Inefficiencies failing the Tax Apparatus in Pakistan

The following write-up was published in the Oct-Dec 2017 Quarterly Edition of “Policy Insights”, the largest accountancy body ACCA’s regional publication covering MENASA

Link: ACCA’s Policy Insights’ Published Link

Link: Main Page

Inefficiencies failing the Tax Apparatus in Pakistan

(by failing the genuine Taxpayers)

Federal Board of Revenue (FBR) is a semi-autonomous federal institution that is responsible for auditing, enforcing and collecting revenue for the government of Pakistan. It’s one of the most critical components of the revenue collection apparatus in Pakistan. As such it is supposed to be the pinnacle of professionalism, discipline and support to tax payers.

During the last budgetary season, Chairman FBR invited this writer, while representing ACCA (UK) and LTBA at a historic pre-budget seminar that was organized with the collaboration of ICAP, ICMAP, ACCA, LTBA, PTBA, LCCI and several other Tax Bars, to send him proposals about the issues in and reforms for FBR. Below is a brief overview from that perspective.

Currently there are approximately 1,210,000 active income tax return filers as per the FBR directory issued in August 2017, out of a population of roughly 218 million in Pakistan. This is a meager 0.55% of the total population. A huge proportion of these filers, file NIL returns is another topic. On the other hand every Pakistani is paying indirect taxes on whatever they consume. The evident lack of trust of the taxpayers on the system and the resulting regressive taxation policies are a big hindrance in the attainment of an optimal taxation system. We’ve often discussed the problems with the taxation policies in Pakistan and proposed practical solutions. Frankly speaking there is only so much FBR can do in this regard since the policies are often driven by the IMF, World Bank and/or the political interests in the country. However the areas where FBR can and should play a very effective role are not in the best of states either.

Considering the tiny tax base it was only natural for FBR to attempt to broaden it. However the way they went about it, has been unprofessional to say the least while messing up a good endeavor big time. Notices claiming no existing tax registration based on “economic activities”, usually citing vehicle purchases were sent out to masses. Sounds positive? Hang on, what if it’s shared with you that many of those receiving these notices were not only tax payers already registered but paying millions in Income Taxes annually? This exemplifies a total lack of coordination within the systems and functions of FBR, which is unfortunately becoming a norm of late. Missing out on the records already held by FBR simply reinforces the misconceptions amongst the tax payers that FBR is out to bother already registered tax payers instead of acting as a facilitator and initiating genuine drives to catch tax evaders.

What’s tragic is that while on one hand such steps are undertaken citing the need to broaden the tax base but on the other hand proposals with huge potential to broaden the tax base such as bringing agricultural income and other exempt sections within the tax net as well as converting the CNIC into National Tax Numbers (NTN) and Sales Tax Registration Numbers (STRN) for broadening the tax base have been falling on deaf ears for almost a decade now.

To underline the vast difference in the workings of FBR and similar bodies in developed countries, a personal experience is hereby shared with the readers to illustrate the significant gulf between the international standards and the ones practiced in our beloved country. While working in UK, I needed to change my tax code. For ease of understanding you can say it was like claiming a tax refund and I was not even a British national. It took me one phone call to UK’s HMRC (Her Majesty’s Revenue and Customs) during my office lunch hour to get it done by the end of the lunch. Yes, just in less than an hour. Now compare it to the experience of genuine tax-payers in Pakistan who are ridiculed and abused for even minor genuine tax affairs. Presumptive and advance taxes are collected but when it is time to issue refunds in line with the law, actual due refunds are held for months and even years despite completion of all legalities and verification. What is worst is that in most cases the FBR officials verbally accept the cases as genuine but claim that due to the pressure to meet revenue collection targets they are unable to follow the law and deliver the tax payer their due right.

The problem manifests from the nepotism and non-professional attitudes of some officers who treat tax-payers with utmost contempt instead of the dignity they deserve. Un-realistic targets setup by higher-ups then further aggravates the matters with coercive, non coordinated and even illegal measures used by certain sections within FBR. The widespread corruption within the department further worsens the matters.

It’d be reasonable to point out that although PRAL (Pakistan Revenue Automation (Pvt) Ltd) does mess up things at times, many of its’ positive endeavors were blocked for fears of eradicating corruption using different pretexts by certain sections of FBR. For example, PRAL once finalized a completely automated system of issuing refunds to tax payers with even an online payment instrument. Naturally there was a huge hue and cry. The project was dumped and the corrupt manual practices continue to date.

