Cyber attack on FBR’s database: Only system disrupted but no data stolen, says FBR chief

ISLAMABAD: After exceeding tax collection by Rs160 billion in the first two months against the envisaged target, the Chairman FBR Dr Muhammad Ashfaque said on Tuesday that the government would honour its obligations in case of those who had availed tax amnesty for possessing offshore assets abroad. The FBR chief conceded that the cyber attack on FBR’s database succeeded in disrupting the system but failed to get access to any data or transaction details. “The FBR is not in the business of repatriation of money but we are supposed to tax unexplained/undeclared assets lying abroad. The government provided two tax amnesties and owners of offshore assets whitened their assets/ income by availing these schemes. We got information from OECD in bulk but if the parliament has granted amnesty scheme, then it has become a routine issue for us,” the newly-appointed Chairman FBR Dr Muhammad Ashfaque said in his maiden press conference here at the Board’s headquarters.

When asked about the cyber attack on the FBR’s database and having any link with the resignation of CEO PRAL, the chairman FBR replied that the CEO PRAL had tendered his resignation prior to the cyber attack on database, he had completed his notice period and was now no more attached with them. However, the FBR’s Chief Information Officer, Mansoor, replied that there was no evidence that the FBR’s data was leaked but the attackers succeeded in disrupting the system. “There has been a breach of system and it seems that the attackers did not want to go beyond that,” he said and added there were total 850 data machines out of which 400 got disrupted. “The data was not lost at all,” he made it clear.

When asked that the data was sold for $26,000, he said that nothing of this sort had happened. He further said that there were hectic procedures involved for procuring $80 million equipment with the help of World Bank money and it was hoped that all required procedures for making procurement would be completed soon.

To another query about the anti-reform elements within the ranks of FBR, the chairman FBR said that 16 Reform Commissions were established in the last 72 years and all of them had written 11,500 papers to reform the tax system of the country. He said that they were all tax professionals working into the fold of tax machinery and possessed political space behind the FBR team.

While sharing the FBR’s tax collection figures, he said that the total collection stood at Rs850 billion in the first two months (July and August) 2021 against the fixed target of Rs690 billion, so the tax collection exceeded by Rs160 billion or achieved the envisaged target by 123 percent.

The FBR’s net tax collection stood at Rs850 billion in the first two months of the current fiscal year against a collection of Rs603 billion, so the FBR achieved a growth of 41 percent. The FBR’s net collection stands at Rs434 billion in August 2021 against the desired target of Rs349 billion, so the collection exceeds by Rs85 billion.

Answering a query, he said that the tax collection at the import stage was probably more than 50 percent in the first two months. When asked about the FBR’s strategy if the government took steps to curtail rising imports, he said that the FBR would take into account all possible risks. He said the FBR would exceed its envisaged tax collection target of Rs5,829 billion and would go close to what the IMF was asking for on the occasion of the last budget. The chairman FBR did not explain but the IMF was asking the government to assign the FBR collection of Rs6 trillion for the current fiscal year. The chairman FBR said that the FBR collection remained stagnant at around Rs3.8 trillion in the tax year 2018-2019 and 2020. In the last tax year 2021, the FBR’s collection touched Rs4.735 trillion, showing a growth by 18.45 percent.

When asked about the ratio of direct and indirect taxes, Dr Muhammad Ashfaque said that there was no difference between direct and indirect taxes for him. He did not explain fully when asked about the contribution of rising inflation into the collection of FBR. The chairman FBR parried a question when asked why he was appointed when he was in Grade-21 and the chairman said only that it should be asked from the government.

Regarding the benami assets and FBR’s efforts to catch them, he replied that it became difficult to prove in court of law as India made the law before us but they were unable to take many actions. He said that the FBR generated tax demand of Rs2.6 trillion and it would be materialized into revenue in a gradual manner.

The FBR Member Customs, Tariq Huda, said that the FBR took steps against smuggled POL and curbed $2 billion smuggled products by raiding 1,600 petrol pumps all over the country.