The Federal Board of Revenue has drafted a new Sales Tax Registration Plan (2012) for documentation of vendors, employees, suppliers and agents engaged in making huge quantity/turnover of taxable supply of goods and services without filing sales tax returns and statements. Sources told Business Recorder here on Thursday that the FBR has finalised sales tax registration plan which will be communicated to the Large Taxpayer Units (LTUs) and Regional Tax Offices (RTOs).

The sales tax plan has been chalked out by the enforcement authorities of the FBR which would be disseminated to the field formations for compliance and registration of vendors, employees and suppliers etc to bring this untapped supply chain within the documented regime. Sales tax registration pan will be implemented in January 2012 targeting registration of vendors, employees, suppliers and agents engaged in taxable supply of goods and services.

According to the registration plan (2012), another important area falling in the jurisdiction of Board is control over non-filing through registration of those unregistered. There is a fairly large number of vendors/employees/suppliers/agents and other stakeholders of the withholding agents who make substantial taxable supply of goods and services. They must be having income from other sources also by law of average. Most of them are not filing the returns or periodic statements. They need to be registered under the sales tax also for making substantial taxable supplies.

The plan said that since numbers are large, a special scheme will be required for issuing the sales tax (ST) and income tax (IT) numbers preferably at the door steps of prescribed persons to facilitate the withholding agents for registration of their vendors/payees. Later, the complete documentation can also be ensured by indicating complete particulars in the returns and statements (that is most often agitated and creates enforcement problems by various tax payers/groups) more so an account of enforcement of CNIC/NTN from January 1, 2012.

It will not be out of place to mention that enforcement activities being undertaken by the FBR have not produced the desired results and have not addressed concerns of all the stakeholders. Taxpayers on their part have complained of tax procedures including IT applications as too cumbersome and too complex to be followed. Field officers major reservation is about lack of adequate technological support from PRAL regarding automation. The World Bank, while reviewing achievement vis-à-vis targets of TARP, has taken exception to lack of enforcement particularly in area of non-filing where non-compliance is in excess of 42 percent, the FBR plan said.

The FBR plan further stated that Auditor General of Pakistan in the Annual Reports has also taken swipe at inadequacy of the systems to provide effective enforcement environment for meeting the tax obligations and for true audit of the tax system and processes in I.T environment. Therefore, the FBR needs to immediately put in place a comprehensive plan for enforcement of various sales tax and income tax provisions so as to create an enabling environment for improvement of compliance of tax laws in the country. Simultaneous support will be needed from Pakistan Revenue Automation Limited (Pral) due to huge volumes and for proper control by supervisory officers for which IT infrastructure and a vibrant tax management system is absolutely necessary.

As per sales tax registration plan, while stating the timelines, effort has been made by taking into account the ground realities regarding enforcement environment and state of information technology. It is presumed that Pral will fully cooperate for these purposes as application of manual processes can hardly enable us to start and complete the entire life cycle of the related enforcement processes. Monitoring tools will be developed through PRAL or other sources, if need be, for effective followed up and proper evaluation of performance of each unit as provided under concerned jurisdiction order. Mid-period review of the Action Plan thus may involve some adjustments in line with specific circumstances of each unit, sources added.