On suspicion of value-added tax evasion, the National Board of Revenue has empowered its VAT intelligence unit to conduct a second audit on business entities which have already faced audit by the field-level VAT offices, NBR officials said.
They said that the decision was taken to check VAT evasion by the business entities either by concealing information or in collusion with field-level VAT officials.
Though only a few businesses may have to face double audit due to the NBR move, the decision will play an important role in checking VAT evasion, they said.
The decision was made at a recent meeting of the VAT audit and intelligence wing with the VAT Audit, Intelligence and Investigation Directorate of the NBR.
Earlier in June last year, the revenue board in a charter of functions for the directorate asked it to avoid conducting double audit on business houses.
Businesses in many cases evade VAT with the help of VAT officials. They also manage the VAT officials to get the audit report in their favour through underhand dealings with the officials, NBR sources said.
At the meeting held on September 22, the revenue board decided that the second audit by the directorate should be conducted on getting specific and authentic information of VAT evasion in large amount, a senior official of the NBR told New Age on Monday.
The directorate will conduct audit activities maintaining cooperation with the VAT offices while preparing its general audit list to avoid auditing a business house at the same time for the same period, he said.
The NBR also asked the directorate to find out the business entities which still remain out of the VAT net despite having business activities for a long time in a bid to bring them under the tax net.
The NBR also instructed the directorate to bring the field-level VAT officials under accountability along with determining their liability for not registering the businesses without business identification number or BIN, commonly known as VAT registration number.
The intelligence unit will also prepare a database of the businesses prone to VAT evasion as there are widespread allegations that many business houses do not properly deposit to the government exchequer the VAT collected from consumers.
The meeting also decided to prioritise the manufacturing units prone to VAT evasion, along with the service sector, for conducting intelligence activities.
The NBR also asked the directorate to prepare criteria for categorising the businesses into high, medium and low risk in terms of VAT evasion.
The VAT intelligence directorate of the NBR in recent times conducted many drives against many business firms including hotels, coaching centres, furniture shops, air-conditioned tailoring shops and shopping malls and detected a significant number of cases of VAT evasion.
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