Access to E-records by Taxing Authorities: A Case for Pakistan (Part I)
Background issues of access to records
To assess the records at hosted remote retained out of the jurisdiction of Pakistan root many legal issues which are needed to be addressed. Hereinafter there is description of the emerging legal issue of access to e-records.
Lack of statutory provisions for access to electronic data at remote Server
The access to record in electronic data is one of most difficult issue where record has been kept in remote hosting place which requires authorization and permission of the taxpayer and web hosting site.
The statutory provision of section 25 of the sale tax the phrase 'electronic data' has been used to get access to database of the record but no specific direction is available. Look at the section 25 of Sale tax Act 1990
"?A person who is required to maintain any record or documents under this Act or any other law shall, as and when required by an officer of Sales Tax, produce record or documents which are in his possession or control or in the possession or control of his agent; and where such record or documents have been kept on electronic data, he shall allow access to such officer of Sales Tax and use of any machine on which such data is kept."
The detail provisions in section 175 income tax ordinance 2002 regarding access to e-records,"In order to enforce any provision of this Ordinance (including for the purpose of making an audit of a taxpayer or a survey of persons liable to tax), the Commissioner or any officer authorised in writing by the Commissioner for the purposes of this section - (a) shall, at all times and without prior notice, have full and free access to any premises, place, accounts, documents or computer;?(d) may, where a hard copy or computer disk of information stored on a computer is not made available, impound and retain the computer for as long as is necessary to copy the information required."
These provision has reproduced at length of the Income Tax Ordinance 2001 for getting access to the e-record but the statute is itself is silence on the point of record of business which has been conducted by e-commerce, how the computer can be accessed by tax officer which has uploaded at remote web server, in light of this fact it can be easily concluded that these legislative construction are inadequate.
The legislative construction are more strict and explicit in defining the right to access of the tax officer for purpose of verify of record but as comparison with the Sale Tax Act 1990,where the statutory detail is missing.
The section 18 of Central Excise Duties Act 1944 runs as under, "?Search made under this act or any rule made there under carried out in accordance with provisions of the code of criminal Procedure (V of 1898), relating with respect to search and arrest made under this code." There is also required the reconstruction of the statute of rule 96 of central duties rules 1945 regarding the special procedure for imposition of central excise duties on services.
The Criminal procedure itself is ineffective before the emerging issue of the e-commerce transactions.
Legality of hacking right
The term "computer hacking" technically defined as the penetration into computer systems, which is not done with the purpose of manipulation, sabotage or espionage, it could be for the pleasure or conspiracy into the technical security computer and net works system. The person who commit offence under above mentioned definition is regarded Hacker. Hacker as individual uses the modern programming tool or built in software to cause damage to networks. The hacking as process of getting access can be used as tool for getting access into computer e-database purpose of imposition of taxation and record verification. To get access and verify the record being hosting in remote services often requires the use of hacking to get access to records. The use of hacking as legal tools requires use of hacking soft wares with most modern technology and means employed to curb any evasion of tax and verify the e- record.
No specific statutory provisions are available for the defining the authorized hacking rights on the part of tax officer reason being lack use of modern technologies.
Security and privacy issues of web Hosting sites
In western legal history, the legislation for security and privacy laws was promulgated in earlier 1970s and 1980s concerned the protection of personal rights and privacy in particular. The relevant legislation was enacted to new challenges to privacy by the increasing possibilities of electronic data processing to collect, store, connect and transfer personal data in 1990s. The advent of era of www the legislative inadequacy was felt and the traditional provisions for the protection of secrecy were amendment for providing more protection to security and privacy of site and electronic net work for purpose of promotion of business and consumer confidence in net trading. The covered part of the personality fundamental rights and proved to be far too narrow for a protection against the new dangers of violation of database of computer and networks. All criminal laws of various states have their historical background of providing penal provisions for curbing cyber and electronic offenses for the protection of secrecy and security of database of computer networks. These provisions can be found in the core of criminal laws. Here aim of providing brief description of these reforms is that these reforms have created secure environment for online transaction which ultimate provide legal system for collection of electronic commerce taxation. One way these reform has provided protect to consumer and business concern but the security rights has created so many legal barriers in way of getting access to server database on part of taxing authorities for assessing the exactness of records exhibited for purpose of taxing. I am here therefore speaking of an international tax authorities exercising their own jurisdiction for exercising their right of taxation. The security and privacy laws clearly show the common problems of all national tax systems.
