Huzaima Bukhari & Dr. Ikramul Haq
The Inland Revenue is here to ensure that everyone understands and receives what they are entitled to and understands and pays what they owe, so that everyone contributes to the UK’s needs—slogan on website of Inland Revenue Service of United Kingdom.
Unlike many other countries of the world, Pakistan’s apex revenue authority Federal Board of Revenue (FBR) has never bothered to launch a well-designed voluntary tax compliance programme. It also failed in creating an effective deterrence in the form of a reliable tax intelligence system—a prerequisite for the success of voluntary tax compliance regime. Resultantly, the number of persons filing income tax returns in Pakistan is pathetically low. During the last many years, FBR has miserably failed to broaden the tax base, counter tax evasion and avoidance, increase the number of return-filers, use modern tax audit tools and tap the real tax potential. The failure of FBR is on two counts; firstly it has failed to collect taxes from where these are actually due thus paving the way for enormous black economy and secondly could not persuade the people for voluntary tax compliance. This has created a malevolent social malady i.e. social injustice where the rich and mighty are enjoying life whereas the overwhelming majority is being pushed below poverty line.
An effective tax audit system is essential to maximize voluntary tax compliance. All the developed tax administrations possess sophisticated tax intelligence systems in place enabling them to enforce voluntary tax compliance. Duplicating a similar system for developing administrations is not optimum due to the lack of basic systems and skilled staff. Countries like Pakistan need a model that combines the best of a developed administration’s practices with the flexibility that allows it to be used regardless of the size of an administration and skill of staff.
In Pakistan, the tax reform process remains unrealized dream. In 2004, the World Bank and other international donors provided funding of over US$ 100 million for various reforms plans. Five-year Tax Administration Reforms Programme (TARP), however, proved to be a great failure despite its extension till 31-12-2011 and more money pouring in from abroad. On the completion of TARP, the World Bank admitted that none of the targets set was completed.
The voluntary tax compliance has been at the core of reform agenda under TARP. But it was disliked by the tax officials from the very beginning. They wanted to retain existing discretionary powers for self-aggrandizement. They were not ready to accept the idea of voluntary compliance backed by strong deterrence audit and tax intelligence system. Therefore, instead of creating an effective tax intelligence system to enforce voluntary tax regime, they resorted to discretionary audits and frequent amendments. They tried to unsettle the declared versions of taxpayers without having any definite information. They amended the assessments on surmises and conjectures or by indulging in fishing inquiries. They lost a large number of cases in courts as taxpayers successfully challenged abuse of powers under sections 177, 122(5) and 122(5A) of the Income Tax Ordinance, 2001.
Global comparison of tax audit provisions, procedures and practices with those adopted in Pakistan shows that FBR has never bothered to provide a transparent selection process based on any intelligible differentia to provide benchmarks that are intrinsically linked with risk areas. From tax year 2003 onwards, FBR selected cases under section 177 (this section was amended numerously and substantially since its inception) of the Income Tax Ordinance, 2001 without any regard to law and established international principles relating to tax audit. FBR also tried to outsource the tax audit work to chartered accountant firms but the experiment failed miserably.
It is important to highlight that in USA, UK, Euro zone, Scandinavia, Japan, Singapore and many other developed tax administrations, the main emphasis is on selecting cases for audit on the following two bases:
1. Benchmarks are provided for each year on websites before the filing of returns. Any case falling in any of the benchmarks is automatically selected for audit. There is neither any discretion nor any discrimination involved in the audit selection process. It makes the selection process universally acceptable and transparent.
2. Special audit is done in cases where any definite information is generated by computerized tax intelligence system or obtained through an independent source.
In Pakistan, FBR did not provide any transparent method for selection of cases for audit. It created distrust and taxpayers contested audit selection in High Courts invoking Article 199 of the Constitution of Pakistan. In these writ petitions, the vires of law as well as administrative arbitrariness were successfully challenged.
FBR also miserably failed to prioritize its audit resources to focus on key areas of tax non-compliance, tax fraud, high-risk, high income taxpayers and unreported income. On the contrary its audit selection criteria aimed at harassing the existing taxpayers without having any tenable evidence of tax fraud, underreporting or non-compliance against them. Their only fault is that they have claimed refunds, which FBR does not like to pay as it has negative impact on its so-called “record” revenue collection.
