The Federal Board of Revenue (FBR) has barred the Pakistan Revenue Automation Limited (PRAL), the IT arm of the FBR, from directly providing taxpayer''s electronic data to the Auditor General of Pakistan (AGP) to ensure confidentiality of taxpayers direct and indirect taxes data.
Sources told Business Recorder here on Saturday that the FBR is ready to provide access to the soft data of the taxpayers to the AGP with the mandate to ensure confidentiality of the taxpayers'' data. It is the FBR''s responsibility to protect taxpayers'' information confidentiality to check any misuse of the business transactions. In this connection, the FBR will design a special computer program to provide access to only necessary soft data to the AGP for carrying out audit of the registered persons.
The FBR is ready to provide soft data to the AGP provided the taxpayer''s information should not be used for any purpose other than audit by the external auditors of the AGP. The FBR is in the process of chalking out a methodology to ensure that the audit authorities must conduct meaningful audit within the powers, jurisdiction and limitations as per law.
According to sources, Auditor General of Pakistan conducts the audit of the FBR and its attached departments'' under the authority vested in it by the Constitution of Pakistan. In the past, the audit was conducted in the tax offices on the basis of record of the taxpayers as maintained by FBR and its subordinate offices.
For quite some time, the audit authorities had been requesting for access to the soft data that could ostensibly be loaded by them for audit purposes. In one of the meetings of the special committees of Public Accounts Committee (PAC), the request was reiterated and FBR Chairman, in principle, agreed to provide access, sources stated.
In order to examine the request of AGP for providing soft data of the taxpayers for audit purpose, a meeting between the FBR and AGP officials was held in the office of FBR Member (Enforcement & Accounting). It was attended by representatives of Inland Revenue (IR), Customs and the Admn Wing and PRAL, which maintains the soft data for FBR. The FBR and the AGP officials discussed basic considerations and imperatives on this count as follows:
Firstly, the FBR and all organs of the state of Pakistan have the responsibility to protect taxpayers'' privilege and information confidentiality. Secondly, all applicable laws, rules and regulations of income tax, sales tax, federal excise and customs have to be fully respected.
Thirdly, the ownership of data belongs to FBR and role of a service provider like PRAL is to comply with FBR instructions. The PRAL cannot serve or decline a data request of its own and neither should any request or direction be made to PRAL directly.
Fourthly, the office of the Auditor General has a clear mandate to undertake audit of FBR and in this respect it needs access to such information as is relevant to the performance of this task. Fifthly, it needs to be ensured by all parties that the information provided is relevant and meaningful and does not lead to incorrect findings. The business rules for data reporting should, therefore, be carefully devised, agreed upon and documented and validated.
Sixthly, all of the above considerations and imperatives have to be fully respected in devising a mechanism for meeting the request of the office of Auditor General of Pakistan for access to FBR''s electronic data. Sources said that the Chief Executive (CEO) of PRAL expressed his viewpoint in the light of discussions in the meeting and proposed the following mechanism that may be considered by FBR for implementation for the purpose of providing access to electronic data.
"An AGP Menu will be provided in FBR''s Integrated Tax Management System (ITMS). This menu will be accessible to designated personnel of AGP. This menu will only be accessible from FBR ''WAN'' or ''VPN", FBR agreed. Sources said that the technical features and privileges of this menu will be similar to and not exceed what is available to an FBR officer. This will, inter alia, mean that all outputs will be in a pre-agreed format (programmed through a formal interface) and visibility of underlying data schemas will not be available. Similarly, data download will not be available.
There will be two general types of enquiries or reports available: One is the enquiry or report involving a single taxpayer and the second is the enquiry or report involving many taxpayers. Sources said that the specific content and format of each enquiry or report will be requested by AGP, approved by FBR and programmed/provided by PRAL on case to case basis. Resultantly, the system will maintain log of each enquiry. The range of taxpayers which can be enquired upon by any user from AGP will be determined by the jurisdictional mandate of that user.
Sources further said that the detailed business rules for complex reports and analysis will be pre-specified, pre-agreed and pre-tested and signed-off before these reports and analysis are put into production. Sources said that the following methodology will be adhered to in implementing and maintaining the above mechanism, which is in accordance with well recognised Software Development Life Cycle processes:
Firstly, the AGP will provide to the designated officer at FBR a Requirement Definition or Change Request document. The designated FBR officer after approval will forward this document to PRAL. Secondly, the PRAL will prepare a Requirement Specification Document (RSD) which will be provided to the concerned officer of FBR who will communicate it to AGP. On AGP''s approval, PRAL will program and enable the functionality for User Acceptance Testing (UAT). A joint user group of AGP and FBR will carry out the UAT.
On successful completion of the UAT, signified by a joint approval of the UAT by the AGP-FBR team, the functionality will be promoted into production status and final judgement would be acceptable to all concerned departments. The FBR Enforcement Wing is of the view that since a decision has been taken to provide access to AGP, FBR may devise a mechanism and adopt a methodology for this purpose in such a way that audit authorities are in a position to conduct a meaningful audit and make such suitable recommendations as may deem appropriate by them but that are implementable. This Wing agrees with the opinions expressed by the representatives of various Wings of FBR regarding sanctity of the data, basic purpose of audit and practical issues related to provision of soft data to the offices representing AGP, as may be suggested by them.
In the meanwhile, Chief (Automation-IR) has intimated that the audit authorities are pressing hard for provision of necessary access to them in the light of requirements contained in their letter. It will thus be appreciated if the requirements of audit for provision of access to the soft data, as aforementioned, are examined and exact mechanism and methodology to be adopted by each FBR Wing it must be intimated to this Wing immediately so that a consolidated response is sent to AGP.
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