Information provided by citizens: FTO urges FBR to set up a structured mechanism

ISLAMABAD: The Federal Tax Ombudsman (FTO) has recommended that the Federal Board of Revenue (FBR) establish a structured mechanism for receiving, evaluating, and responding to information provided by citizens regarding revenue leakages, tax-base expansion, and systemic tax compliance issues.

The matter arose from a complaint filed under Section 10 (1) of the Federal Tax Ombudsman Ordinance, 2000, alleging maladministration on the part of the FBR due to its failure to respond to communications submitted by the complainant.

According to the complaint, the complainant had written to the Chairman FBR on 18 January 2024, proposing special measures for the realisation of taxes allegedly not being charged, particularly in relation to taxable supplies. He maintained that the information in his possession had the potential to generate billions of rupees in additional national revenue.

The complainant stated that despite the passage of considerable time, no response was received from the FBR. He subsequently submitted a reminder on 27 October 2025 to the Chairman FBR, warning that failure to address the matter would compel him to seek redress before the Federal Tax Ombudsman. However, the reminder also remained unanswered, leading him to file a formal complaint before the FTO.

During the investigation, the FTO observed that the issues raised in the complaint primarily related to matters falling under the Islamabad Capital Territory (Tax on Services) Ordinance, 2001, and provincial sales tax laws. As these statutes do not fall within the jurisdiction of the Federal Tax Ombudsman under the definition of “Relevant Legislation” contained in Section 2 (6) of the FTO Ordinance, 2000, the complaint was initially closed for want of jurisdiction.

Aggrieved by the decision, the complainant filed a review petition, contending that the FTO had incorrectly assumed that all nineteen reported cases related to sales tax on services. He clarified that only five cases pertained to services, while the remaining cases involved taxable goods, and furnished details to substantiate his position.

While examining the review petition, the Federal Tax Ombudsman emphasised that citizens who, in good faith, provide information capable of broadening the tax base, identifying revenue leakages, or improving tax administration perform a valuable public service.

The Ombudsman noted that such information merits proper institutional consideration, even where it may not fall within the scope of the Inland Revenue Reward Rules, 2021.

The FTO further observed that the case highlighted a significant systemic gap within the existing tax administration framework. Although reward mechanisms exist for certain tax evasion cases, there appears to be no comprehensive process for handling information relating to revenue leakages, tax-base expansion, administrative shortcomings, or broader compliance concerns. As a result, potentially valuable information supplied by citizens may not receive due attention, leading to missed opportunities for revenue enhancement and administrative improvement.

In view of these observations, the Federal Tax Ombudsman recommended that the Federal Board of Revenue examine the feasibility of establishing a structured framework for dealing with information received from citizens and informers regarding revenue leakages, tax-base expansion, and systemic compliance issues.

The FTO specifically recommended that the FBR consider developing transparent eligibility criteria for recognition or rewards in cases where information demonstrably contributes to revenue recovery, prevention of revenue loss, expansion of the tax base, or measurable improvements in tax administration. The Ombudsman also advised the issuance of necessary rules, guidelines, or administrative instructions to effectively implement and oversee such a framework.

The review petition was disposed of in the above terms, and the order in review shall be read together with the Forum’s earlier order dated 20 February 2026.

Copyright Business Recorder, 2026