Taxmen to get judiciary power to arrest, detain VAT defaulters

The provisions that will allow taxmen to arrest and detain VAT defaulters and auction off their assets remain a part of the Value-Added Tax (VAT) and Supplementary Duty Act, 2012. In addition, in case the VAT defaulters cannot be found, the taxmen will have the judiciary power to arrest their business partners, said a National Board of Revenue (NBR) official. “Despite concerns from business leaders, the amendment of the act, which the NBR has prepared for the upcoming fiscal year, does not include anything on Provisions 96-101, which gives the NBR officials the judicial power,” added the official, requesting anonymity. The amendment is current at the Ministry of Law for vetting. Business leaders fear that these provisions will have a huge impact on local businesses and well as the private sector. “It is unfortunate that young tax officials will now be able to arrest us for not paying VAT,” said former FBCCI president Mir Nasir. “These provisions should be scrapped from the law. We will sit with senior ministers to discuss it.” The new VAT and Supplementary Duty Act, 2012 will come into effect from July 1 this year where the flat VAT rate of 15% will be applicable to all sectors instead of the current different rates applied to different sectors. The law was passed by parliament on November 27, 2012 where it was expected to come into effect on July 1, 2015, but the NBR failed to enact the law. Under the new law, the NBR will serve a notice to the VAT defaulters about seizing their assets. If they do not respond within the designated time and cannot be found, the NBR will auction off their assets. A representative of a defaulter's estate can also sell off the assets and pay off the taxes, in which case the defaulter cannot take legal action against the representative.