Collection of taxes through ‘coercion’: FTO’s advisory body objects to fake demands

LAHORE: The Advisory Committee of Federal Tax Ombudsman (FTO) has objected to the practice of creating fake demands to collect taxes coercively by the field formations of Federal Board of Revenue (FBR).

The objection was raised by the business coordinators and advisors in the Advisory Committee of FTO in a recently-held meeting to collect budget proposals on last Monday. The committee included presidents of chambers of commerce and industry, chairman of export-oriented associations and tax consultants.

They said the Board has shifted the responsibility of verified identity card from buyers to sellers in the last mini budget to charge three percent extra tax from non-registered buyers. Earlier, it was the responsibility of buyers to provide a verified ID card, they added.

Representatives from the business associations registered their protest over the creation of extra tax demands by the field formations against their members as and when they resist to the imposition of unfair tax liability. They urged the FTO to make part the wrongdoings of tax officials to their annual confidential reports (ACRs) in order to check the practice of raising undue tax demands to coerce taxpayers. The FTO agreed with the proposal and asked the complainants to submit a written request for further action.

It may be noted that creating fake demands has become a norm of the day in the field formations of the Board, most of which are challenged and turned down by the courts. However, the tax officers are found carrying out desk audits while relying on the tools available within the system to create fake tax demands. So much so, they beg tax consultants and chartered accountants of taxpayers for letting them impose tax demands and get them strike off by the courts later on.

According to sources, the phenomenon of creating excessive demands has become popular in the field formations over the last two years. Cases of taxpayers were examined on merit earlier and most of them were cleared if no major legal contraventions were found. They said the Board was seeking daily, weekly and monthly reports of fake demands from the field formations on a regular basis.

Meanwhile, sources from the Large Tax Office (LTO) Lahore told this scribe that both the Zone-I and Zone-II have recently met the demand generation target of Rs17 billion and Rs16 billion respectively.

The overworked mid-career officers in the field formations also prefer to opt for foreign missions job keeping in view the stress out of workload in the Board against low allowances and salaries. They said majority of the aspirants appearing for the trade and investment offices in the foreign missions belong to the FBR.

According to the insiders, 50 percent of the opportunity in the foreign missions was availed by the FBR officers last year. The Institute of Business Administration (IBA) had recently conducted examination for the posts in foreign mission on behalf of the Ministry of Commerce and Trade.

Copyright Business Recorder, 2022