The frequency of conducting the audit of taxpayers was previously restricted to once in three years period in the finance act 2018.

The government has been criticized by the business community for eliminating the condition of conducting audits once in three years period in the Finance Bill 2020.

Anomalies in the Finance Bill 2020 were highlighted by the Overseas Investors Chamber of Commerce and Industry (OICCI) and sent to the Federal Board of Revenue Pakistan. As per this, the omission of the condition would burden the taxpayers and would give sweeping powers to tax officials.

The amendment of 2018 demonstrated the confidence of the Government on the records maintained by registered persons.

The bill is proposed to omit the condition of conducting audit once in a three year period. If the bill is passed, this would pass the unnecessary burden on the taxpayers and the sweeping powers would be handled to the assessing officers of Inland Revenue, and the officers could be able to conduct audits of one or multiple tax periods without any reprieve for the taxpayer available under law.

As a consequence, the taxpayer’s confidence in the revenue machinery will be eroded and it would also cause the unnecessary wastage of time and effort by the revenue authorities.

The OICCI said that during the FBR/OICCI Weblink meeting on May 5th the FBR Member (IR-Operations) informed that new Audit Policy will be announced soon, where there will be only one audit in three years u/s 122, which was welcomed by OICCI members.

For OICCI members, the removal of the condition of one audit in three years in the Finance Bill 2020 is probably a shock.

As per the sayings of OICCI, “we strongly advocate maximum of one for audit within three years, for promoting Ease of Doing Business,”