207K - Predicted IT ATL @ 10M & FST ATL 500K, if properly Disconnections are implemented without Discrimination

B.   Updated Commentary

Further to KQU 3207 dated 23.1.25, being an important matter, we would inform you about Tax Machinery Being Fixed to Nab Tax Evaders: Chairman FBR (Attachment 3030.1) in the ensuing paragraph, with emphasis in bold & Underline for quick reading.

1.   FBR Chairman Rashid Mahmood Langrial regretted that the people’s undeclared income and wealth were facilitated and that documented sectors were overburdened with taxes.

2.   He informed the National Assembly Standing Committee on Finance that people operating in the black economy and having undeclared income were facilitated. He lamented that governments made illegal money legal by offering higher rates of withholding tax rates to the non-filers.

3.   He briefed the committee that the revenue collected in 2008 and 2016 is the same revenue collected in 2024. This means from 2008 to 2024 we have not moved a bit. Despite the increase in the sales tax rate, the minimum income tax rate was raised from 5 to 15 percent heavy taxation on the salaried class and others, the revenue collection was not increased. The tax rates were increased for individuals/sectors that had no option to get out of the tax net.

4.   As a result, the government has to do huge borrowing for public sector fiscal investment and local expenditures.

5.   FBR Chairman claimed that for the first time in the history of Pakistan, all goods declarations of imports are now being cleared without payment of any speed money. 85 percent of the imports are now being reduced from 106 hours to 18 hours.

6.   FBR Chairman shared that less than 25 percent of the manufacturing units are registered with the sales tax department. Similarly, the wholesalers and retailers are not operating in the tax net. Those in the sales tax net are involved in under-reporting, wrong tax adjustments, and misreporting of taxes.

7.   The federal cabinet has been given powers to set sequences, timelines, and amount of restrictions. The federal government will systematically implement the bill. The gradual implementation of the bill will be done as per federal cabinet approval, the FBR Chairman said.

8.   For the first time, the FBR has conducted a trial run of a high-powered incentive regime. This means that the tax officials would be categorized in terms of quality of output and terms of integrity. The officials would get four times higher salaries as per categories, Langrial added.

9.   National Assembly Standing Committee on Finance and Revenue expressed serious concern over some clauses of the Tax Laws (Amendment) Bill, 2024” having serious economic implications for the country.

10.    Committee appointed a sub-committee to resolve the issues between the FBR and stakeholders on the Bill.

11.   The committee considered “The Tax Laws (Amendment) Bill, 2024” (Government Bill). The Hon. Minister of State for Finance and Revenue briefed the Committee on the background of the proposed Amendments. The Chairman FBR presented an overview of the Amendments.

12.   The Committee expressed concerns about some Amendments. The Members pointed out challenges related to significant corruption and capacity issues within the FBR. The Hon. Members also observed serious economic implications for the country.

13.   The Chairman of the committee emphasized the need to increase overall tax collection and enhance the registration of fillers in the network and directed Chairman FBR to address the controversies in the Bill and propose solutions to mitigate the economic impacts of the bill in the country.

14.   The Chair urged the Finance Division to take all stakeholders into confidence and remove anomalies.  The Chair directed the FBR to revisit the registration process and prepare an easy, user-friendly, and trouble-free procedure for a layman.

15.   The Committee appointed a Sub-Committee comprising Bilal Azhar Kayani, MNA/Convener, Syed Sami Ul Hasan Gilani, Dr. Mirza Ikhtiar Baig, Usama Ahmed Mela, MNAs as Members, and Muhammad Mobeen Arif, MNA as Special Invitee. As per the Terms of Reference (TOR), “the Sub-Committee will ensure that the Revenue Division engages the Association of Builders and Developers (ABAD) to determine the quantum and timeline for eligibility”.

16.   The Sub-Committee will submit its report within 10 days, with the first meeting scheduled for Thursday, 23rd January 2025, at 4:30 PM at the FBR House, Islamabad.

17.   The Committee unanimously approved the Minutes of its previous meeting.

18.   The meeting was attended by Bilal Azhar Kayani, Rana Iradat Sharif Khan, Syed Sami Ul Hassan Gilani, Zeb Jaffar, Hina Rabbani Khar, Dr. Mirza Ikhtiar Baig, Muhammad Jawed Hanif Khan, Arshad Abdullah Vohra, Shahram Khan, Muhammad Mobeen Arif, Usman Mela, and Shahida Begum, MNAs. The meeting was also attended by Ali Pervaiz Malik, the Minister of State for Finance, Secretary Finance, Chairman FBR, and other senior officers from the Ministry.

Further Details & Services 

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