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BIR takes hard line on tax dodgers

Wednesday, March 16, 2011
Deokia Hosein BIR chairman

 Last week, the Business Guardian reported on the Board of Inland Revenue’s (BIR) role in the Government’s latest tax amnesty. This week, in an exclusive interview at her office, Trinidad House, Port-of-Spain, BIR chairman, Deokia Hosein, delved deeper into the consequences of not paying taxes and the possibility of being charged for fraud if found guilty. Penalties and interest would be waived on taxes/levy (for businesses) and tax returns (for individual citizens) that are paid by May 31.

Hosein expects $1 billion to be collected at the end of the amnesty period. “After the amnesty, we will not be considering waivering any penalties and interest in respect of persons who left out income. In fact, we can charge people for fraud if it was deliberately done,” she said. The BIR has a division called the criminal tax investigation unit (CTIU) which, she said, will be following all caseS of tax evasion very closely. “We have a few cases in court but, we would be trying to encourage people to pay and declare the proper income by ensuring that if a person does something willfully, we could charge them for fraud,” Hosein said.

She said some taxpayers may declare their income thinking that the BIR does not know the full income but, because of a third party database the BIR now has, they would be able to match the data they have with what was actually declared on tax returns. She used the example of contractors and third parties that the Government does business with. “A lot of income goes to contractors in the oil industry. The Government also pays contractors a lot of money, for example, contractors in the construction sector. The contractor, before he is even allowed to claim the amount as an expense for the person he is doing work for, will have to provide us with a list of the contractors who he paid the money to.

“So, when he sends us the information, we will collate the information according to the contractor’s name, BIR number, etc. Then, we would be able to say that the person received this money and has to pay tax on it,” Hosein said. She hopes to have a system in the future where all taxpayers would keep records of all payments they made to other sources and then submit it to the BIR.

Hosein is pleading with taxpayers who have “discrepancies” to use the amnesty period and pay their relevant taxes and get the waivers on the interest and penalty.

Electronic payments

Hosein said the BIR is trying to get information from all persons who are making payments to third parties, to send that information to the BIR electronically. The Government’s TTConnect, she said, will give them a secure portal to submit the information for third parties to submit the information to the BIR.

“We’ll also be able to get information from the government divisions as the government financial system is also being improved, so that all payment made to anyone from the Government is put onto one financial system that the BIR will have access to. “When this information comes to us, we will be dealing with this information and focusing on the particular taxpayer, as we will be gathering information based on the VAT number and, we would know where a person’s income source is from.”

Hosein said this electronic system easily picks up on any discrepancies.

“In situations where persons would have formally left out sources of income and we may not have been able to follow it up, we would now be able to do that.

“This is one of the strengths of our new information technology system that we are hoping to rely on in our compliance drive.

“We are have seen efficiencies in recording of payments, in processing of returns, in looking to see who looked at the account, who changed. There are a lot of security features in it.

“But another feature is taking bulk information from third parties and process it in a way so we’ll know the taxpayers. We now will develop that part.” The new system also reduces error. “The system gets rid of routine tasks. An assessment will go straight through the machine onto the printer, then to the automailer and out of the door.”

Paying taxes at the bank

Hosein said the BIR is currently working on a system with banks where taxes can be paid over the counter. This process, she said, is very complex. “So far, we have not been successful in having the banks give us a system that will allow us to do it. Tax payments must be made for a particular period. Each period is a separate account that must be paid separately. It’s not a common system,” she said. Hosein said the banks will have to work with them when the TTConnect system is implemented.

“The banks will have to know our needs before they develop it for TTConnect.” In this process, taxpayers will have to register online to access government’s services, she said. “Once you are authenticated, BIR will have to get further security measures to allow the authenticated persons to get to them to be able to get to BIR’s system to make payments and to be able to see what they have on their account.” Hosein said legislation has to be passed first before TTConnect starts the process with the BIR. “This is concerning the electronic data protection, Electronic Data Act, etc; these acts have to be passed. This should take a couple months, I hope.”

Clearing interest

Taxpayers will be getting a “lot of letters” in the post, she said. She urged taxpayers to go to the District Revenue Offices or to BIR head office to find out their current balance. She described what has to be paid. “All we are saying that you pay the principal amount. You’ll see an area called principal and you might see a credit where you might have paid something towards the principal and the balance on that principal lies.

“We’d appreciate if you pay all of it. Once you pay all of it, the system will automatically, within two days, clear all the interest that is due. The interest will not be a liability once it is paid.” After the amnesty, the BIR will be sending letters of liability and, by the third letter, will be taking “enforcement activity.”

“The BIR is very strict with this and has a lot of powers of enforcement and we are the first line that persons have to satisfy their liabilities with.” Taxpayers who refuse to pay taxes, she warned, will be dealt with. “We have persons who don’t like to pay taxes and will do anything to avoid it but, there are different methods to deal with different people.” 


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