FBR fails to achieve POS target

ISLAMABAD: The Federal Board of Revenue (FBR) has failed to achieve its target to integrate big retailers with its system and collect an additional Rs50 billion in taxes despite giving away hundreds of millions of rupees in prizes and spending funds on advertisements.
During the last fiscal year, the FBR integrated less than 12,000 Point of Sales (POS) machines with its system, according to the FBR officials. As a result, the total POS machines that have so far been linked with the FBR stand at 23,200 – a figure that is far less than the target the former finance minister, Shaukat Tarin, had given to the FBR.
The last government had announced that it would connect 500,000 POS at retail shops with the tax database and collect an additional Rs50 billion in revenues.
To achieve these goals, the previous government had also started giving Rs53 million per month in prizes through computer balloting aimed at incentivising customers to purchase goods from the registered big traders – known as tier-1 retailers.
The tier-1 retailers are those who work in big shopping malls, use debt or credit card machines, are in some manner already linked with the formal economy and are easy to track and bring to the tax system.
However, despite these advantages the FBR could not achieve the assigned targets.
Details showed that against the goal of collecting an additional Rs50 billion in sales tax, the net additional taxes paid by these retailers were just Rs6.3 billion.
On the total declared sales of Rs1.5 trillion, these retailers paid Rs27.8 billion in taxes, which was higher by Rs6.3 billion over the collection made from the tier-I retailers in the preceding year.
Integration of 500,0000 sales machines with the FBR system was the single largest initiative by the last PTI government that the then finance minister had announced in his budget speech to broaden the tax base.
Tarin used to claim that the lottery scheme would help to achieve these goals, as he had got similar results in the 1990s when he was heading Habib Bank Limited.
However, the FBR had informed Tarin in June last year that it at best can collect additional Rs15 billion from the POS initiative as against the budgeted figure of Rs50 billion and minister’s desire to generate Rs100 billion. The FBR officials had also told Tarin that the integration of the retailers with its system would result into capturing additional about 15% to 20% sales. But the former Finance Minister was of the view that the scheme can be made successful by giving prizes to the customers through computer balloting. -Agnecies