International NGOs Come Under FBR’s Radar In Multi Million Dollar Tax Evasion Cases

The Federal Board of Revenue (FBR) field formations, with the assistance of the Federal Tax Ombudsman (FTO), have initiated multi-million dollar tax evasion charges against International Non-Governmental Organizations (INGOs).

According to the details, the FTO initiated its motion investigation by section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance) based on evidence-based information that some of the most meaningful and innovative initiatives of FBR’s officers and field formations have been diluted and washed away due to systemic follow-up failure, ineptitude, and incompetence, frequent posting transfers of officers, and massive changes of jurisdictions.

According to FTO Secretariat’s in-house analysis, FBR and its dozens of field formations maintain an organized web portal, rich data center, exhaustive Data Bases, elaborate and comprehensive operational soft wares, and houses a full-fledged & homegrown IT support system such as Pakistan Automation (PVT) LTD (PRAL), neither FBR headquarters nor any single field formation maintains any IT-based tracking system, archiving various valuable documents.

Any thorough, failsafe, and IT-enabled handling of a module (from predecessors to successors) for such projects.

Any institutionalized internal follow-up system or internal review mechanism to determine if the aims envisioned by FBR’s flagship projects have been logically pursued and attained

As a result, in most situations, valuable work is squandered, diluted, or compromised with the movement of persons, dissolution of units/cells, and takeover by new management.

During the previous in-house research, the FTO Secretariat concentrated on 34 probable cases of tax evasion, for which full Investigation Reports with Case Studies were generated and shared by the Directorate General (DG), BTB FBR in December 2018, with the relevant FBR field units.

Given this approach, further action against resident companies/concerned international contractors for failing to declare true particulars of their receipts/income and discharge their duty as withholding agents may have greatly increased national revenue.

However, in 2019, the FBR administration abruptly disbanded the whole BTB regime, disbanding BTB Zones Islamabad, Lahore, and Karachi. The Office of the DG BTB was reduced to a ceremonial body with extra duty. As a result, in addition to losing an effective organization, the repository of all data above/information was abruptly rendered extinct. This kneejerk reaction of FBRs has resulted in a large loss to the state exchequer.

Taking OM note of this evident maladministration by section 2(3)(ii) of the FTO Ordinance, 2000, the FTO office resurrected the dead procedures by re-sharing weakened investigative Reports.

Thus far, the FTO office’s renewed processes have yielded fairly revealing consequences, such as an income tax demand of over Rs. 660 million being created in six (06) such instances, taken up anew by FBR’s concerned field units.

Earlier information released by DG BTB in 2018 was admittedly squandered, shelved, inert, or even lost in most situations.

So far, the tax demand produced has primarily been a default under Section 161/205. However, routine assessment processes based on shared information may establish a similarly large tax demand.

All of the grounds for the immediate OM have been proven. The stupidity, incompetence, and delay created in these instances since 2018 have resulted in tax proceedings being blocked by time in some cases for some Tax Years, another blow to the public coffers.

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