NA panel: Committee to question FBR over Rs14.7b payment to banks
Tax body paid compensation on Rs50b borrowing for inflating revenues.
The committee would question the Federal Board of Revenue (FBR) about inflating the tax revenues by borrowing from commercial banks STOCK IMAGE
ISLAMABAD:
As the compensation to banks for loans acquired to inflate tax collection grows to Rs14.7 billion, the National Assembly Standing Committee on Finance and Revenue has decided to take the tax authorities to task for the misdemeanor.
The committee would question the Federal Board of Revenue (FBR) about inflating the tax revenues by borrowing from commercial banks, said Omar Ayub Khan, chief of the parliamentary body.
He said the matter would be taken up today (Tuesday) and could be referred to a sub-committee that has been constituted to look into the FBR affairs.
It will be the second such action that the standing committee plans to take to save public money. Earlier, it had taken up the issue of losses in the Bangladesh branch of the National Bank of Pakistan (NBP).
The committee has recommended the Rs18.5 billion losses in the NBP’s Bangladesh branch to the National Accountability Bureau for fixing responsibility and recovering the money. It had been reported that the FBR paid over Rs12 billion in ‘compensation’ to four banks against roughly Rs50 billion advances obtained to inflate the tax collection figures during the period 2010 to the end of 2014. As the commercial banks reveal their annual financial results, the compensation amount has also grown.
Fresh calculations based on balance sheets of the banks reveal that the compensation was given to the tune of Rs14.7 billion. The figure is expected to go further up once the results of NBP for the last quarter are publicly available.
The tax authorities have not even spared smaller banks. They paid “Rs112.8 million in mark-up on delayed tax refunds” to Soneri Bank in 2014, showed the audited statement of the bank.
With the inclusion of Soneri, the number of banks that gave advances to the FBR and earned compensation in return has grown to five.
Earlier, financial accounts of NBP, Allied Bank Limited (ABL), MCB Bank and Habib Bank Limited (HBL) showed that the FBR paid them over Rs12 billion. Against earlier reported figure of Rs8.7 billion, the compensation to NBP stood at Rs9.9 billion from 2010 to September 2014.
Compensation to HBL also stood at Rs1.5 billion after the country’s largest bank declared its financial results for the year ended December 2014. Earlier, the HBL’s compensation was reported at Rs222 million from 2012 to 2013.
MCB Bank received Rs1.12 billion in compensation in 2014 – the PML-N’s tenure. ABL received roughly Rs2 billion from 2013 to September 2014, again in the current government’s tenure.
After one of the banks took the FBR to a tax tribunal for its failure to either return the advances or adjust against tax liabilities, the FBR started paying them 15% interest on the gross amount by misusing the Income Tax Ordinance 2001.
Some of the compensation was concealed from the auditors by creating “fake tax demands”, an FBR official who handled these transactions revealed. The Federal Tax Ombudsman (FTO), which was set up to check FBR’s maladministration, is also investigating this matter.
Published in The Express Tribune, March 3rd, 2015.
As the compensation to banks for loans acquired to inflate tax collection grows to Rs14.7 billion, the National Assembly Standing Committee on Finance and Revenue has decided to take the tax authorities to task for the misdemeanor.
The committee would question the Federal Board of Revenue (FBR) about inflating the tax revenues by borrowing from commercial banks, said Omar Ayub Khan, chief of the parliamentary body.
He said the matter would be taken up today (Tuesday) and could be referred to a sub-committee that has been constituted to look into the FBR affairs.
It will be the second such action that the standing committee plans to take to save public money. Earlier, it had taken up the issue of losses in the Bangladesh branch of the National Bank of Pakistan (NBP).
The committee has recommended the Rs18.5 billion losses in the NBP’s Bangladesh branch to the National Accountability Bureau for fixing responsibility and recovering the money. It had been reported that the FBR paid over Rs12 billion in ‘compensation’ to four banks against roughly Rs50 billion advances obtained to inflate the tax collection figures during the period 2010 to the end of 2014. As the commercial banks reveal their annual financial results, the compensation amount has also grown.
Fresh calculations based on balance sheets of the banks reveal that the compensation was given to the tune of Rs14.7 billion. The figure is expected to go further up once the results of NBP for the last quarter are publicly available.
The tax authorities have not even spared smaller banks. They paid “Rs112.8 million in mark-up on delayed tax refunds” to Soneri Bank in 2014, showed the audited statement of the bank.
With the inclusion of Soneri, the number of banks that gave advances to the FBR and earned compensation in return has grown to five.
Earlier, financial accounts of NBP, Allied Bank Limited (ABL), MCB Bank and Habib Bank Limited (HBL) showed that the FBR paid them over Rs12 billion. Against earlier reported figure of Rs8.7 billion, the compensation to NBP stood at Rs9.9 billion from 2010 to September 2014.
Compensation to HBL also stood at Rs1.5 billion after the country’s largest bank declared its financial results for the year ended December 2014. Earlier, the HBL’s compensation was reported at Rs222 million from 2012 to 2013.
MCB Bank received Rs1.12 billion in compensation in 2014 – the PML-N’s tenure. ABL received roughly Rs2 billion from 2013 to September 2014, again in the current government’s tenure.
After one of the banks took the FBR to a tax tribunal for its failure to either return the advances or adjust against tax liabilities, the FBR started paying them 15% interest on the gross amount by misusing the Income Tax Ordinance 2001.
Some of the compensation was concealed from the auditors by creating “fake tax demands”, an FBR official who handled these transactions revealed. The Federal Tax Ombudsman (FTO), which was set up to check FBR’s maladministration, is also investigating this matter.
At present, total outstanding refunds of taxpayers stand close to Rs200 billion including Rs50 billion of the banks, said an FBR official.
Published in The Express Tribune, March 3rd, 2015.