KCCI OPPOSES FBR AUDIT POLICY 2016 – Shamim Firpo terms it ‘yet another attempt’ to harass loyal taxpayers

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President of the Karachi Chamber of Commerce and Industry Shamim Ahmed Firpo, while expressing sheer disappointment over the recently approved ‘FBR Audit Policy 2016’, termed it as ‘yet another attempt’ to harass the loyal taxpayers as this new policy empowers the officers to carry out audit of those cases again which have been audited last year.

In a statement issued, Shamim Firpo pointed out that in case of corporates, businesses and industrial units, the audits by FBR involve explicit monetary burden including legal costs as well as implicit costs to businesses like diversion of time, resources, efforts and concentration away from core business activities. “Therefore, the Karachi Chamber strongly opposes the idea of conducting re-audit of businesses the very next year under the new parameters as defined by the new audit policy”, he added. 

He suggested that the audit once done should be exempted for at least three years so that businesses may be spared to perform business activities smoothly.

President KCCI feared that all cases of commercial importers, who are paying 3 percent value added Sales Tax, would also be exposed to audit even though they have already been subjected to taxes at the import stage. “Such a move appears to be redundant and would only create hindrances in smooth business activities”, he added.

He also criticized FBR’s decision to take all NTN holders, salaried person and even pensioners into the audit-net under the new Audit Policy 2016. “Expanding the scope of audit to such an extent would not be practically feasible for FBR given its limited capacity”, he opined, adding that such an extreme move would expand avenues of corruption for the FBR officials who are most likely to harass the NTN holders who would be penalized for being a registered taxpayer, besides making the unregistered tax payers much better off even with the higher withholding tax rate applicable on them.
“We fear that these poor salaried class and pensioners would have to bear the brunt of their low knowledge level of legal and accounting procedures, which is another reason why KCCI strongly opposes such an intense move”, he added.

He reiterated that FBR does not even have the capacity to conduct audits at such a vast scale and it is not even feasible to do so given the limited resources. Instead of diverting more resources on expanding the tax net, FBR’s recent move is likely to further fleece the existing tax payers. Such a strategy is not only harsh but also discriminatory toward the genuine tax payers of Karachi.

He said that as seen in the past, this FBR Audit Policy 2016 will mostly affect the business and industrial community of Karachi only whereas the rest of cities remain exempted from all such anti-business policies due to FBR’s discriminatory attitude towards the businessmen and industrialists of Karachi only.

Shamim Firpo said that it was also disturbing to note that such decisions, which directly affect the business and industrial community, are implemented without any consultation with KCCI despite the fact that this largest Chamber of Pakistan represents the biggest taxpaying city. The Audit Policy 2016 was also approved during a meeting of the Board-in-Council held at the FBR House on 24th November 2016 but the Karachi Chamber was totally kept ill-informed and never take on board prior to implementing this policy.

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