FBR uncovers Rs756bn sales tax scam

ISLAMABAD: In a major tax scandal, the Federal Board of Revenue (FBR) has uncovered sales tax frauds amounting to Rs756 billion, while Prime Minister Shehbaz Sharif has directed the attorney general of Pakistan (AGP) to assist the tax authorities in recouping the maximum possible revenue from the culprits.

Officials from the FBR have contacted PM Shehbaz regarding the identified tax frauds and the measures taken against the offenders, a high-ranking official source told Dawn on Friday.

The premier was briefed on the revenue measures to achieve the revenue target.

In the wake of the detection, FBR has lodged over 100 FIRs against the culprits. The premier asked Attorney General Mansoor Usman Awan and Finance Minister Muhammad Aurangzeb to hold a meeting with the FBR officials to work out a plan for optimal recovery from the fraudsters.

The FBR’s tax collection fell short of the target by almost Rs53bn in April, mainly due to a drop in domestic taxes and customs duty. Revenue collection stood at Rs654bn against a projected target of Rs707bn. It increased by 34.56pc compared with Rs486bn in the corresponding month last year.

According to the source, the prime minister has asked the FBR Chairman Zubair Tiwana to refine his presentation on revenue collection in collaboration with the finance minister for the next three months. Mr Tiwana also claimed that over Rs2.7 trillion in tax amount is stuck in various courts.

The attorney general was also asked to discuss the new legislation with FBR officials and to maximise recovery from cases in litigation.

Appellate tribunals

The government has enacted new legislation to expedite the recovery of disputed taxes.

This law, passed by Parliament on April 29, establishes the Appellate Tribunal Inland Revenue (ATIR) to facilitate the swift recovery of taxes currently in litigation. Remarkably, this law was passed in just a week.

On Friday, President Asif Zardari signed the law, which became an act of parliament.

Currently, 72,000 cases are pending at various forums and there are only 20 ATIRs, whose number is now being increased to 35 to expedite the process. Under the new legislation, the members, equivalent to the high court judges, would be appointed through an open competition and the conduct of tests through reputable institutions like IBA, NUST, and LUMS.

Moreover, the commissioners will continue to hear cases of tax liabilities up to Rs10 million, whereas the other cases will be referred to the ATIR. The duration of the appeal in high courts has been reduced from 90 days to 30 days, with the provision that the taxpayer will automatically get a stay to prevent the immediate withdrawal of the amount from his account.

Awards for officers

In response to the current turmoil within the tax department, the prime minister has ordered an awards ceremony to honour high-performing officers in Lahore on Saturday (today). According to the source, these awards were initially planned for the end of June to recognise officers who excelled in tax collection.

An official announcement of the FBR said that the finance minister visited the FBR Headquarters and held a meeting with the FBR chairman and board members to review revenue collection performance. The Attorney General was also present on the occasion.

During the meeting, the FBR chairman detailed the revenue collection efforts for FY24 and measures for FBR digitalisation to enhance performance.

Various other issues, including pending legal cases, were also discussed during the meeting. It was decided to devise a holistic strategy to actively pursue all pending legal cases for the early recovery of stuck-up revenue, added the announcement.