TAX season starts in Pakistan from July to September of every year, in which taxpayers fulfil their national obligation of voluntarily filing their annual income tax returns and statements of assets and liabilities, declaring their net annual income and wealth on FBR portal, to be assessed by FBR in the following assessment year. By fulfilling this national obligation of filing annual income tax return and wealth statement makes taxpayers entitled to fulfilment of their certain human rights by the state.
Taxpayers are a major stakeholder in collection of revenue in national exchequer by the state’s agencies/departments/revenue authorities. Taxpayers contribute to the state’s revenue generation process in the form of payment of taxes, charges, cess, duties and levies etc. Government spends the taxpayers’ money in implementation of its development projects, programs, welfare activities and services for its citizens, such as education, health, security measures, law enforcement, defence and transportation systems etc. All these factors contribute to the smooth functioning and development of the state.
Because of taxpayers’ contribution in the national exchequer, they are entitled to certain rights and privileges to be guaranteed by the state through legislation. Likewise, taxpayers have certain obligations to act as a responsible person/citizen and fulfil their obligations of paying the due taxes in-time and manage their tax matters diligently.
The basic taxpayers’ human rights that must be protected and fulfilled by the state’s agencies/departments/revenue authorities inter alia are as under:
• The right to be treated fairly, with respect and dignity during handling of tax matters of taxpayers.
• The right to be informed, assisted and heard about tax obligations.
• The right to be educated and facilitated in tax matters.
• The right to access information about tax documents/records.
• The right to file appeal/review against a tax assessment order.
• The right to pay no more than the due amount of tax.
• The right to claim due exemptions, concessions and rebates in the taxes.
• The right to fair trial and adoption of due process of law during the course of any tax proceedings undertaken by revenue authorities to determine the tax liability.
• The right to issue the due refund of taxes within a prescribed time limit.
• The right to consult and be represented by a legal/tax practitioner of his choice.
• The right to confidentiality, privacy, and certainty of taxpayer’s information/record/declarations.
• The right to life, survival and development of taxpayer.
Rights of taxpayers also confer certain obligations upon taxpayers to be fulfilled. These obligations inter alia are as under;
• The obligation to register as a taxpayer in accordance with the procedure laid down in law and regularly update any changes in his taxpayer profile accordingly.
• The obligation to filing of tax returns in time.
• The obligation to pay due taxes in full and in time.
• The obligation to maintain accounts, accounting documents, registers and other relevant documents in accordance with procedures described in law. Also, keep record of his tax documents and transactions.
• The obligation to provide accurate information and documents in time to tax authorities.
• The obligation to requesting required information from the tax authorities.
• The obligation to familiarize oneself with the basics of taxation laws/policies. Taxation laws are amended every day, so it is important to stay informed about the latest changes in these laws.
• The obligation to retain the services of a tax practitioner/lawyer and to pay their full remunerations. A tax practitioner/lawyer can assist the taxpayer in understanding his tax obligations and rights.
• The obligation to be honest and co-operative in his taxation matters.
• The obligation to be aware of tax fraud, abuse and scam. Immediately report such malicious activity to tax authorities and law enforcement agencies.
The above taxpayers’ rights and obligations are the integral part of the taxation system of any state and without maintaining the balance on taxpayers’ rights and obligations, taxation system of the state cannot function in efficient, effective and transparent manner. It is therefore the responsibility of the state to ensure that resident and non-resident taxpayers’ rights and obligations are exercised in true letter and spirit by the state’s agencies/departments/revenue authorities. Many states have established Taxpayers’ Charters or Bills of Rights to publicly define and communicate taxpayers’ rights and obligations. Pakistan’s FBR’s FATE wing has published a Taxpayers’ Charter detailing the expected behaviours of both tax officials and taxpayers. However, despite its clear guidelines, these rights and obligations are often not fulfilled in practice.
This failure stems from negligence by both revenue authorities and taxpayers, compounded by political instability and inadequate investment in the tax system. These issues lead to ineffective tax enforcement, significant monetary losses to the national exchequer, weakened economic conditions, and violations of taxpayers’ rights and obligations.
The FBR’s Taxpayers’ Charter primarily serves as a facilitation guide for implementing existing tax laws, rather than providing additional rights or obligations. It does not function as an exclusive law for overseeing taxpayers’ rights and obligations. While some countries have enacted Taxpayers’ Charters or Bills of Rights as part of their tax legislation, Pakistan lacks such specific legislation. It is recommended that the federal government introduce a dedicated law, termed the ‘Taxpayers’ Rights and Obligations Protection Act.’ This proposed law would explicitly define and enforce taxpayers’ rights and obligations, establish rewards for compliant taxpayers, and impose penalties for violations. Implementing this act would help overhaul the current ineffective tax system, expand the active taxpayer base, improve the Tax-to-GDP ratio, prevent tax theft and official malpractice, ensure the proper collection of taxes, and advance the country’s struggling economy.
—The writer is a former Programme Policy Advisor at National Commission on the Rights of Child, Govt of Pakistan, Islamabad.
