Power to suspend sales tax registration centralised

ISLAMABAD: The newly-appointed chairman of the Federal Board of Revenue (FBR), Shabbar Zaidi, has asked tax officers to seek his prior approval before the suspension of sales tax registration of taxpayers.

After taking charge as FBR chairman on Friday, this is the second major directive of Mr Zaidi to all chief commissioners of Inland Revenue who are heading regional tax offices and large taxpayers units across the country.

Once a sales tax registration is suspended, the taxpayer concerned is unable to claim credit of input tax. Currently, a tax officer can suspend sales tax registration of a tax defaulter with prior approval of an income tax commissioner as required under the sales tax act.

However, the FBR did not consider making the chief commissioners accountable for any possible misuse of the power. Instead of making the chief commissioners responsible for any possible misuse of the power by a tax officer, Mr Zaidi has centralized the power of approval regarding suspension of sales tax registration of tax defaulters.

“There will be no suspension from active taxpayer list unless there is personal interaction with CEO/owner of the business 24 hours before suspension,” said Mr Zaidi in an official order.

According to the order, a list of all cases of suspension after the suspension will be sent to the FBR chairman and the Inland Revenue (Operations) member with reasons of suspension and evidence of personal interaction.

Tax officers used the power mostly in cases of tax frauds. But there were a few cases where possibly the suspension was made for some other reasons.

The FBR chairman told a news conference that he took the decision to facilitate businessmen. He said more facilitation measures would be announced in the budget.

He directed the senior officers that there would be no raid on premises of any existing taxpayer without prior approval of IR (Operations) member and the FBR chairman himself. The order stated: “If there are evidences of economic transactions, which are chargeable to tax and the organization/entity is not a tax registered person, then officer of that jurisdiction will report it to the member operations and chairman.” According to the order, after receiving the information, the FBR chairman will provide necessary direction for future course of action.