Now as if all this was not enough, even the laws governing the whole taxation system are made mockery of within FBR by several officers undermining the good work and efforts undertaken by their more professional colleagues. Just ask any genuine tax payer or tax practitioner about the treatment meted out to them by most FBR officials and you’d be shocked. Due to limited space, this topic will have to be continued in future write-ups.

As for now, perhaps the policy makers and senior FBR officials should consider this dire situation seriously to rectify all the serious problems within FBR. If they fail to do so, the next time they complain about low proportion of tax payers in Pakistan as compared to UK or other developed countries, they should realize that they only have themselves to blame. 

About author:

The author is Director of the think-tank “Millat Thinkers’ Forum”. He is a leading tax expert, experienced fellow Chartered Certified Accountant CFA Charterholder, and anti-money laundering specialist with international exposure who can be reached on Twitter and www.myMFB.com @OmerZaheerMeer or omerzaheermeer@hotmail.co.uk

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Who Needs to file Income Tax Return?

Image result for become filer pak

You need to file your annual Income Tax Return in Pakistan if you fall within the ambit of any of the following:

  1.   Registered Taxpayers (NTN holders)
  2.   Those charged tax in tax years 2015, 2016
  3.   Welfare Institutions or NPOs (defined in ITO 2001)
  4.   Annual (non-business) income of PKR 400,000 or more
  5.   Annual business income of PKR 300,000 or more
  6.   All companies with financial (accounts) closure of before 31st December 2016
  7.   Owners of 250 sq yards  or more land or flat of any size within    Cantt/Municipal/ICT jurisdiction
  8.   Owners of 500 sq yards  or more land (outside Cantt/Municipal/ICT jurisdiction)
  9.   Flat Owners of 2000 sq ft or more covered area
  10.   Owners of vehicles over 1000cc
  11.   Anyone sent notice(s) to file return

Here are some of the major financial benefits of filing your Income Tax Return

Want to file your Income Tax Return?

Contact us now for:

Best quality services by top professionals including:

qualified lawyers,

chartered and chartered certified accountants,

chartered financial analysts and

tax experts

Millennium Law & Corporate Company (MLCC)

(the pioneer ACCA practising firm in Pakistan)

Bashir Mansion, 2 Turner Road, Adjacent AG Office, Lahore

Call: 042-37242434 / 0322-4219292 (prefer text),  Email: ozmeer@mlcc.pk

Memorable Visit of Mr. Brian McEnery, President ACCA

Announcement of Exceptional Public Value Award by ACCA

Dear Readers,

Peace be on you!

It’s with extreme pleasure that I announce that the prestigious Exceptional Public Value Award is to be awarded to myself by Ms. Helen Brand, OBE, CEO ACCA (the largest accountancy body globally). I’ll share the details with you after receiving the award, Insha Allah.

I’m honored by this privilege and grateful to ACCA for the recognition of my:

“contributions in the field of Budget and Taxation including but not limited to

  • the drafting of Anti-Graft Legislation focused on Undisclosed Foreign Income & Assets which was later adopted by the Treasury,
  • work done on the Regional Research Study on Indirect Taxation across South Asia and UAE,
  • MOU’s with Tax Bars,
  • Collaborations with Chambers of Commerce and Tax Bars,
  • Pre & Post Budget proposals and seminars,
  • continued member education events particularly on Taxation and
  • opportunities created through R&I sessions with key employers.”

Last but not the least, I’m thankful to you all for your support and prayers particularly my parents, siblings, mentors, colleagues and friends.

acca-exceptional-public-value-award

Regards,

Omer Zaheer Meer

ACCA publishes detailed report on MLCC

Dear Readers,

Peace be on you,

It is with pleasure that we share that ACCA, the largest accountancy body in the world recently published a detailed report on our firm Millennium Law & Corporate Company (MLCC) and recognized it as the pioneer ACCA practicing firm in Pak. You can directly access it at: ACCA’s published profile of MLCC

or continue to read below and let us know your valuable views.

Millennium Law and Corporate Company (MLCC) becomes the Pioneer ACCA practicing firm in Pakistan

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Profile of Millennium Law & Corporate Company

  • 30 + Years’ “Young”

Millennium Law & Corporate Company (MLCC) has a background of thirty (30) years plus history of professional excellence stemming from its parent practice. It used to be focused solely on legal practice including corporate matters.

  • Way Forward – One stop solution

MLCC was expanded to include a new division for providing ACCA centered services. This led to the inclusion of the areas of taxation, corporate services, internal audit, advisory, risk management and trainings in addition to the other legal matters within the services offered by MLCC.

