Tax system in Pakistan is operating on self-assessment basis aimed at promoting voluntary-compliance, documentation and self-policing. Tax Audit is an effective instrument of control with the FBR through which compliance level is monitored. Audit can play a major role in improving overall Tax compliance. It should not be seen as a tool to generate additional revenues. Rather it is a tool to identify the high-risk taxpayers through risk-based approach and promote voluntary compliance. Moreover, audit is a tool to address the tax law deficiencies and act as risk based responsive regulation.
FBR has been carrying out Audit selection based on the erstwhile system called Risk Based Audit Management System (RAMS). To further strengthen function of audit, FBR has now established Compliance Risk Management (CRM) System as per international best practices. CRM is a strategic framework established to identify, assess, and prioritize compliance risks associated with tax profiles of all categories of taxpayers. The CRM process involves developing risk profiles, creating and updating a risk register, collecting and analyzing data from various sources, and planning & implementing risk treatment strategies. The goal of CRM is to enhance domestic revenue collection, broaden the tax base, and curb tax leakages by continuously monitoring and evaluating compliance behaviours and performance.
FBR is taking great care to ensure that audits are conducted in courteous, efficient, professional and effective manner as well as with highest standards of integrity.
Taxpayers are selected for audit on the basis of transparent, discretion free and automated process. The selection is done by CRM System using systematic approach to identify risks related to four pillars of compliance (Registration, Filing, Correct Reporting and Payment) to be included in risk register.
An overall Integrity Program has been implemented within the organization. Officers and Auditors are expected to meet the highest ethical standards. Disciplinary actions will be initiated against those who choose to conduct themselves in an unethical manner. A quality review process has been established to ensure that prescribed standards and procedures are followed and there is uniformity in application of laws and procedures.
Periodic feedback from Field Formations and Tax Bars Associations is obtained to:
Gauge perception of the Audit Process.
Improve the overall audit process.
Evaluate the behaviour, professionalism and competence of Audit staff.
