FBR fails to chase 12,300 people who opted for tax amnesty

They had submitted challans but were unable to file asset declarations

ISLAMABAD: The Federal Board of Revenue (FBR) has failed to nail 12,300 people down who owned black money but could not timely file asset declarations under the last tax amnesty scheme despite depositing Rs2.6 billion in taxes.

These people had submitted bank challans to avail the Pakistan Tehreek-e-Insaf (PTI) government’s 2019 tax amnesty scheme but could not file declarations of assets, which deprived them of availing the scheme. The FBR knows the whereabouts of these people but instead of forcing them to come in the tax net it took benefit of Rs2.6 billion worth of taxes that these 12,300 people deposited to opt for the tax amnesty scheme.

On the one hand, the FBR has failed to broaden the income tax base that actually shrank 12% this year, while on the other hand, its arm-twisting tactics against the existing taxpayers continued amid desperate efforts to enhance tax collection.

As against 2.82 million income tax returns filed in tax year 2018, this year only 2.5 million fulfilled their legal obligation, which led to a 12% contraction in the tax base.

FBR to begin implementing deal reached with traders

The FBR has stopped giving exemption from the advanced income tax deduction on import of raw material and plant and machinery, according to a complaint made by the Karachi Tax Bar Association to the FBR headquarters on Tuesday.

The FBR has already stopped clearing sales tax refunds of exporters for the past 22 days under its FASTER system in the name of system glitch, according to Pakistan Textile Exporters Association Secretary General Azizullah Gohar.

Instead of coming in the tax net through normal channels, these 12,301 people have now knocked the door of the Federal Tax Ombudsman (FTO), seeking his intervention to get their declarations accepted. The FBR too did not bother to go after these people and bring them in the tax net.

Although FTO Mushtaq Ahmad Sukhera has taken notice of the pending amnesty declarations, he has given a week’s time to the FBR to come up with a reply to sort out the dispute. The FTO took suo motu notice of over 300 complaints filed by the aggrieved people, according to a statement issued by the FTO office on Tuesday. The complainants took the plea that the FBR’s online system was not working smoothly on the eve of the last date of the tax amnesty scheme.

The FBR’s top hierarchy told the FTO office that the government could not accept their declarations after the expiry of the amnesty scheme eight months ago. There was a possibility that the FBR could adjust the money deposited by those who were active taxpayers against their future obligations. Many of them are active taxpayers but some of them are not even income tax return filers.

FTO Sukhera held a meeting with FBR members to get their side of the story. The FBR informed the FTO that its PRAL system was perfectly working, therefore, it was out of the question that they could not file declarations due to the faulty system. Pakistan Tax Bar Association had also lodged a complaint with the FTO to take suo motu notice of the 12,301 pending cases with the FBR. These 12,301 people paid Rs2.6 billion in taxes at reduced rates, ranging from 1.5% to 4%.

The PTI government had offered the tax amnesty scheme at very low rates of 1.5% to 4% which expired on July 3. As many as 119,595 people availed of the scheme and paid Rs55 billion in taxes, FBR’s Member Inland Revenue Policy Dr Hamid Atiq Sarwar told the National Assembly Standing Committee on Finance on July 4 last year.

PM urges FBR to restore taxpayers trust

The FTO and the FBR discussed the possibility of accepting these returns by invoking Clause 17 of the tax amnesty law. However, the FBR officials said the Ministry of Law did not vet this plan.

“If any difficulty arises in giving effect to the provisions of this ordinance, the federal government may, through a notification in the official gazette, remove such difficulty as is inconsistent with the provisions of this ordinance,” reads Section 17 of the Assets Declaration Ordinance 2019.

FBR version

When contacted, FBR spokesman Dr Hamid Atiq Sarwar said the FBR could not go after these 12,300 people until the FTO decided the matter. 

Published in The Express Tribune, March 11^th, 2020.

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