The purpose behind any tax audit is always to check potential cases of non-compliance or tax fraud rather than threatening the existing taxpayers or to penalize the persons claiming refunds. The FBR has yet not come out of conventional methodology of ignoring or protecting the tax evaders and punishing those who file returns though may not be reporting their correct incomes. The priority should have been to first nab the non-filers and then go after those who underreport their incomes. Audit, if not backed by a reliable ‘Tax Information Integrated System’, will never be effective.
The FBR needs to adopt a rational audit strategy representing a new direction for its compliance effort. The FBR must conduct research and planning to work out a new approach that could focus on high-risk areas of non-compliance. The audit policy of apex revenue authority must aim at new and enhanced efforts on several priority areas, including:
- High-risk, high-income taxpayers.
- Abusive schemes and promoter investigations.
- High-income non-filers.
- Unreported income.
- The National Tax Research Programme.
Increased resources for audits – also known as examinations – should be devoted to these areas, which should be declared as a year of transition and training as new audit cases to be selected from returns accepted under section 120 of Income Tax Ordinance, 2001. The Regional Tax Offices (RTOs) and Large Taxpayers Units (LTUs) must be equipped to handle the new audit assignments in these key areas affecting individuals and businesses. Compliance and widening of tax base efforts should also be reconsidered with starting a national tax research programme at the Directorate General of Research & Training.
The FBR can learn a lot from recent initiative on the part of Internal Revenue Service (IRS) of United States in this direction that reflects part of a broader, agency-wide plan. This strategy places a top priority on pursuing promoters of abusive schemes, shelters and trusts and then identifying participants in these efforts to evade taxes. To address these problems, the IRS has revamped its compliance programs to refocus on problem areas. The IRS is using a full scope of tools and techniques ranging from summons enforcement, injunctions and criminal investigation of promoters to civil audits of participants.
The new audit strategy must reflect the new way of doing business at the FBR as well, but till today it is completely missing. Several of these efforts – such as the National Research Programme and the credit card initiative – need to reflect innovative approaches to tackle long-standing tax problems. And the FBR’s reorganization must allow key parts of the organization to work together in ways they didn’t previously. For example, the new audit initiative must include similar emphasis for the FBR’s collection area. And new levels of cooperation and coordination should be underway on initiatives that involve both civil actions and criminal investigation.
For the five new areas mentioned above, the FBR may direct more examination resources to address these issues. However, the FBR may maintain a presence in other audit areas to maintain core tax administration responsibilities. Additional exam resources can help meet this requirement.
Key areas for the new initiative must include:
High-Risk, High-Income Taxpayers
High-income returns are often more complex and, generally, upper income taxpayers have resources to engage in pass-through entities such as partnerships, trusts and corporations. Even utilising FBR’s various matching programmes, income and deductions from such activities are more difficult to verify.
FBR needs to match returns from pass-through entities, the technique does not provide any verification of income reported by the entity itself. Verifying the income on these returns requires an examination. The FBR must start utilising a combination of filters to identify high-risk, high-income returns. The returns selected for desk examination should be those most likely to have unreported income or structured transactions. The idea to examine all of them will be sheer wastage of resources. A structured transaction is one with limited economic benefit and whose primary purpose is to reduce or eliminate a tax liability. Structured transactions are generally done through one or more pass-through returns. The pass-through returns create paper losses that flow back to individual income tax returns offsetting income from other sources. FBR has not even bothered to conduct audit on these lines.
Abusive Schemes and Promoter Investigations
FBR must accelerate efforts to combat abusive schemes and scams on the rise that include:
- Schemes, reducing a person’s tax liability by claiming inflated expenses, false deductions, unallowable credits or excessive exemptions.
- Frivolous return arguments, telling taxpayers that compliance is voluntary or the Constitution does not provide for tax collection.
- Abusive shelters and trusts, investments established for the purpose of hiding income from taxation.
- Employment tax schemes, employee leasing, paying in cash and filing false payroll tax returns.
Abusive Scheme Groups are being established in each Area and the use of Fraud Specialists must increase. To identify and address promoter activity, a Promoter Lead Development Center needs to be created. The Center must systematically monitor the Internet to identify promoters of abusive activities and develops cases for injunctive investigations.
The FBR’s efforts to address non-filers must focus on the most egregious and high-risk segments of the population. The non-filer strategy should be pursued on many fronts:
- Re-engineered processes and work streams to improve efficiency and productivity.
