Non-compliant return filers remain active

KARACHI: Several big taxpayers remain active despite failing to file sales returns for a consecutive six months – highlighting a deficiency in the automated system of the Federal Board of Revenue (FBR) that manages transactions of sales and purchases of taxpayers, official sources said on Thursday.


An official note has been sent in this regard to FBR by a local tax department indicating the flaws in the computerised system, which kept the non-filers in the active taxpayers list.


According to the Sales Tax General Order (STGO) 35/2012 dated June 30, 2012: “A registered person who does not file sales tax return for six consecutive months shall be suspended by the system without any notice.”


The sources said that the delinquent companies – having a big turnover – had one reason or another for not filing returns. “They (companies) are still active in the online system,” said a tax official requesting anonymity.


Further, sources said, the flaw in the FBR system could allow some elements to misuse the sales tax registration of those companies for obtaining refunds on their behalf.


Sources said big taxpayers had a relatively high level of compliance in filing returns and usually had valid reasons if they failed to file their returns. However, sales tax registrations of smaller taxpayers, who remain in the system despite non-compliance, sources added.


Issuance of bogus refunds on fake and flying invoices is one of the biggest challenges for the FBR. The revenue body has taken measures to plug revenue leakagesthrough RTOs.


A SOP regarding blocking and suspension of a registered person was issued in August 2013 for RTO Karachi, and circulated to all RTOs and LTUs a few days ago. The SOP was issued to stop bogus refund in RTO Karachi, where a large number of companies were found involved in illegal refunds, which later blacklisted or suspended. However, further actions have not been taken, sources in RTO Karachi said.

Source: The NEWS