  • Partners

The firm is setup with specialized teams dealing with relevant areas under four (4) partners, two of whom are ACCA members while one is an ex legal advisor Federal Land Commission (Government of Pakistan) and another is an ex deputy Attorney General of Pakistan.

  • Pioneer ACCA Practising Firm in Pakistan

In 2015, the Association of Chartered Certified Accountants (ACCA) took a giant leap in Pakistan and initiated practising license program for the country.

  • MLCC became the pioneer practising firm in Pakistan with
  • Omer Zaheer Meer FCCA (the managing partner of MLCC) being awarded the first ever ACCA practising license in Pakistan.

Before that history was made when:

  • Omer Zaheer Meer FCCA became the first ever ACCA member to get admitted to the prestigious Lahore Tax Bar Association (LTBA) during 2009/10.
  • He was later joined by his brother Mr. Ali Zaheer Meer ACCA who is now a partner at MLCC and another ACCA member at LTBA.

Millennium Law & Corporate Company has built a reputation for quality services based on value creation and issue resolutions with time-specified deliverables. It is now the premier ACCA practising firm in the country and one of the leaders in the taxation, advisory and corporate services sectors.

  • Distinguished Collaborations

MLCC through its partners is currently represented at the Taxation Committee of Lahore Chamber of Commerce and Industry, Chairing the Liaison and sitting on the publication committees of LTBA, Chairing the Taxation Committee of ACCA, Global Tax Forum of ACCA and several think-tanks including Hamdard Thinkers’ Forum and Millat Thinkers’ Forum. MLCC’s clientele also includes some of the most distinguished names. Out key clients and/or associations are as below:

Read the rest of this section directly at:  ACCA’s published profile of MLCC

 

Why was MLCC started?

Managing Partner’s Views:

It is my strong and educated belief that the ACCA qualification and a proper training program equips one with the relevant skills, education and expertise to be the best not just technically but on the value addition side of being an entrepreneur.

With an early start to my career resulting is sufficient experience, I felt it was the right time to launch an ACCA practising firm on my return from UK to Pakistan. Also it was an opportunity to contribute back to the profession and ACCA fraternity in several ways.

However ACCA did not have a local practising license back then. Nevertheless we upheld the brand ACCA and pioneered in an area deemed alien for ACCA members at the time, i.e. local taxation. Within a short span of time we stood out of the crowd delivering excellence and quality beyond norms of the market. We then started expanding into other areas such as corporate services, advisory, risk management, e.t.c. with equally good results.

The milestones so far

Since becoming the pioneer ACCA practising firm in Pakistan some of the major milestones achieved by MLCC are outlined below:

  • Establishment of our non-legal services headquarter at the prime location of Bashir Mansion, 2 Turner Road, Lahore which is opposite FBR, close to Appellate Tribunal, behind Lahore High Court, adjacent AG Office and practically in the hub of all the action.
  • Establishment of a branch office in DHA, Lahore for facilitation of our clientele from the posh areas.
  • Award of the practising license and hence becoming the pioneer ACCA practising firm in Pakistan
  • Joining of Mr. Ali Zaheer Meer as the second ACCA partner of the Firm
  • Expansion intro value addition areas beyond taxation including internal audit, advisory, risk management, corporate services, e.t.c.
  • Start of our training division
  • Partnership with ACCA Pakistan for the CPD trainings of ACCA fraternity and beyond
  • Attendance of our CPD programs and training events by high-profile professionals including owners, directors and even non-ACCA partners of other renowned firms
  • Publication and launch of a research study on indirect taxation across the MESA (Middle-East and South-Asia region) in collaboration with ACCA and EY
  • Working with top names in various sectors including the likes of National Bank of Pakistan, Habib Bank Limited, MPDD, ACCA, LCCI, KCCI, LTBA, e.t.c.
  • Pre-launch of our ACCA trainees induction program

Advantages and benefits of ACCA firms

ACCA firms offer several benefits for the ACCA fraternity, the business community and the society at large. Some of the major ones include:

  • Opening up of new horizons and opportunities
  • Jobs creation
  • Quality services
  • Greater acceptance of ACCA locally
  • Entrepreneurial rewards
  • Increased collaborations with worthy partners
  • Greater exposure

With the advent of CPEC and the corresponding developments, there is a lot of potential for quality accountants and firms offering the right services. Yes it will be challenging but the rewards are more than commensurate. So have a dream and turn it into a reality.

