Disclosure in this context serves two main purposes. First, it is necessary to provide information for audit selection. Secondly, disclosure is relevant to the issue of the abatement of penalties.

Taxpayers have a statutory obligation to disclose to the Commissioner in a timely and useful way all information required to be disclosed under the tax laws. Disclosure here covers items specifically required to be disclosed by statute, and items for which disclosure is required by the Central Board of Revenue Department. For income tax, under section 26 of sale tax act 1990 and 114 of income tax ordinance 2001, the departments requires a complete statement of the taxable income of the taxpayer for the preceding year, together with such other particulars as may be prescribed. The department?s disclosure expectations cover any requirements set out in a particular tax return, in the guide accompanying a particular tax return, or matters for which a specific disclosure form is prescribed.

In the area of tax returns and compliance, electronic commerce may create new variations on old issues as well as new categories of issues. These developments require that practical techniques be developed to deal with these technological innovations. These technological developments touch on a wide range of issues affecting the filing of tax returns.

Electronic commerce is still developing and no electronic money system has yet achieved widespread usage. Nevertheless, it is important to consider these issues now since some issues may require that the needs of filing and providing of tax returns be considered tax returns be addressed while electronic commerce systems are still under development, the filing of tax return of e-business and furnishing evidence. Commerce on the Web can actually facilitate compliance with consumer disclosure requirements.

A New Yorker cartoon once featured two dogs sitting in front of a computer with a caption that read "[O]n the Internet, nobody knows you`re a dog." Tax administrators face a similar issue.

Under clause (a) subsection 1 of section 114 of Income tax Ordinance 2001 has make it obligatory on Every person and company regarding filing of the tax return, ??subject to this Ordinance, the following persons are required to furnish a return of income for a tax year, namely (a) Every company and any other person whose taxable income for the year exceeds the maximum amount that is not chargeable to tax under this Ordinance for the year;?

Under section 26 of Sale Tax Act 1990 has make it obligatory on every person and company regarding filing of the monthly tax return, ??Every registered person shall furnish not later than the due date a true and correct return in the prescribed form to a designated bank specified by the Board, indicating the purchases and the supplies made during a tax period, the tax due and paid and such other information, as may be prescribed?

Under section 26AA of Sale Tax Act 1990 has make it obligatory on every person and company regarding filing of the Retail tax return, ??Every person required to pay turnover tax shall furnish a true and correct return in the prescribed form to the Office of the Collector having jurisdiction indicating the value of supplies made in tax period, the tax paid and such other information as may be prescribed.?

Identification of the parties to a transaction is a necessary first step in determining what the tax liability is for the transaction and who is liable for any tax payable. In relation to e-commerce, special difficulties are presented. Where business is done through a website the tax authorities must be able to link the website with the "real world" physical parties behind it. A website can easily conceal the true identity of the person benefiting from any business it does. On the Internet it is possible to use a false identity and it is not currently possible to independently verify a party`s identity. This raises a number of issues because the identity of counterparty is important for numerous tax provisions.

Similarly, unless tax administrations actively look for signs that existing businesses are involved in e-commerce the existence of a website could remain undetected. Furthermore, websites can quite easily be set up offshore or offshore websites can "front" onshore business. It is imperative for Revenue to encourage voluntary disclosure of websites used as part of the selling and, possibly, distribution functions of a business. As a modest first step, tax forms will need to be changed to ask about e-commerce and to get the website address of any business selling on the internet.

Finally, how the tax returns and other documents are to be attached as provided in tax provisions.