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KP businesses voice concerns over FBR’s new LTU model

KP businesses voice concerns over FBR’s new LTU model

PESHAWAR: Business owners in Khyber Pakhtunkhwa have urged the Federal Board of Revenue to review their recent restructuring, under which thousands of cases are being shifted under the jurisdiction of three newly created large taxpayers units (LTUs) in Karachi, Lahore, and Islamabad.

The bid for restructuring means that the regional taxpayer offices (RTOs), with whom businesses had been dealing up until now, will only be responsible to broaden the tax base and facilitation of existing taxpayers under the new restructuring mechanism. The FBR has implemented its order by handing over 1,100 cases to LTU Lahore, 750 cases to LTU Islamabad and around 1,500 cases to LTU Karachi.

Out of the 750 cases handed over to LTU Islamabad, 128 are from KP, a move that has been vehemently opposed by businesses. The concerns were brought to light during a meeting of the Sarhad Chamber of Commerce and Industry (SCCI) with Dr Muhammad Ashfaq, a Member of the FBR’s Inland Revenue Operation.

Instead of imposing additional burden of taxes on existing taxpayers, the business community urged the FBR to take measures to broaden the existing tax-base by bringing more people under the tax-net. Besides this, the meeting also requested a one time tax audit instead of multiple audits throughout the year.

The general consensus of the SCCI was that there should also be deferment of turnover tax for the next one year, and reduction in the ratio of this tax. They furthermore demanded fixed tax regimes be introduced for small traders.

The SCCI has joined growing voices that are making their reservations over the new LTU structure known. Earlier, ranking members from within the FBR have said that the move could be disastrous, as it will pave the way for abandoning the structure of RTOs because their collection will be much less but their fixed expenses will be on higher side. However, others have said that the new structure means that that 75 to 80 percent revenue was coming through three major LTUs so more workforce was needed to be deputed to monitor and pursue major revenue potential cases.

At the meeting, Dr Muhammad Ashfaq assured that business owners that the FBR would resolve the grievances of the business community regarding shifting cases of 128 units from RTO Peshawar to LTU Islamabad. However, he did stick to his guns, saying that the 128 cases were shifted to LTU Islamabad to make life easier for taxpayers, not to add to their problems. He also claimed that none of the taxpayers would have to make unecessary trips to Islamabad, since everything would be done remotely through state of the art online systems.

He also said that the issue was a moot point for the time being, since the Peshawar High Court had issued a stay against the transfer of the 128 cases to Islamabad, and the FBR would make any final decisions based on the orders of the court.

Keeping in view the reservations of the business community about the Point of Sale (POS) system, the senior official said the consultation would be made with relevant stakeholders before enforcement of the system, adding that implementation of POS system might be extended.

Following the directives of Prime Minister Imran Khan, he said the FBR has so far cleared Rs120billion arrears of refunds to business community across the country during the last four months. He assured the process for disbursement of refunds before 2014 and from July 2019 to up to date will be initiated very shortly. He informed the whole system will be updated after June 2021 and the entire backlog will be cleared.

Regarding the deferment of turnover tax for next one year, the senior official replied that it is a policy matter, which would be discussed at policy level. He agreed with the appointment of independent lawyer at ADRC and gave assurance for extension in date for submission of sale tax returns.

Earlier, Senator Nauman Wazir, former chamber presidents, Zahidullah Shinwari, Riaz Arshad, Malik Niaz Ahmad, Sherbaz Bilour, Mujeebur Rehman, Aftab Hayat and others also spoke on the occasion. They urged the FBR to take measures for existing tax-base, tax-reforms, besides informing about reservations/apprehensions of industrialists and traders regarding policies of the FBR.