Countering tax malpractices
In Pakistan, when people are endowed with power, they are likely to abuse it
Tax returns. PHOTO COURTESY: NEW PAKISTAN
It is not unfair to say that corruption at the top infiltrates through the ranks and consequently permeates our institutions at large. Moreover, in our society, it may be said that when people are endowed with power, they are likely to abuse it. Over and over again. In another blow to the Federal Board of Revenue (FBR), brokers at the Pakistan Stock Exchange have lodged a complaint against alleged malpractices on the part of tax officials. It is quite startling to learn that the charges cited include “maladministration in the monitoring of withholding taxes, bogus demand and seizure of bank accounts despite refund intimations”. Federal Board of Revenue officers create a bogus tax demand and then “create fear in the mind of the (association) members,” or so claim the general secretary of the association to FBR Chairman Tariq Pasha.
What’s saddening and unfortunate about this issue is that it is uncommon for businessmen to lodge a formal complaint since trade bodies and businesspeople usually try to avoid putting things in black and white about corrupt practices of the taxmen. This in itself speaks volumes for how grave the matter has become. The association said that instead of adjusting the “arbitrarily” created demand against the already determined refunds, the concerned officer seizes all bank accounts of our members. While doing this, even bank accounts reserved by law for keeping “funds of the clients only” are not spared.
The nature of brokerage business is quite distinctive. Brokers cannot keep any money out of the bank. All business goings-on are copiously documented and recorded to the degree of nanoseconds – at least that is what’s supposed to happen. Laws applicable to business demand that the money belonging to clients must be kept in separate bank accounts marked by the bank as “client account.” The FBR needs to issue special instructions to field officers that the money lying in such accounts may not be treated as money belonging to the brokerage house. Adequate measures to that effect must be taken. Prompt investigation and immediate attention is needed to thwart such rampant tax malpractice on the part of the FBR. An inquiry must be held to determine all those accountable for such emerging complaints.
Published in The Express Tribune, August 21st, 2017.
What’s saddening and unfortunate about this issue is that it is uncommon for businessmen to lodge a formal complaint since trade bodies and businesspeople usually try to avoid putting things in black and white about corrupt practices of the taxmen. This in itself speaks volumes for how grave the matter has become. The association said that instead of adjusting the “arbitrarily” created demand against the already determined refunds, the concerned officer seizes all bank accounts of our members. While doing this, even bank accounts reserved by law for keeping “funds of the clients only” are not spared.
The nature of brokerage business is quite distinctive. Brokers cannot keep any money out of the bank. All business goings-on are copiously documented and recorded to the degree of nanoseconds – at least that is what’s supposed to happen. Laws applicable to business demand that the money belonging to clients must be kept in separate bank accounts marked by the bank as “client account.” The FBR needs to issue special instructions to field officers that the money lying in such accounts may not be treated as money belonging to the brokerage house. Adequate measures to that effect must be taken. Prompt investigation and immediate attention is needed to thwart such rampant tax malpractice on the part of the FBR. An inquiry must be held to determine all those accountable for such emerging complaints.
Published in The Express Tribune, August 21st, 2017.