‘Whistle Blower Scheme’: FBR proposes hefty cash rewards for informers

RECORDER REPORT

ISLAMABAD: The Federal Board of Revenue (FBR) will offer hefty cash rewards to the informers and tax officials, who would give information about the non-filers of income tax returns, concealment of income, default of withholding agents, tax frauds and those involved in evasion of sales tax/federal excise duty under a new ‘Whistle Blower Scheme’.

Sources told Business Recorder here on Wednesday that the FBR has submitted the draft of the ‘Whistle Blower Scheme’ to the Ministry of Finance. The FBR has finalized the Finance Amendment Ordinance 2012 which would be issued through a Presidential Ordinance. Finance Amendment Ordinance 2012 would introduce new sections in the Income Tax Ordinance 2001, Sales Tax Act 1990 and Federal Excise Act 2005 to introduce the Scheme.

The provisions for rewards to the Whistle Blower (Informer) and Tax Authorities have also been drafted for incorporation in three Inland Revenue Laws through proposed Presidential Ordinance, sources said.

According to the Finance Amendment Ordinance 2012, the FBR has proposed that after section 146 B, a new section “146C” (Reward to Whistle Blower i.e. informer and Income tax Authorities) would be added. The rewards would be given in cases involving non-filing of returns liable to penalty as per S.No.1 of Section 182 of the Ordinance; concealment of income liable to penalty as per S. No.12 of Section 182 of the Ordinance; or default of withholding tax liable to penalty as per S.No.15 of Section 182 of the Income Tax Ordinance 2001.

The cash reward shall be sanctioned to the Whistle Blower (Informer) giving information regarding non-filers of returns or providing credible information leading to detection and finalization of concealment of income and evasion of tax or establishment of default of withholding tax as the case may he, only after realization of part or whole of such tax. The cash reward shall also be sanctioned to the Income Tax Authorities for detection of concealment and evasion of tax upon finalization of proceedings and after realization of part or whole of such tax, sources said.

The Board may, by a notification in the official Gazette, prescribe the rules and the procedure for sanction of reward and specify the apportionment of such reward amount to Whistle Blower, Income Tax Authorities and the collective welfare of the personnel of Inland Revenue Service.

Under the draft of the Finance Amendment Ordinance 2012, amendment has been proposed in the Sales Tax Act, 1990. After section 75, a new section “76” (Reward to Whistle Blower (Informer) and Officers of Sales Tax) would be added. The FBR will give cash rewards in cases involving tax fraud to the Whistle Blower (Informer) providing credible information leading to detection and finalization of Tax fraud only after realization of part or whole of such tax. The cash reward shall also be sanctioned to the officers of Sales Tax for detection and finalization of cases of tax fraud only after realization of part or whole of such tax.

Through draft Finance Amendment Ordinance 2012, the FBR has proposed amendment in the Federal Excise Act, 2005. After section 47, a new section “47A” (Reward to Whistle Blower (informer) and Federal Excise Officers) would be added in the Federal Excise Act, 2005. The cash rewards would be given in cases involving tax fraud cash to the Whistle Blower (Informer) providing credible information leading to detection and finalization of tax fraud only after realization of part or whole of such tax. The cash reward shall also be sanctioned to the officers of federal excise for detection and finalization of cases of tax fraud only after realization of part or whole of such tax, sources added.