- Identification and expedited assignment of the most egregious non-filers.
- Expanded and centralized automated enforcement.
- Outreach and education efforts.
Unreported income represents the largest component of the tax gap. FBR must develop a new tool for identifying returns with a high probability of unreported income. The new tool can be known as Unreported Income Discriminant Index Formula (UI DIF). Its details can be seen at the website of Inland Revenue Service (IRS) of USA.
All individual returns in USA have traditionally been assigned a DIF score rating the probability of inaccurate information on the return. The new UI DIF score rates the probability of income being omitted from the return. The IRS has customarily used indirect examination methods to identify unreported income but until now has had no systemic method for selecting the returns at highest risk for unreported income. The same method can be used in Pakistan.
UI DIF will give the FBR the ability to systemically identify returns at high risk for unreported income and beginning this fall all returns will receive a UI DIF score in addition to the traditional DIF score.
National Research Programme
National Research Programme (NRP) examinations measures reporting compliance and identify compliance issues. NRP has enabled the IRS to improve the examination selection process. NRP is very different from its predecessor, the Taxpayer Compliance Measurement Program (TCMP) used by IRS earlier. NRP no longer relies heavily on time-intensive, “line-by-line” audits for establishing a baseline measure of reporting compliance. The FBR must learn from IRS experience in this regards.
The FBR has never conducted research on the distribution of errors on returns. Without the information that needs to be gathered through NRP, the FBR will have no ability to direct examinations and other compliance activities with accuracy and precision. With updated information, the NRP effort will prevent thousands of “no change” audits each year. The NRP effort could have reviewed a small, statistically valid sample of individual returns for tax year 2011, less than 2000 returns out of 60,000 business returns filed. The FBR has never thought of such techniques that are prevalent in other parts of the world.
The NRP process should have four main categories:
- No FBR contact. About 8,000 returns may be checked relying solely on information already available.
- Correspondence. These may be less intrusive correspondence exchanges with taxpayers – rather than the old standard of sit-down audits. About 9,000 returns can be included in this process.
- Less intrusive audits. Instead of the old “line-by-line” examination approach, the FBR may gather more information beforehand and focus only on selected parts of approximately 20,000 returns.
In amending the assessments under section 122, the FBR violated all norms of good administration. The new Income Tax Law was promulgated with the tall claim of bringing simplification but it has turned out to be a more complex document susceptible to increased litigation. Section 122 provides unbridled, unfettered and uncontrolled powers to the tax department which are violative of Article 4 and 25 of the Constitution. Absolute powers conferred on tax authorities under this section are bound to corrupt them absolutely. This corruption can be financial as well as intellectual. The power to amend and further amend any order passed is a classic piece of legislation showing how a faulty tax system increases tax burden of the existing taxpayers and leaves unaffected those who are non-filers.
Section 122 has proved to be a lethal weapon in the hands of tax officials who have taken it as a licence to destroy the sanctity of past and closed transactions that constitute taxpayers’ vested right under the law. They are using it in a ruthless manner by finding fault with every order under section 120. This is an open mockery of due process of law enshrined in Article 4 of the Constitution of Pakistan and unashamed violation of basic norms of justice.
This provision of law is being abused by the Taxation Officers under delegated powers whereas the Commissioner cannot delegate his legal obligation to apply INDEPENDENT MIND to amend or further amend an assessment order. Powers and functions can be delegated but legal obligation to apply independent mind cannot be passed on to another person—2011 PTD 307 [Tribunal]. Where application of a statute is left entirely to the whims and caprice of the executive authority, it offends Article 25 of the Constitution.
The FBR wrongly interpreted the law that assessment completed under the repealed law can be reopened/unsettled under section 122(5) or (5A) as a result of amendments made in section 122 vide Finance Ordinance 2002 and 2003. The apex court in the case of Eily Lilly disapproved the interpretation of FBR, but it started issuing notices in time-barred cases under section 65 and 66A by misinterpreting para 54 of the apex court judgement in Eily Lilly case. This shows the level of understanding of legal principles for FBR’s stalwarts—it is established law that time-barred matters cannot be reopened.