These laws in fact provided Immunity to these site to disclose information related with identity of consumer and businesses which are related to security procedure, no person or authority is permitted to question the data base or to disclose any password, key or other secret information exclusively within his private knowledge of these network system which enables their use of the security procedure or advanced electronic signature to claim immunity against any authority . There number of tax haven sites that come to contract with provider for providing complete secrecy against business records.
The most formidable task is getting access to remote data is the legal shelter being provided by the remote hosting servers. The right to breach the security right as statutory is not possible in case of hosting of data at remote server, unless the tax payer be compelled to facilities the access to e-data.
The legal issues of multi jurisdiction
I have discussed the territorial jurisdiction at length on chapter on "Jurisdiction". Here I shall discuss the jurisdiction of taxing authorities to access the records not available in state jurisdiction. The cross border jurisdiction often leads to multi jurisdiction of various states. The most important legal issue which hamper in the way of implementation of statutory right of tax authorities is to collect taxes on cross border e-transaction. This legal question often arise the multi jurisdictional issue which requires for just adjudication of tax disputes. Tax legislation, generally, requires a taxpayer to maintain books and e-records for a period of five years . On the internet, records of business transactions are being created in electronic form and the requirement to keep records for tax purposes applies to records kept in electronic form for period of give is a difficult to do. The concept of examining computer based records, although a specialist audit area is not new to CBR. There is possible that is likely to witness an increase in e-business records being maintained in electronic form and to match this growth, adequate number of staff resources and training will have to be devoted to, and invested in, computer audit in the near future. In addition, as a business trading on the internet may not have a readily identifiable physical presence, it will not always be clear where the basic business records are held. Any person intent on being non-compliant can keep records in an offshore location. Central board of revenue has already been faced with the difficulties in just tax compliance when records relevant to a taxable Pakistani activity are kept in an offshore location. The increased globalization of trade means that records can be held in many locations around the world for valid business reasons. The revenue authorities' response has been for its auditors to carry out the audit of the physical records in the offshore location. It is likely that auditors will have to face multi jurisdictional problems in future be able to access off-shore records on the internet. There will be a reduced need for physical visits to sites where records are kept.The revenue authorities already have not been legally powered to enable it to carry out its audit function regardless of the means by which records are maintained and regardless of location. At present companies trading in Pakistan do not need to physically maintain sufficient records in this country to enable their tax position to be established to the satisfaction of the Central board of revenue.
The encryption is a possible technique for computer auditors for verification of records out of state jurisdiction. Encryption keys can be used for legitimate business purposes to preserve confidentiality and prevent unauthorized access to sensitive commercial data. In proposing the legal changes concerning the standards under which records may be stored electronically, Central Board of Revenue should ensure that it always has access to a means of decrypting data within taxing jurisdiction irrespective of fact that where the data base has been hosted.
Issues of authenticating the integrity of business records
As comparison with traditional based methods original records are held in form of paper based form. These record has its own advantages and disadvantage too. With conventional commerce original records can be examined for the attributes of authenticity and integrity. Since, with e-commerce transactions have begun, the original documents are stored in electronic form which provides enough opportunity for tax payer to tamper with the records. The development of confidence in physically viewing the originals knowing that they are unaltered is not possible. However, the modern device and software has been developed to check the authenticity and integrity of record to identify alterations to computer records but their use is limited to few advance countries. The revenue authorities of these countries specifically use accounting software for this purpose. We are entering into era where the business concerns are more feel comfort in maintaining their record in electronic form. Many of us in the workplace feel more comfortable with paper-based records. But is this comfort an illusion? But to question the integrity of paper based record can not said unaltered. The paper based records can be altered, lost or falsified but doing same with e-record can be done with relative easy. We are moving into paper based record keeping to electronic form but our revenue authorities are not familiar with the tools and procedures for checking paper records. The employed by private enterprise are more technologically advance as comparison with our taxing authorities. Whereas, CBR tools for validating computer records are new and, perhaps, less intuitive just because pace of advancement is slower as comparison with private enterprises. The CBR must adopt following strategies to overcome the technological gap has created but them and enterprises. First they have to train their staff for computer auditing because computer records has their particular specially when are hosted at remote servers. The second step once the staff has been trained. They should be equipped with more tools for validation and verification of records and finally CBR must promote the maintenance of records in computer based form because it's easier and effective assessment.
