Blundering tax-men?

It should not be unreasonable to assume that FBR has awareness of tax status of projects associated with CPEC

Deciphering exactly what was the reasoning behind the seizing of the bank accounts of a Chinese company that is working on the $1.5 billion Karot hydroelectric project may not be easy. The project is a part of the vast complex of works that make up the China-Pakistan Economic Corridor (CPEC) and reportedly has no tax liability. It should not be unreasonable to assume that the Federal Board of Revenue has an awareness of the tax status of projects and companies associated with CPEC. The matter came to light when Minister for Planning and Development Ahsan Iqbal had it drawn to his attention and he ordered an immediate inquiry. He was conducting a routine progress review of CPEC projects and was doubtless surprised at this turn of events.

Early inquiries suggest that the FBR field formations could not defend their moves when questioned, and that they had acted without taking the headquarters of the FBR into their confidence. This raises any number of questions not the least being what level of control the FBR has over its various field units. Was this the actions of a ‘rogue’ element acting in what it decided was the interests of the FBR and the state generally?

Secondly, what level of control or oversight does the federal government have of the FBR in the broadest sense? The actions of the FBR field unit in this instance may be construed as harassment, and unlikely to be viewed favourably by our partners in CPEC which includes a diversity of Chinese private companies. If a section of the FBR can claim that it acted in ignorance of the tax status of the company it raided then there is at the least a breakdown in communication at several points along the line of management and the flow of information. The minister has now banned the FBR from taking any action against any Chinese company that is working on a CPEC project unless it has the express permission of the finance and revenue ministers. Blundering taxmen may be emblematic of a wider malaise — the failure of the left hand to let the right hand know what it is doing.

Published in The Express Tribune, May 6^th, 2017.

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