The apex court has held in categorical term that section 122(5) can only be invoked in respect of orders passed after 1st July 2002 in respect of tax year 2003 onwards or for any income year ending on or before 30th June 2002 in the light of section 239(1) and (2) under the new Ordinance. It has no application whatsoever for assessment orders made prior to 1st July 2002, the date on which the new Ordinance was made effective vide SRO 381(I)/2002 dated 15 June 2002, issued by the Federal Government in exercise of powers entrusted by sub-section (3) of section 1 of the new Ordinance. As regards section 122(5A), it can be invoked in respect of orders passed after 1st July 2003 as it was inserted vide Finance Act 2003 prospectively. Secondly it does not cover the orders passed under the repealed Ordinance.
The language of section 122(5) and (5A) casts a heavy burden on the Commissioner to prove that there was:-
- On the basis of definite information acquired from an audit or otherwise:
- any income chargeable to tax has escaped assessment; or
- total income has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund; or
- any amount under a head of income has been misclassified.
- The assessment order is erroneous in so far it is prejudicial to the interest of revenue
The divergence of views that the assessing officer who passed the earlier order should have completed the assessment in a different way cannot be construed as a basis to invoke section 122(5) as it will be a mere change of opinion. The expression definite information is defined in sub-section (8) of section 122 to “includes information on sales or purchases of any goods made by the taxpayer, receipts of the taxpayer from services rendered or any other receipts that may be chargeable to tax under this Ordinance, and on the acquisition, possession or disposal of any money, asset, valuable article or investment made or expenditure incurred by the taxpayer”. This is an inclusive definition and literal meaning of the expression is to be relied upon in addition to what has specifically been included. The leading cases elaborating the scope and import of this expression are:
- IAC and another v Pakistan Herald Limited 1997 PTD 1485= (1997) 76 Tax 131 (S.C.Pak).
- EFU General Insurance Ltd and others v Federation of Pakistan & Others 1997 PTD 1693= (1997) 76 Tax 213 (S.C.Pak).
- Central Insurance Co. and others v CBR Islamabad (1993) 68 Tax 86 (S.C.Pak).
- Saitex Spinning Mills Ltd v CIT, Zone 3, Lahore 2003 PTD 808 (H.C. Lah.).
As regards section 122(5A) past and closed transactions cannot be disturbed by merely alleging that assessment order is erroneous in so far it is prejudicial to the interest of revenue. First of all the Commissioner will have to prove beyond any shadow of doubt that while making the assessments in question the provisions of the repealed Ordinance were incorrectly applied and it also caused loss of revenue.
In 2003 PTD 808, the Lahore High Court highlighted the sanctity of finalised assessments which cannot be disturbed on mere views, gossips, conjectures or surmises and in a light manner as is being attempted by the Taxation Officers these days through issuing notices u/s 122 indiscriminately, erratically and irresponsibly.
The Sindh High Court in Shahnawaz (Pvt.) Ltd. Through Director v. Pakistan through the Secretary Ministry of Finance Government of Pakistan, Islamabad and another 2011 PTD 1558 (H.C.Kar.) held that “It will be seen that the Supreme Court spoke of both “vested rights” and “past and closed transactions”. A detailed analysis of the distinction between the two need not detail us, and it suffices to note that while every past and closed transaction is normally based on, or comprises, a vested right, every vested right is not necessarily a past and closed transaction. Indeed, if rights were required to be placed in ascending order, the ‘scale’ could be said to comprise of ‘bare’ right, a vested right and a past and closed transaction. Ordinarily, a right can be regarded as progressing from a ‘bare’ right to become a vested right and then perhaps even a past and closed transaction. Of course, some rights only become vested rights, and do not go beyond to become past and closed transactions. Others may vest immediately, as soon as they arise or accrue, and then may (or may not) become past and closed transactions. Some rights (though this would be a somewhat rare and unusual situation) may even become past and closed transactions once they accrue, i.e., progress to that category straight from being ‘bare’ rights. As even this brief account shows, some care must be taken to properly analyze the nature of the right under consideration. This is all the more so because (especially in the realm of fiscal statutes) past and closed transactions appear to stand on a footing higher than vested rights. The vesting of a right is to protect the position of the person in whom the right vests, so that his position is not altered to his detriment. If the subsequent change in fact improves his position, he ought not to be denied the benefit of that change. On the other hand, if the scope of section 177 has been broadened or extended, then it is to be applied as it stood in the former position, and not as it stands in the subsequent position. The reason is of course that in this scenario, the vested rights of the taxpayer are being affected to his detriment. Section 177 as it stands in the subsequent position must therefore be aligned with how it stood in the former position, and the section can only be applied to the extent so made possible. Thus, whenever the form of section 177 as a vested right is different from the form it has taken subsequently, when the taxpayer is selected for audit, a comparative exercise must carefully be carried out of the former and subsequent positions, and the section applied in terms as stated above”.