What matters for the revenue authorities is that businesses more likely to perpetrate tax fraud are identified through correct risk analysis. This does not depend on the nature of the records as between paper-based and computerized.
In conclusion, revenue auditors will require a higher level of computer skilled staff in future to allow accurate interpretation of computerized records systems. It will also be necessary for revenue auditors to have systems analysis skills to validate the data models for e-business which are to be used in a given accounting environment. This will also need manipulation records accurately trace transactions through such systems. The computer software industry is aware of potential for loss of audit trail arising from business being conducted on the internet. As mentioned already, the software industry is developing new techniques to ensure the integrity of electronic records. An example of this is a technique called "message digests". A message digests works by attaching a unique message to an electronic record. Any subsequent change to the record can be traced by comparing the original digest with a newly created digest based on the current state of the file data. Once again we see an emerging overlap of interest between the public and private sector; both are keen for ecommerce to work well and both face common problems. The point has been well made that the private sector, particularly the auditing profession, has the same interest as tax auditors in safeguarding the integrity of e-commerce records. One area of focus is the impact of significant electronic processing of information on the auditor's ability to rely on substantive, observable evidence in the conduct of an audit.
The writer is an advocate of High Court and practicing immigration and corporate laws in Pakistan since September 2001. He is a self employed and pioneer in research on electronic commerce taxation in Pakistan. His articles were published widely in the critical areas of cyber crimes, electronic commerce, e-taxation and various other topics. He wrote LL.M thesis on titled "Legislation of electronic commerce taxation in Pakistan" in which he provided comprehensive legal proposals for statutory reconstruction of tax laws for purpose of imposition of taxation on e-business in Pakistan. Currently he is conducting is research on topic 'Electronic commerce taxation: emerging legal issues of digital evidence'.Author can be contacted by email@example.com
Indiana, Kentucky among states with lowest property taxes in country FOX 59 Indianapolis
Tax-friendly destinations: A guide to the world's lowest taxes countries Business Insider India
Opinion | A Case of Tax Fraud—at the IRS The Wall Street Journal
CloseUp: Soucy promises property tax cut if elected Nashua mayor WMUR Manchester
Tax Cheat Sentenced to Prison for Failing to Pay Employee Taxes Department of Justice
Unemployment Tax Program - Texas Workforce Commission Texas Workforce Commission
West Sacramentans paying higher property tax rates due to error by Yolo County officials - KCRA Sacramento
West Sacramentans paying higher property tax rates due to error by Yolo County officials KCRA Sacramento
Don't Pay Uncle Sam More Than You Have to in Dividend Taxes The Motley Fool
The politics of property taxes in Montana – Daily Montanan Daily Montanan
Nebraska school aid, tax cap cut taxes for some, not all Omaha World-Herald
IRS contractor charged with leaking tax return information of Trump, other wealthy people - PBS NewsHour
IRS contractor charged with leaking tax return information of Trump, other wealthy people PBS NewsHour
New California Law Places Additional Taxes on Guns, Ammunition ... Campus Security Today
Roth IRA Conversions: Benefits and Considerations Beyond Taxes Kiplinger's Personal Finance
Budget reforms that could lead to lower taxes and more transparency Indiana Capital Chronicle
Taylor Swift Tickets and a New IRS Rule: What You Need To Know Kiplinger's Personal Finance
Gallego Moves to Lower Taxes for Arizona's Broadband Grant ... Congressman Ruben Gallego
Paintsville City Council votes to leave taxes unchanged The Paintsville Herald
