ISLAMABAD: The government is expected to announce a scheme next month to attract non-filers into the tax net and incentivise whitening of untaxed money planted at home or abroad, Dawn has learnt from an official source in the Finance Division.

The work on the package has been fast-tracked in order to provide ample time for individuals to avail the scheme before an International Monetary Fund (IMF) programme is implemented as it will be difficult for the government to provide such incentive-laden scheme after securing bailout package from the Fund.

Another official, familiar with the proposed package, said the Federal Board of Revenue (FBR) is considering various options including ease of filing returns, incentivising filing of tax returns and sending out emails to potential taxpayers about the exact amount of tax and assets details they will have to deposit.

“We have financial transactions data and other material collected from National Database and Registration Authority,” he explained. The FBR has collected data from various sources; banks, utility corporations, immigration department and car manufacturers etc to identify wealthy individuals whose names are absent from tax rolls.

The FBR has already sent out notices to high-net-worth individuals whose names do not appear on tax rolls. Individuals, who possess untaxed wealth and live in posh localities, but are not registered on tax rolls ie they have not obtained national tax numbers, will be targeted.

The official said that, in case, a taxpayer fails to comply with the notice, a provisional assessment will be finalised. However, the individual will have the option to file a return, accompanied by a wealth statement and reconciliation within 60 days, whereby the provisional assessment order will be automatically initiated.

If the taxpayer fails to file returns and the required documents within 60 days, the tax liability will become final and will be recoverable. Moreover, penal and prosecution proceedings, which may result in imprisonment and fines, will also be initiated in selected cases to create credible deterrence.

The incentives package also includes early refunds to more than 4,000 over-taxed small salaried taxpayers.

An official source told Dawn that FBR top officials are expected to meet Prime Minister Imran Khan and Finance Minister Asad Umar shortly. “The meeting will set the tone of proposed scheme”, the official said, adding that FBR is looking for PM’s input on the assets declaration scheme.

The FBR has set a target to raise the number taxpayers in the country to five million by June, 2021 and tax-to-GDP ratio to 12.5 per cent at the end of next fiscal year from the current 11.2pc. The tax authority, for the year 2018, received 1.73m returns — the highest ever in the country’s history. “We have a target of 2m for the tax year 2018”, the official said while adding that around 40,000 returns are being filed on daily basis.

Published in Dawn, March 27th, 2019