Tax-related disputes: SOEs allowed to adopt ADR facility before litigation

ISLAMABAD: The government has decided to allow state-owned enterprises (SOEs) to first avail the facility of the Alternative Dispute Resolution (ADR) mechanism for the settlement of tax-related disputes with the Federal Board of Revenue (FBR) before filing appeals.

Explaining the Tax Law Amendment Bill, 2024, tabled before the National Assembly, a tax expert told Business Recorder that a new mechanism is created for ADR in three fiscal statutes; i.e., Sales Tax Act, 1990, Federal Excise Act, 2005 and Income Tax Ordinance, 2001 for cases of Rs50 million and above. This limit is not applicable in the case of SOEs.

The time limit for filing an appeal is reduced from 60 to 30 days for taxpayers. In the case of SOEs, an appeal can be filed within 30 days from the date of a decision of the Alternative Dispute Resolution Committee (ADRC) under Section 134A of the Income Tax Ordinance.

A Directorate-General of Law is proposed to be established in fiscal statutes.

Now, the federal government shall be appointing authority for members instead of the prime minister.

As per the bill, the existing members including the chairman of the Appellate Tribunal shall continue to hold office, on the same terms and conditions as applicable to them prior to the commencement of the Tax Laws (Amendment) Act, 2024.

The proposed Tax Amendment Act has removed the distinction of accountant member and judicial members. The qualification of lawyers for becoming a member is increased from 10 years of practice to 15 years of practice in the High Court. Chartered Accountant’s qualification for becoming a member remains the same. The tenure of service for members from FBR in BS-21 and 20 remain the same. For grade 20 officers no prior experience as Zonal or Appellate Commissioner is, now, necessary.

The tenure of the chairman is fixed for a period of three years and can be reappointed if the federal government deems fit, the tax expert explained. The age limit is increased from 60 years to 62 years (equivalent to the retirement age of a High Court judge) for members possessing law and accounting background. The members from the FBR shall retire as per the parent department’s rules for superannuation.

Copyright Business Recorder, 2024