Painful property tax hike ahead for apartments — and likely their tenants Mankato Free Press
Springboro seeks renewal of 0.5% income tax levy Dayton Daily News
Deferring Taxes Until Retirement? You May Want to Rethink That Kiplinger's Personal Finance
Namdar beats the Sheriff's sale buzzer, pays up on taxes for ... The Business Journals
How’s the market? To save on taxes, timing matters Ukiah Daily Journal
IRS Grants Louisiana Tax Relief Kiplinger's Personal Finance
Chairman's News | Newsroom | The United States Senate ... - Hearing | Hearings | The United States Senate Committee on Finance
Chairman's News | Newsroom | The United States Senate ... Hearing | Hearings | The United States Senate Committee on Finance
Pop Singer Shakira Charged with Tax Evasion for Second Time CPAPracticeAdvisor.com
MT counties buck governor: won't collect full school property tax Montana Free Press
Florida Men Charged in Multimillion-Dollar Tax Refund Fraud Scheme Department of Justice
Jump in property values raises worry over tax issues on ballot Youngstown Vindicator
County OKs relief for Topeka couple paying taxes on lost house The Topeka Capital-Journal
Wayne County Woman Sentenced for Embezzlement and Filing ... Michigan Courts
Median Household Income After Taxes Fell 8.8% in 2022 U.S. Census Bureau
Will You Owe Taxes When You Sell Your Home? Morningstar
Capital Gains Tax: Rates for 2023, How to Calculate and More - Buy ... The Wall Street Journal
Lawsuit claiming travel firms cost Nevada millions in taxes can move forward - Las Vegas Review-Journal
Lawsuit claiming travel firms cost Nevada millions in taxes can move forward Las Vegas Review-Journal
California Gunmakers Fear Impact of New Taxes on Sales San Jose Inside
Michigan Marijuana Dispensary Owner Convicted of Tax Evasion ... Department of Justice
Republic of Armenia: Review of Tax Expenditures International Monetary Fund
These are the U.S. states with the highest property taxes—New York and California aren't in the top 10 - CNBC
These are the U.S. states with the highest property taxes—New York and California aren't in the top 10 CNBC
Editorial: Pittsburgh's nonprofit tax challenges are struggling, and ... Pittsburgh Post-Gazette
Mitchell City Council to consider adopting $2 hotel BID tax amid ... Mitchell Republic
Europe takes climate fight global as carbon border tax goes live POLITICO Europe
NTA Blog: Nationwide Tax Forum FAQs – Part One National Taxpayer Advocate
How to protect yourself from the ‘Dirty Dozen’ of IRS scammers The Press-Enterprise
'The Enclaves,' a luxury hotel-restaurant project in Southold wins $2.7 million in IDA tax breaks - Newsday
'The Enclaves,' a luxury hotel-restaurant project in Southold wins $2.7 million in IDA tax breaks Newsday
Ferry leaders outline need for added income tax Martins Ferry Times Leader
Wells council talks tax levy | News, Sports, Jobs Faribault County Register
Voter guide: Prop II asks Colorado voters to spend extra nicotine tax ... The Longmont Leader
Foreclosure sale ends with payment of back taxes; Spring Lane Cinema ownership to remain same - The Rant
Foreclosure sale ends with payment of back taxes; Spring Lane Cinema ownership to remain same The Rant
Tax Cuts Are Here to Stay—and So Are Exploding Budget Deficits The Wall Street Journal
Letters: Loveland food tax; Andrea Samson Loveland Reporter-Herald
Steamboat Springs reports sales tax revenue was up 2.65% in August Steamboat Pilot & Today
Wendel Proposes Large Property Tax Rate Cut, Increase In Levy Jamestown Post Journal
Gov’t spokesman: No tax hikes Kathimerini English Edition
State Nonconformity With Section 174 Changes Could Bring Tax ... CLA (CliftonLarsonAllen)
TAS Tax Tip: Waiting on an Employee Retention Credit Refund? - TAS National Taxpayer Advocate
Commission comes with new proposals to simplify tax rules European Commission
Trump advisers plot aggressive new tax cuts for second White ... The Washington Post
Another Tax Loophole
Just image, you are a small manufacturing company, business has been good, but yesterday you received a call from a customer who wants 50,000 widgets in 45 days. The customer is a large account and if you turn the business down, he may never call you again.
