Dar accused of delaying tax refunds

Tax ombudsman alleges minister inflated revenue collection for IMF


Shahbaz Rana June 19, 2016
Federal Finance Minister Ishaq Dar. PHOTO: REUTERS

ISLAMABAD: The federal tax ombudsman has accused Finance Minister Ishaq Dar of deliberately inflating revenue collection figures for painting a rosy picture of the national economy before the International Monetary Fund.

Dar directly controls the release of taxpayers’ refunds with an aim to inflate revenue collection in front of the global lender, states the report commissioned by the FTO Office.

The report also casts doubts over the authenticity of the total outstanding tax refunds, which, the industry people say, have crossed Rs270 billion while the finance minister puts them at Rs200 billion.

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The FTO had constituted a seven-member committee, headed by Advocate Dr Ikramul Haq, on a complaint filed by the Pakistan Apparel Forum chairman about delays in issuance of tax refund cheques by the Federal Board of Revenue (FBR).

“The actual problem leading to delay in payments of refund claims is a political matter and is being handled by the finance minister and the prime minister’s adviser,” the report quotes one of the participants of the committee meetings as saying.

The tax authorities, the report states, are showing gross collection of taxes whereas it should be the net collection after deducting the amount of refunds. “The approval to issue the refund cheques is being obtained from the finance minister,” it said.

The report noted the non-FBR participants of the committee meeting unanimously agreed the FBR officials were deliberately delaying the processing of refund claims and issuance of refund cheques of already-issued refund payment orders (RPOs) to show revenues on the higher side to appease the IMF at the cost of exporters.

The findings once again expose the government’s claim of meeting its revenue collection targets. From July through May of the outgoing fiscal year, the FBR claimed it had collected Rs2.64 trillion. The annual collection target for this fiscal was Rs3.104 trillion.

The IMF imposes a quarterly ceiling on the FBR’s targets, and the failure to achieve these targets also led to a couple of mini-budgets in the outgoing fiscal.

Shoaib Ahmad Faridi, Karachi Chamber of Commerce & Industry’s GST and Refund Sub-Committee chairman, complained the normal claims were being processed without any consideration of date and queue.

According to the sales tax refunds data provided by the FBR to the investigator committee, about 77,891 sales tax refund cases worth Rs111 billion were pending clearance. This includes 13,120 cases worth Rs32.9 billion, where RPOs have been issued.

Pakistan Apparel Forum Chairman Jawed Bilwani had also complained to the FTO that the FBR had created serious liquidity problems for exporters by not issuing refund cheques.

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The committee has recommended the FBR must update data regarding blocked refunds on its website on monthly basis starting from August this year. The data must contain disclosure of accumulated pending refunds as of end July, refunds added during the month, refunds paid during the month and the closing balance at the month-end.

The FBR, the committee said, should expeditiously pay all outstandingly refunds where electronic-RPOs have been issued. It asked the FBR to send monthly report about delayed refunds, compensation accrued and paid to the FTO.

On November 26 last year, Dar told the National Assembly Standing Committee on Finance that outstanding refunds stood at Rs200 billion. “Never before, was this mammoth quantum of refunds ever admitted officially,” the report noted, recalling the remarks of Dar.

Published in The Express Tribune, June 19th, 2016.

COMMENTS (2)

H.A.Khan | 5 years ago | Reply The plain fact is Sales Tax and Income Tax refunds are being withheld by FBR to show inflated collection. I put entire responsibility of FBR for the delay in issuing refunds and resultant decrease in exports due to cash flow problems. FBR should agree to independent audit by priviate accounting firm to truly determine the scale of refunds. The nation will be shoked to know the real number which will be more than Rs 300 Billion
ishrat salim | 5 years ago | Reply PML N especially Mr Dar is master manipulators of figures. His growth figure of 4.7% last fiscal year has already been challenged by outside experts as 3.1%.
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