Collusion with fraudsters in bogus refund claims: FTO tells FBR to take disciplinary actions against taxmen

ISLAMABAD: The Federal Tax Ombudsman (FTO) has strongly recommended to the Federal Board of Revenue (FBR) to take criminal and time-bound disciplinary actions against tax officials who were found involved in collusion with the fraudsters to claim bogus refund claims on fake documents.

The FTO annual report (2020) has specifically talked about the accountability of the tax officials of the FBR.

The FTO office further disclosed that harassment and victimization of persons, who lodged complaints before FTO was also very common. This was discussed with FBR senior hierarchy for issuing appropriate instructions to all field units to refrain from vindictive actions against such complainants.

The report revealed that for effective accountability time-bound completion of disciplinary action against officials involved in gross misconduct or corruption was recommended. It was recommended that in all cases where fake verifications stood established, criminal as well as disciplinary action should be taken against officials who were found involved in collusion with the fraudsters to claim bogus refund claims on fake documents. According to FBR, an Integrity Management Cell (IMC) has been created at FBR headed by Chief Collector Customs (North) for strengthening Internal Accountability mechanism in FBR. Incharge of IMC will be directly reporting to the Chairman FBR. Regional Integrity Committees (RICs) have also been established at field levels, FTO report stated. The FTO has further stated that the faulty human resource (HR) policies included faulty performance evaluation, no job rotation, non-focused training, weak internal controls, corruption and nonexistent internal accountability. FBR needed to develop a set of comprehensive performance measures, which could provide a benchmark on operational activities within each key functional area of the Tax Administration. In this context following measures were recommended: As a first step, the targets for collection through Indirect Taxation mode (such as Withholding or Advance Taxes) and assessment/return based collection of Income Tax may be segregated to judge the performance of Tax Officers on the basis of real assessments and Broadening of Tax Base (BTB). According to FBR performance of officers is monitored holistically, FTO added. In many countries, taxpayers have been protected against arbitrary and unfair treatment by Tax Administration through Charter or Bill of Tax Payers’ Rights. This office sent a set of proposals on the subject to FBR and had been reminding time and again about the importance of this law, which was long overdue and needed prompt attention to ensure fair and equal treatment to taxpayers. The proposal was also repeated at the time of sending budget proposals, FTO office stated.

Copyright Business Recorder, 2021