What You Need To Know About Taxes If You're Getting Married
It may not be high on the list of wedding planning activities, but there are a few simple steps that can help keep tax issues from interrupting your newly wedded bliss. If you recently married, check out your new tax situation.
Marriage or Divorce - Check Your Social Security Number
Newlyweds and the recently divorced should make sure that names on their tax returns match those registered with the Social Security Administration (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) could unexpectedly increase a tax bill or reduce the size of any refund.
Identity Theft - Impacting Your Taxes?
If your identity is stolen, your finances can quickly become a nightmare. A less obvious problem is the effect identity theft can have on your taxes.
Are You Overpaying Taxes If You Use Tax Preparation Software?
For many business owners the answer to this quandary is tax preparation software. Fill out a fairly simple interview, click "print" and out comes a completed return that will pass muster with the IRS.
Deducting Points On Home Refinances
Deduction of Refinance PointsAny points that you pay in the refinancing of your residence are tax deductible over the length of the loan in question. The deduction is allowable only if the residence is your primary home and the new mortgage replaces a previous one and/or is used to improve the residence.
Euro Tax Haven Threat
Media reporting of a new EU savings tax directive has left many people wondering whether European tax havens could soon become obselete.The July directive requires banks throughout Europe, including low and no tax areas such as Gibraltar, Monaco, Malta and Andorra, to disclose bank account owner information to their home country's tax authority.
Tax Audits: What Signs Make You More Likely to be Audited by the IRS?
It's a major fear for most Americans: A notice from the Internal Revenue Service (IRS) summoning you for an audit.What is it about these three letters that strikes a cord of fear in Americans' hearts? Learning the signs that could put your tax return at the top of the list for an audit, and avoiding them if possible, may put your mind at ease.
How To Claim CHILD TAX CREDIT The Right Way And Add An Extra $2,000 To Your Refund
Tax Jokes and Quotes
Do you realize that some tax forms ask you to check a box if you are BLIND?Quote: "Two years ago it was impossible to get through on the phone to the IRS. Now it's just hard to get through.
About Income Taxes; Tidbits
1812The first attempt to impose an income tax on America occurred during the War of 1812. After more than two years of war, the federal government owed an unbelievable $100 million of debt.
Take Control of Your Taxes
As everyone in the U.S.
10 Tax Tips to Reduce Costs and Increase Income
No one likes paying tax. Everyone understands that tax is a necessary evil and that without it our government would not be able to afford our roads, health services, education, welfare system etc.
Need an Offshore Sales Office in a Tax Free Environment?
The 100 year old investment-banking firm of Warburg, Dillon Read (on Park Ave. N.
Complaince of Tax Return in Electronic Commerce Taxation
Emerging Legal issues of Tax compliance of e-business Self-assessment system relies on taxpayers voluntarily meeting their tax obligations by tax payee. This concept is recognised in all tax statutes, which sets out taxpayers' primary obligations to fill tax return on self-assessment, and clearly spells out that taxpayers are required to determine the amount of tax payable correctly and to pay it on time.
How to Maximize Your Home Business Tax Deductions for 2005
Someone once said, 'the best way to calculate your taxes is?Honestly'. For 2005, add 'Smartly' to that and you'll get to keep more than you make.
Some Folks Pay A Lot Less Tax Than Others On Very Same Income-Did You Pay Too Much Tax In 2004?
Someone once remarked, "Next to being shot at and missed, nothing is quite so satisfying as an income tax refund." There's no question that saving money in taxes is high on everybody's list of financial priorities, especially small-business owners.
Slash Tax when Buying a Business
When buying a business, how the "purchase price" is made up can affect what you pay in tax. The plan is to make as much of the price tax deductible for you and not the other party.
The Tax Man Cometh... To Search
You're at your office, or home, and the doorbell rings - it's the Canada Revenue Agency ("CRA").The first thing to do is find out why they've come.
How to Cut Duty Cost and Increase Profit as an Importer
Import duties continue to be significant elements in the cost of international trade. Yet many companies and businesses still pay more duties than the law requires - which impacts adversely on landed cost and ultimately on business profitability.
|home | site map|