Accuse taxmen of maladministration, demanding bribes and freezing bank accounts. PHOTO: FILE
The PSX Stockbrokers Association, which works to protect the interests of the brokers, has approached the FBR headquarters and the Securities and Exchange Commission of Pakistan (SECP) against the FBR’s field officers for alleged malpractices.
It has written letters to these organisations citing “maladministration in the monitoring of withholding taxes, bogus demand and seizure of bank accounts despite refund intimations”.
FBR officers generate a bogus tax demand and then “create fear in the mind of the (association) members,” wrote the general secretary of the association to FBR Chairman Tariq Pasha.
Another brokerage firm defaults within two weeks
When negotiations fail, the same show-cause notice based on bogus demand becomes the basis for the order for tax recovery, said the letter.
It is a rare occurrence when businessmen have lodged a formal complaint as trade bodies and businesspeople usually try to avoid putting things in black and white about corrupt practices of the taxmen.
FBR officers seek bribes after creating arbitrary tax demands, alleged Ghulam Mujtaba Sakarwala, General Secretary of the PSX Stockbrokers Association.
The complaint is related to the Corporate Regional Tax Office (RTO), Karachi. The officers, who were behind creating bogus tax demands, have recently been elevated to the Large Taxpayer Unit, Karachi.
One of them has been made commissioner appeals who would hear grievances of the taxpayers against the orders that he had issued in his capacity as the commissioner of Corporate RTO.
“The FBR never encourages malpractices by its officers and takes appropriate action when and if required,” said FBR spokesman Dr Mohammad Iqbal.
He said he was not aware of the brokers’ complaint and would give a response after reviewing the matter.
It is not an isolated incident where taxpayers have complained about the taxmen. The issue has also been taken up in the past by the Senate Standing Committee on Finance and Revenue. But the FBR could not be forced to mend its ways.
During a recent wave of transfers and postings, the FBR posted certain officers with a questionable record on key posts in the headquarters and in three field offices, said sources aware of the developments.
The FBR field officers demanded bribes in case of withholding tax payments. The monitoring of withholding taxes ought to be a simple affair, but the corporate RTO officers have made the whole exercise a nightmare for the association members, according to the complaint.
Senate panel proposes increased tax on income of stockbrokers
It added during the course of audit, the concerned officer neither examines the salary statements of employees nor pays any attention to other documents. Instead of quoting instances of tax evasion, the officer picks up gross figures from the profit and loss account, applies hypothetical rates of tax deduction and confronts taxpayers with astronomical figures of tax not deducted.
The general secretary said the FBR officers demand tax on the salaries of even those employees who fall below the taxable income threshold of Rs400,000 per annum.
The FBR’s direct tax collection largely hinges on withholding taxes which are of 74 types, indicating its dependence on regressive measures to enhance collections. Withholding taxes are often treated as an indirect mode of taxes, although the FBR does not agree with this.
When negotiations fail, the FBR officers freeze bank accounts of the brokers and draw money against the arbitrary tax demands, claimed the brokers.
The general secretary wrote that the freezing of bank accounts has ruined the business of brokerage houses. The taxmen are not sparing even the clients’ accounts that the brokerage houses maintain as per SECP regulations.
The association has also sought the SECP’s help to stop the FBR from attaching the clients’ bank accounts.
Published in The Express Tribune, August 19th, 2017.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS (2)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