The Federal Board of Revenue (FBR) was on the verge of signing off on a massive waiver of Rs47 billion on outstanding taxes for five cellular service providers, but the move was intercepted by the country’s top anti-corruption watchdog.
FBR Chairman Mumtaz Haider Rizvi was interrogated for over two hours at the National Accountability Bureau (NAB) headquarters on Friday night and was allowed to leave the premises only after he agreed not to issue a notification to write off the outstanding amount, the head of the bureau’s media wing, Dr Ayesha Siddiqa, told The Express Tribune. The Rs47 billion includes a principal amount of Rs26 billion owed by five cellular service providers since 2007. FBR tax auditors had pointed out the discrepancy in 2010.
“The FBR chairman tried to convince FBR officials that the waiver is in line with the law and said he intended to grant it the very next day. However, he had to retreat once he was confronted with relevant evidence and supporting documents,” Siddiqa said. Rizvi himself denies being summoned by the bureau. “I did not have any meeting with NAB’s chairman or his staff recently,” Rizvi said.
Siddiqa accused Rizvi of giving false statements and said he did indeed meet NAB’s chairman Admiral (retd) Fasih Bokhri.
She added that Rizvi had refused to appear initially but agreed after the bureau threatened to issue an arrest warrant against him. Siddiqa added that NAB was committed to taking action against those involved in the case, including Rizvi, as the move would have resulted in a huge loss to the national exchequer. She said FBR officials had been warned against making such move earlier, too, but to no avail.
The cellular companies in question had first approached the office of the Commissioner Inland Revenue (CIR), which asked the companies to pay the tax. Following this, they went to the Appellate Tribunal Inland Revenue (ATIR).
The tribunal upheld the CIR’s decision and directed the cellular service providers to deposit the tax.
The companies, however, remain adamant not to pay the amount. They told the chief commissioner of the Large Tax Unit they were ready to pay interconnect charges applicable from July this year, provided the FBR waives off past liabilities worth Rs47 billion.
The FBR agreed to this offer. Though some reports alleged the FBR authorities of receiving incentives for the move, there is no evidence for such a suggestion. Siddiqa said it was too early to comment on the issue.
NAB’s chief has constituted a fact-finding committee comprising director-general (operations), director (special operations) and a senior banking officer of NAB to probe the matter. Siddiqa said NAB presently had no grounds to assert the FBR was illegally waving off taxes.
Mumtaz Haider Rizvi is already facing pressure to resign from his post, which he himself had promised to do after FBR failed to achieve last year’s revenue target by a whopping Rs65 billion.
Published in The Express Tribune, July 8th, 2012.
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