Tax evasion case: Alvi rejects FBR plea against FTO ruling on INGOs

ISLAMABAD: President Arif Alvi has rejected the FBR’s representation against the order of the Federal Tax Ombudsman (FTO) for referring cases of six International Non-Governmental Organizations (INGOs) for conducting internal audit to ascertain whether any actions were taken against them or not.

The FTO took a suo moto notice on six cases of INGOs involved in multimillion-dollar alleged tax evasion by resident companies, concerns and international contractors.

It argued that its own motion investigations were initiated because the FTO Secretariat has evidence-based information that some of the most meaningful and innovative initiatives of FBR’s officers and field formations stand washed away due to failure to follow up, frequent posting transfers of officers and massive changes of jurisdictions. The FBR’s Broadening Of Tax Base had undertaken reports from 2014 to 2018 and shared them with the FBR’s Large Taxpayer Unit (LTU) Islamabad and CTO Islamabad but the FBR took no action against any of these six cases till 2022.

Moreover, through In-House Analysis FTO Secretariat has also identified that though FBR and its dozens of field formations maintain an organized web portal, rich data center, exhaustive databases, elaborate and comprehensive operational soft wares and houses a full-fledged & homegrown IT support system i.e. Pakistan Automation (PVT) LTD (PRAL), yet neither FBR HQs nor its any single field formation maintains any IT-based tracking system, archiving various valuable initiatives & ventures made by different FBR organizations, officers, teams or specially created cells from time to time.

While conducting the aforesaid in-house analysis FTO Secretariat has information that a list of potential cases of tax evasion, including the six cases in question, along with a detailed investigation report and case study was shared by the Directorate General (DG), BTB FBR with the field formations for action back in Dec 2018. However, in 2019, FBR’s management suddenly shelved the whole BTB regime overnight.

Out of 34 such cases in which notices were issued by the FTO office, compliance has only been made by CTO and RTO Islamabad in 27 cases. As per information provided by field offices, thus far a demand amounting to Rs660 million has been raised in six cases at CTO and RTO Islamabad.

It recommended the FBR direct the Director General Internal Audit-IR to inspect the six cases to ensure that action is initiated and concluded as per information provided by FTO.