IMF softens stance on merger of two LTUs, looks to unified code

---

S M Jahangir
The International Monetary Fund (IMF) has finally soften its stance on merger of the existing two large taxpayers' units (LTUs) - one for income tax and the other for value added tax (VAT).
Rather, it is convinced of the government's initiative to introduce a unified code to be used by the two LTUs for checking revenue evasion, official sources said.
"Now the IMF has no major objection to introduction of a common code, which will be used by both the LTUs for their mutual benefits regarding the collection of revenue," an NBR official said.
After establishment of the LTUs in 2004, the multilateral donor agency had been pressing the government for their merger in order to make the government's revenue collection systems effective and time-bound, sources said.
Deferring with the IMF's suggestions, the National Board of Revenue (NBR) argued that there was little scope to merge those separate wings.
The NRB had come with an idea to introduce a uniform code styled 'UNITIN' to be shared by the LTUs for collection of revenue from taxpayers under the units.
Under the system, both the LTU authorities will use a twelve-digit TIN (taxpayers' identification number) in order to prevent tax evasion, official sources said.
"Such UNITIN will give an opportunity to both the LTUs to cross-check the payment of tax by large taxpayers. Thus it will also help the authorities realise the maximum amount of revenue from them," a senior NBR official said.
Through the 12-digit code, the tax wing will be able to see whether the volume of income tax paid by any individual or companies matches their payment of VAT.
Similarly, the VAT wing will also cross-check the payment of income tax by the taxpayers while realising VAT from them, sources said.
Apart from that, the NBR has already taken steps to bring about a deep correlation between systems of the existing TIN and Business Identification Number (BIN) to check tax evasion.
The correlation is to be applicable to joint auditing systems and greater exchange of information between the LTUs on payment of VAT and income tax, official sources said.
Such a joint auditing system will help both the LTU authorities check whether there is any inconsistency in the tax statements of the TIN and BIN holders or not.
The official further said the main objective of the initiative is to maximise the operational benefits of the two LTUs in respect of their revenue collection process.
Officials, however, mentioned that such a move had been initiated in line with the ongoing tax reforms in the tax administration that the government has undertaken on suggestions of multilateral donors including the IMF.