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Online tax profiling: how does it affect you?

June 24, 2019
 

The government unveiled two portals comprising data of 53 million Pakistanis last week. This database has your personal and financial information, such as details about mobile phones, cars and property that you have purchased and a history of your foreign travels, to name but a few things.

It has created quite a fuss on social forums with people asking all kinds of questions about how it works as well as the status of the privacy and security of their personal information.

Following is an explainer that may answer some of these questions.

What is tax profiling or data integration?

Various government agencies as well as banks already have your personal and financial data. For example, the Pakistan Telecommunication Authority knows all the mobile numbers registered under your name and details of the expensive mobile phones that you may have bought.

Immigration services has your international travel history (yes, it knows where you spent your summer vacation last year). The National Database Registration Authority has all your personal data, including details of your family members. Similarly, the Federal Board of Revenue (FBR) has information about your income and taxes as well as any assets, such as property, automobiles and business, you own.

In its data integration exercise, the government has put all this information in one place and linked it with your CNIC number. In other words, it is creating tax profiles for citizens. So far, it has compiled data for 53 million Pakistanis over 18 years of age. It includes both filers and non-filers and local as well as overseas Pakistanis.

The government has also obtained information about your bank accounts based on the withholding taxes you paid on your withdrawals before the tax was abolished. In the next phase, it will get more information from your banks.

People with a bank balance of Rs500,000 or more are the government’s main target. The idea is to match your lifestyle, using the above information, with the taxes you have paid. In case there is a notable gap, it will raise a red flag.

So the launch of these portals was a show of the government’s strength and capability. It wants to show what information it has and how it can use it against those hiding their assets or understating their income to evade taxes.

Why is it being done?

That most Pakistanis do not pay taxes in accordance with their income or do not pay any tax at all is no secret. Pakistan has one of the world’s worst tax-to-GDP ratios (the value of taxes collected as a percentage of the GDP), standing at less than 11%. The International Monetary Fund (IMF) wants the government to have at least a 15% tax-to-GDP ratio to plug in the gap between its revenue and expenditure (over Rs3,000 billion).

Concerns around privacy and data security

If you want to find out if your data is included in the existing 53 million profiles, you can check by accessing any of the two portals through the NADRA or FBR websites.

Regarding privacy, the FBR says no one else can access your personal information. According to FBR Chairperson Shabbar Zaidi, this data will be kept at a centralised location and will not be shared even with the region offices of the exchequer.

He also made assurances about the security of the information. However, information security experts say there are risks involved. Any app containing sensitive information must go through a secure development life cycle. It should go through internal and third party testing before going online, they say. Since all of your private and financial data, which used to be scattered at different places, is now resting at one place, it will be a prime target for hackers.

Should you care?

If you access the FBR portal, you can view your private information from your tax and CNIC numbers, to property and asset details and every bit of personal information you hold dear. If something you own is missing, it doesn’t mean FBR is unaware of it because the portal is only showing partial information. Unlike the FBR portal, the NADRA one does not contain your bank account details.

Since the database includes both filers and non-filers, it may mean different for both. Filers have already declared their assets and have less to worry about unless the data base contains an asset you hid from the FBR while filing your tax returns.

Non-filers, including those having a bank balance of Rs500,000 or more or an 1,800cc or above car or expensive property registered in their name, may face problems as the FBR will likely go after them if their tax records do not match their lifestyle. If someone is flagged, they are likely to receive a notice asking to explain the source of income with which they bought their assets.

The government has just started this exercise and set a deadline of June 30 for people who want to declare any hidden or undeclared assets. If you declare it within the deadline, you will pay taxes at a reduced rate. Alternatively, if you take a chance, thinking the government may not have all your information, you risk paying a higher tax rate if caught later.

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4 Comments

  1. Avatar
    Anonymous   June 25, 2019 12:03 am/ Reply

    excellent effort and idea

  2. Avatar
    Hussain   June 25, 2019 9:32 am/ Reply

    I’m a a Dsta Scoentist by profession and I must say this is a very overdue exercise and will be the first step towards formalizing our economy. I’m paying my taxes this week and so should everyone else. Great step!

  3. Avatar
    Zahid   June 26, 2019 1:08 pm/ Reply

    Time to pay your taxes or the Govt. is surely coming after you.

  4. Avatar
    Muhammad Sana Ullah Khan   June 26, 2019 7:14 pm/ Reply

    We must pay out taxes and encourage others to pay their taxes too. We also pinpoint all non tax payers and inform FBR about corrupt citizens who are minting hell of money and not paying due taxes. Corrupts like Zardari and Nawaz and their cronies are all criminals and we must strongly fight against them and against those who supports these corrupt politicians.

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