ISLAMABAD: The tax administration intervention in presence of complex compliance procedures is hampering the exploitation of full tax potential, an official said.
The official said the Framework for Economic Growth (FEG) has described narrow tax base and high enforcement costs the major problems in resource mobilization.
The reform process initiated under Tax Administration Reform Project (TARP) has yet to materialize into a higher tax-to-GDP ratio.
This reform includes raising tax revenue through improved compliance with tax laws and broadening of the tax base; improving effectiveness, responsiveness and efficiency of tax administration through institutional and procedural reforms; improving collection through transparent and high quality tax services; and strengthening audit and enforcement procedures.
However, the official went on to say that even after several years of this reform effort, tax policy remains complex, and gives favour to a elected few while corruption and poor administration weakens collection and allows vested interests to prevail. Tax administration reforms should be based on amending the Income Tax Ordinance 2001 and Sales Tax Act 1990 to limit the discretionary power of the Federal Board of Revenue and to improve the administration, the auditing system and the tax refunds system.
There is also need of simplifying the tax system and tax administration by creating one-window cells for tax registrations at the sub-national level to cater to all taxes to Federal, Provincial and local and Reforming data warehouse in FBR with help from NADRA in order to check multiple bank accounts of tax payers.