It is worthwhile to mention that the honourable Supreme Court in Income Tax Officer v Cement Agencies Ltd (1969) 20 TAX 1 (SC.Pak) held that: “…even a legislative measure like an Ordinance expressly given retroactive effect could not operate so as to annul a valid and existing judgement as between parties whose rights had been determined and according to law which existed before the new Ordinance was passed.” In another case Central Insurance Company and Others v CBR 1993 SCMR 1232 =  68 TAX 86 (S.C.Pak), it is categorically held by the honourable apex court that in Para 27 that ‘any subsequent decision after the disposal of the case by the assessing officer cannot be said to be the discovery of a new important matter or of a mistake or an error on the face of record and that mere conflict and divergence of opinion cannot give rise to review of the judgement’.
These judgements of the honourable apex court confirm that section 122 cannot be used to amend a valid and existing judgement as between parties whose rights had been determined and according to law.
The concept of reopening/revising an assessment order is not new. There can be occasions when an existing order – whether accepted under self-assessment scheme or passed after applying conscious mind by a departmental official – is subject to escapement of income, under assessment, lower rate of tax or excessive relief or is erroneous in so far as it is prejudicial to the revenue—needs to be amended or further amended. Section 122(5) envisages amendment or further amendment of an assessment order where the Commissioner considers that as a result of “definite information” or examination of record:
- any income chargeable to tax has escaped assessment; or
- total income has been under-assessed, or assessed at too low a rate, or has been the subject of excessive relief or refund; or
- any amount under a head of income has been mis-classified.
- Any assessment order is erroneous in so far it is prejudicial to the interest of revenue
The expression Commissioner as appearing in this section when read in conjunction with section 211 clearly provides that although powers and functions can be delegated by the Commissioner, but his legal obligation imposed by the statute itself of applying independent mind cannot be delegated to Taxation Officers. Section 212 reads: “where by virtue of an order u/s 210, a taxation officer exercises a power or performs a function of the Commissioner, such power or function shall be treated as having been exercised or performed by the Commissioner”.
The Commissioner cannot consider for amendment anycompleted assessments through the spectacles of Taxation Officers, who had earlier passed orders as assessing officers. The Commissioner’s statutory powerto invoke sections 122(5) and 122 (5A) after considering the orders by applying his independent mind is not a function that can be delegated under sections 210. How can the Commissioner delegateto a Taxation Officer his own statutory obligations? There is no question of delegation of statutory obligations imposed on the Commissioner u/s 122, which is distinct from functions or powers as envisaged in section 210 of the Ordinance. If a Taxation Officer applies mind on behalf of the Commissioner u/s 122(5) or (5A), he will perform coram non judice functions lacking legal validity.
There are certain basic norms of justice that have to be adhered to in all the judicial and quasi-judicial proceedings. One of the cardinal principles of such basic norms is that one cannot be a judge of his own cause. Section 122(5A) as it stands now makes the Commissioner of Income Tax a judge in his own cause as first of all he delegates all his powers to a taxation officer and once an order is made by him, he may declare that the delegated officer applied the law incorrectly! What a mockery of ‘due process of law’ that in fact he is posing as judge in his own cause. How can he declare his own orders [though passed by somebody else on his behalf as envisaged in section 211] as incorrect? This would certainly be a wanton breach of the basic norm of the justice that no one can be a judge in his own cause. This breach will in fact be violative of ‘the right of access to justice’ which is an inviolable fundamental right enshrined in Article 4 of the Constitution. This right is equally founded in the doctrine of ‘due process of law’—New Jubilee Insurance Company Limited, Karachi v National Bank of Pakistan, Karachi PLD 1999 SC 1126.
The ‘right of access to justice’ includes the right to be treated according to law, the right to have a fair trial and proper opportunity of being hard and the right to have a just and impartial court/tribunal/authority. The term due process of law, as elaborated by the honourable apex court in the case of New Jubilee Insurance Company Ltd (supra) can be summarised as under:
- a person shall have notice of the proceedings which effect his rights;
- he shall be given reasonable opportunity to defend;
- that the tribunal, court of authority before which his rights are adjudicated is so appointed/constituted as to give reasonable assurance of its honesty and impartiality; and
- that it is a court/authority of competent jurisdiction.
