Large Taxpayer Units (LTUs) yet to take off
Finance minister P Chidambaram said setting up of large taxpayer units (LTUs), aimed at providing single window for big assesses, will take at least six months.
"It will take minimum six months to set up large taxpayer units since the whole design for such units is yet to be prepared," Chidambaram said in an interview. This was promised in the Budget speech of the FM.
Sri Lanka had introduced this concept in 1993. Bangla Desh started them in 2003. Even countries like Bosnia have them.
LTU and IMF
An IMF report says,
• For the LTU to be effective and for the large taxpayers' compliance to improve significantly, the government must fully commit to setting up the LTU, providing it with the necessary resources (staffing, physical infrastructure, computers, etc.), and supporting auditing and enforced collection for the largest taxpayers.
• The long-term effectiveness and credibility of the LTU depends on the government's ability to incorporate the LTU into a broader tax administration reform. This is an area where the IMF could improve follow-up of the initial LTU reform effort.
• The LTU needs continued reform and modernization, like the rest of the tax administration, to remain effective and to keep up with changes in the economy and the taxpayer population.
• For an LTU to work properly, it must meet certain minimum requirements (many of which are also applicable to the overall tax administration), including
o A sound legal framework;
o Clear and simple criteria for selecting large taxpayers;
o Standard and transparent procedures;
o The administration of all the large taxpayers by the LTU;
o The administration of all national level domestic taxes by the LTU;
o LTU performance of all core tax administration functions;
o Clear reporting lines between the LTU and the headquarters office;
o Appropriate job grading and remuneration of LTU staff;
o Effective LTU staff training; and
o Identification and regular compilation of key performance indicators.
Large Taxpayer Unit in Pakistan
The Unit had started working at PIC Towers, 32-A, Lalazar, Karachi since July 01, 2002. The LTU handles all domestic taxes (income tax, sales tax & central excises). It is an integrated tax administration, catering for all taxes, such as income tax, sales tax and central excise duty operating jointly from one location. This interfacing and integration is to substantially reduce irritants to taxpayers, smooth-out the tax administration and to also prove a role model for developing the approaches, attitudes and behaviour that would be followed by other organs of the CBR. Integrity, transparency, accountability and understanding of problems from taxpayer’s point of view will be the guiding principles of the workforce.
Values the LTU wants to stand for :
• Integrity;
• Professionalism;
• Responsiveness;
• Espirit de corps;
• Courtesy;
• Transparency.
Goal of the LTU
• To perform as a role model for the tax administration in Pakistan by providing integrated tax services (i.e administration, technology, offices, human resource).
• To improve voluntary compliance by taxpayers with the tax laws through programs, which encourage and assist compliance and detect those who do not comply and wherever appropriate take action against them.
• To provide top quality service to each client.
• To increase productivity by providing a quality work environment and adequate compensation to each employee and all employees.
Recently Pakistan had doubled the salaries of the officers working in LTUs.
Organizational Structure of LTU:
The Model office of Large Taxpayer Unit (LTU) at Karachi will fully manage the affairs of designated large taxpayers of Karachi. The LTU has the mandate of collection, enforcement and audit of income tax, sales tax and central excise duty of around 300 Large Taxpayers in the Karachi region. While some of the selected taxpayers are liable to pay all the three taxes, the others are required to pay any two or only one of them. Notwithstanding the number of taxes paid by a taxpayer, it is being administered as a single entity by the LTU. There is close liaison between various members of CBR and Director General LTU.
Functions of LTU
• assist taxpayers through technical advice and taxpayer services;
• conduct professionally competent audit;
• assessment of cases;
• collection of revenue ;
• sanctioning and monitoring of refunds/arrears;
• Defence of cases under litigation, appellate tribunal, superior courts and other forums.
This is what is already in place Pakistan and we may as well follow them. That’s what wee were talking about last week.