Fixing the clockwork: Tax bureau’s database to face audit by World Bank

A report on tax affairs of parliamentarians has spurred doubts on security issues in database system.

ISLAMABAD:

The government has decided to pursue third-party audit of a body handling the entire data of the tax bureau Federal Board of Revenue, as the first detailed report on tax affairs of parliamentarians had put question marks on security of the data and its authenticity.

The audit of Pakistan Revenue Automation (PRAL) – a subsidiary of the Federal Board of Revenue – will be conducted by a company hired by the World Bank (WB), according to an official. The expenses will also be borne by the WB. The PRAL is responsible for providing Information Technology solutions and maintains the entire data of the FBR.

He said the audit of the company was long overdue and the publication of the report ‘Representation without Taxation’ has reinforced the case for conducting audit. The FBR was not worried about the fact that parliamentarians’ data had been leaked but it was a matter of concern that the citizens’ data was not secured.

He added, the other element that has reemphasised the need to conduct audit was the authenticity of data, as in many cases there are variations in numbers and so far few parliamentarians have claimed that information pertaining to them was wrong.

The FBR admits the flaws of the PRAL system and does not blame the author of the report – Umar Cheema – who is an investigative reporter. So far, the FBR had claimed that there were 1.5 million regular income taxpayers in the country. But according to FBR’s own fresh findings the actual number is only around a meagre 800,000, exposing the weaknesses of the database.

In yet another clarification, issued here on Saturday, the FBR spokesperson said Anusha Rahman Khan, a member of the National Assembly, registered since September 8, 2005 has, according to FBR’s records, been paying her income tax dues since 2004 and filing yearly tax returns.

The report had claimed that Khan was a non-filer. Earlier, Farzana Raja, chairperson of the Benazir Income Support Programme had contracted the report’s claim that had shown her as tax avoider.

The author of the report, Cheema has challenged the revenue authorities and all the parliamentarians to prove his findings otherwise and take him to court. He said there was no problem as far as the information given in the report was concerned. He said everyone was forgetting that the report only talked about the financial year 2010-11.

The FBR has been admitted the loopholes in the PRAL system. According to FBR’s eye-opening report on PRAL’s IT initiatives, “two-third of the FBR officials have not heard about most of the software applications, developed for them and in their name.” It goes on to say that 91% of the FBR officials were not trained and the level of usage of software applications in the offices was less than 9%.

The report findings say that the PRAL was working in isolation and so far had failed to integrate all the FBR services, which the tax avoiders were using to shun the system.



The efforts to integrate tax management systems shelved without reasons in 2004, it added, the software applications were not user-friendly to the end-users domain of Income Tax, Sales Tax, Customs and Federal Excise Duty.

The obsoleteness of the PRAL software was also highlighted by the federal auditors. According to a report, lack of monitoring of processing of refund claims by STARR (Sales Tax Automated Refund Repository) software caused excess payment of Rs1.8 billion. Moreover, Rs22.1 billion refunds could not be processed due to the same reason.

The FBR official said the audit was aimed at unifying revenue systems, closing all loopholes and integrating the risk management systems.

He added there were silos of information, as separate applications existed for web and offline versions. “The results are inconsistent and delays in data synchronisation causing variable reporting.”

“Audit of PRAL’s system was never done to determine as to whether the software applications in vogue do fit into the industry standards,” according to the FBR report.

The FBR could not get the desired results despite spending billions of rupees in the last 15 years. The main reason was that automation had never been handled with a clear vision. So far PRAL had developed over 37 software and these applications were completed without going through the due process and without adequately documenting the requirements of domain.

But PRAL’s data collection could not be translated into information to generate revenues.

Published in The Express Tribune, December 16^th, 2012.