Session on FATCA

From: members.pk
Sent: Monday, September 26, 2016 6:05 PM
Subject: Webinar on Foreign Account Tax Compliance Act (FATCA)

The Foreign Account Tax Compliance Act (FATCA) is a recently implemented law which creates a new reporting and withholding regime for financial institutions but impacts individuals and other businesses too.  FATCA, despite being a US regulation, has global implications as it effectively covers all US persons. State Bank of Pakistan (SBP), Pakistan Banks Association (PBA), Securities & Exchange Commission of Pakistan (SECP), individual commercial banks, non-bank financial institutions and other stakeholders in their respective capacities

It is a very important area for the banking and financial services sector, and equally important for professionals from other sectors and industries.

Keeping in view of our tradition of keeping our members and affiliates up-to-date on important professional developments, we’ve organized a session on this current and highly in-demand topic.

Trainer’s Profile

Mr. Omer Zaheer Meer is an experienced accounting, finance, management and economics professional holding FCCA (senior ACCA member), CFA Charter, the Anti-Money Laundering Specialization, BSc (Hons) in Applied Accounting and several professional certifications from UK along-with 15 years of experience gained in top management positions in leading British and Pakistani companies.

Currently, he is the Managing Partner at Millennium Law & Corporate Company (pioneer ACCA practising firm in Pakistan) and a Director on the board of multiple organizations. Mr. Meer is an experienced trainer having worked with esteemed organizations in corporate, public and academic sectors. His portfolio includes having conducted mandatory promotional trainings of Government Officers at MPDD (Punjab Govt) as well as conducting programs at National Bank of Pakistan (NBP), HBL, LCCI, LTBA, Bahria University (Pak Navy), UET, e.t.c.

He is a regular contributor to various national and international publications like Daily Nation, Daily Times, Express Tribune and Blue Chip magazine.

Mr. Meer is also a life member and third-time serving Chairman Liaison Committee of Lahore Tax Bar Association, Member of Global Taxation Forum (ACCA UK), Member MNP and Chairman of the Taxation Subcommittee of ACCA (Pak), Member Taxation Committee LCCI, Director Millat Thinkers’ Forum, Member Hamdard Thinkers’ Forum and professionally associated with globally reputed organizations like ACCA (UK), CFAI (USA), UKSIP (UK), PRIMA (USA), PRMIA (USA),  MPDD (PAK) & www.mymfb.com

Topics Covered

        I.            What is Money Laundering?

      II.            Sources of Black Money

    III.            Money Laundering – Method

    IV.            Notable Cases of Money Laundering

      V.            Anti – Money Laundering (AML)

    VI.            Effective AML System

  VII.            Acronyms

VIII.            FATCA Regulations (including for Individual/Sole Proprietorship Accounts, Entities
and Change in circumstances of Existing entities) along-with impact on various stakeholders including businesses and individuals

    IX.            Q & A Session

Audience
ACCA Members & Affiliates, other Tax Professionals and professional accountants

When and Where
The event will be conducted only through Webinar.

Date & Time
3
0 September 2016, 03:00pm – 06:00pm

Registration

The participation fee for this webinar is Rs.5,000 and can be paid at all the ACCA Pakistan Offices to the Customer Services representatives.

The fee is fully waived for ACTIVE ACCA Members and Affiliates. 


All Members and Affiliates interested in attending the event should register before 29 September 2016 by filling up the registration form available on the link below.

Click here to register

CPD Units

03 Units

Haroon A Jan
Head of Member Affairs
ACCA Pakistan
61-C  Main Gulberg  Lahore Pakistan

cel: +92 (0)300 8466 322

tel: +92 (0)42 3598 7022
fax: +92 (0)42 3575 9346

Breaking new ground by combining our world leading ACCA Qualification with a Masters…

www.accaglobal.com/msc

 

Formal Launch of My Youtube Channel

Dear Readers and Friends,

Assalam O Alikum! (Peace be on you),

The constant suggestion by many of you to launch a formal Youtube channel covering my key public and/or professional engagements with a dimension of educating and enlightening has been turned into a reality.

It is with pleasure that I announce on this auspicious day of Friday that my team has successfully launched the same. The channel can be accessed at:

There are already some very interesting videos covering some of the key current issues and opportunities such as Immovable Property Taxation Issues, CPEC, Budget Proposals, Finance Act, e.t.c.

We aim to constantly update our channel with valuable knowledge sharing videos. Your feedback and appreciation would be the fuel to keep us going in this effort. I hope you find this useful and wish you all the best in your lives and careers.

Take Care,

Omer