These are the basic requirements of the doctrine of ‘due process of law’ that are embodied inter alia in Article 4 of the Constitution. It is intrinsically linked with the right to have access to justice which is a fundamental right. This right, inter alia, includes the right to have protection against abuse of powers. The Commissioner of Income Tax under section 122(5A) has assumed the role of a judge in his own cause and, therefore, any action under this provision of the new Ordinance amounts to a manifest and blatant violation of the due process of law. Needless to say that this provision as it stands now is unconstitutional in view of Article 4 and 25 of the 1973 Constitution.
The issues of voluntary compliance and amendment of assessments in appropriate cases cannot be seen in isolation. The FBR’s inability to enforce proper tax compliance has many reasons. The income tax code itself promotes tax evasion e.g. section 111(4) that gives a free licence to all to not pay a single penny of tax by just arranging remittance of their own untaxed money through normal banking channel at a nominal fee to be paid to a money exchanger in Pakistan. Then there is widespread corruption in society which is antithesis of transparency a basis condition for voluntary compliance. A society where State itself encourages money laundering and routes to ill-gotten wealth voluntary compliance can never be achieved.
The recurrent appearance of amnesty schemes and money whitening instruments/modes show that the State has conceded the failure of its tax machinery in performing its main function of collection of taxes. This nation has become addicted to easy money and such schemes/instruments have become a routine matter for them. The people hooked on ill-gotten wealth/income for the last many years know for certain that after every two or three years, there will be an amnesty scheme giving them a chance to get their income/assets whitened by paying far less an amount than what they would have been required to pay under the normal income tax/wealth tax regime. It is a tragic situation where the entire State apparatus is subservient to those who blatantly manage to hide their income and wealth. It is an ugly joke with those who are paying their taxes honestly at much higher rates than those offered to tax evaders (ranging between 2% to 10%) under such schemes. Can we think of voluntary tax compliance in the face of these ugly realities?
The ugliest face of black money emerges in the corridors of power, political as well as administrative. No country other than Pakistan knows better the dangers of allowing money launderers and drug traffickers to get an upper hand. We are at present not only facing a drug-abusing population of nearly 4 million, mostly young, but also many terrorist organisations, which by themselves are a threat to the government. The fact is that a cartel or a group of cartels have become so powerful that they can work out agreements with terrorists and saboteurs to undermine the authority of the State.
Pakistan has been facing a perpetual crisis of fiscal deficit for the last many decades. Amongst many causes for this malady is the ever-growing size of the underground economy. No serious effort has been made by successive governments, both military and civil, to determine the loss of revenue due to the existence of underground economy, not to talk of devising concrete counter measures to bring enormous untaxed money into the mainstream of economy. Rampant corruption and unprecedented tolerance towards black money has made Pakistan a State where the very survival of public institutions is at stake at the hands of ruthless forces representing money power.
One of the worst consequences of black money and tax evasion is their pernicious effect on the general moral fabric of society. They put integrity at a discount and place a premium on vulgar and ostentatious display of wealth. This shatters the faith of the common man in the dignity of honest labour and virtuous living. It is, therefore, no exaggeration to say that ill-gotten wealth is like a cancerous growth in the country’s economy, which if not checked in time, is certain to culminate in its death. There is a need for a wider plan to document the entire economy once and for all. The present government must remember that half-hearted measures, typical of tax bureaucracy, will not yield the desired results. Firmness, consistence and steadfastness must be shown to counter money launderers, terrorists and tax evaders. Our survival now lies in freeing the society from the clutches of the corrupt.
Encouraging and improving compliance can be achieved by respecting taxpayers’ rights and helping them recognise their obligations under the law. Publicity, taxpayer education and support are all essential to achieving these goals. The voluntary compliance can only be achieved through the ways and means discussed above. The reliability of tax machinery, stability of tax laws, low cost of compliance, timely dispensation of justice and respect of taxpayers’ rights are prerequisites of this process.
The writers, tax lawyers and partners in HUZAIMA & IKRAM (Taxand Pakistan), are Adjunct Professors at Lahore University of Management Sciences (LUMS).