Pakistan Tax potential amounts to Rs.4-5 trillion: FTO

ISLAMABAD: Federal Tax Ombudsman (FTO), Dr. Shoaib Suddle here on Tuesday revealed that tax collection potential of Pakistan is about Rs.4-5 trillion.

"We have come to know that there is a pilferage in the taxation system and resultantly we are only collecting one third of the tax potential", Dr. Suddle told a news conference here on Tuesday.

Highlighting the performance of FTO Secretariat, he said that in the year 2010, the Office of Federal Tax Ombudsman received 1446 individual complaints of which 955 (66%) pertained to income tax, 276 (19%) to sales tax, 205 (14%) to customs and 10 (less than 1%) complaints involved the Federal Excise Duty.

He added that out of these, 1261 (87%) complaints were decided by December 31, 2010. Additionally, all 175 complaints pending from 2009 were disposed off March 31, 2010.

The FTO said that the 83 percent of the decided complaints ended up in the favour of the taxpayers.

Dr.Shoaib Suddle further said that the average time taken per individual complaint to decide during 2010 was 67 days as compared to 117 days during 2009.

He said that as a matter of fact, there was hardly a complaint that took more than 3 months to decide during 2010.

Exceptionally, he said as against refunds of Rs.94 million in 231 individual cases in 2009, the amount refunded in 685 individual complaints during 2010 on the intervention of Federal Tax Ombudsman exceeded Rs. 1,972 million.

He said that FTO secretariat has decided all complaints purely on merit basis.

He said that there is no room for individual relief adding that FTO secretariat is making all out efforts for further improving its performance for the relief of the tax payers.

He was of the view that if the taxpayer is treated well there will be no evasion of taxes in the country.

He said that in 2010, the Federal Tax Ombudsman for the first time since its establishment in 2000 started conducting suo moto investigations involving matters indicating underlying systemic or major service-delivery issues. 

Under the suo moto jurisdiction, he said that the Federal Tax Ombudsman got settled 400 sales tax cases involving refund of Rs.180 million, and another 805 cases of held-up bank guarantees amounting to Rs.80 million. 

He added that in addition, 194,056 duty draw-back customs cases involving refunds of Rs.4,904 million were got settled during 2010. 

Dr. Suddle said that further amount of Rs.191 million was got refunded in 70 sales tax cases. 

In all, the taxpayers received refunds amounting to Rs.5,095 million during 2010 under the Federal Tax Ombudsman's suo moto jurisdiction, he remarked.

He said that the fine performance of Federal Tax Ombudsman Office is evident from the fact that total refunds got issued to taxpayers in 196,015 cases during 2010 exceeded Rs.7 billion as compared to Rs.2 billion for the entire nine-year period of 2000-2009.

In other words, the amount of refunds issued to taxpayers during 2010 was almost 32 times the average amount of refunds issued annually during the past 9 years.

While the Office of Federal Tax Ombudsman is playing an increasingly critical role in addressing taxpayers' grievances against tax maladministration, the problem is systemic and needs concerted efforts on the part of the Federal Board of Revenue.