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Meeting with Federal Tax Ombudsman

Islamabad: A meeting was held with Dr. Muhammad Shoaib Suddle, the Federal Tax Ombudsman, with the prominent presence of Haji Fazal Kadir Khan Sherani, President FPCCI, Mr. Tariq Sayeed, Vice President CACCI and former President, FPPCCI and SAARC CCI, Mr. Ehtishamuddin, Chairman Korangi Association of Trade and Industry (KATI), office bearers of KATI, Mr. Masood Naqi, Mr. Muhammad Mansha Churra, former Vice President FPCCI, and Chairman Standing Committee on Liaison with FBR and Engineer M.A. Jabbar, former Chairman SITE Association. Besides these, a number of other businessmen were also present at the luncheon meeting with FTO.

Mian Zahid Hussain, Chairman FPCCI Standing Committee on Sales Tax and President All Karachi Industrial Alliance, host of the meeting told, that the FTO should have the powers of the high court so that its decisions could be implemented in letter and spirit.

He added that tax collection potential of Pakistan could be around Rs 4-5 trillion provided business friendly atmosphere is extended to the business community and FTO office is also endeavoring for the same. There are loopholes and pilferage in the taxation system and resultantly the FBR is only collecting one third of the actual tax potential.

Mr. Mansha Churra appreciated the indispensible role played by the office of the FTO in facilitation of the business community. Engineer M.A Jabbar also commended Dr. Suddle on his achievements during his tenure as FTO.

Mr. Fazal Kadir Sherani welcomed Dr. Suddle and appreciated the office of FTO which has earned great esteem and value amongst businessmen due to the resolutions of issues and addressing of grievances of taxpayers in the shortest span of time towards disposal of the matters and cases brought to his notice.

Mr. Tariq Sayeed also concurred with Mr. Sherani and said that the institution has lived up to our expectations and we would like to contribute in strengthening of the FTO institute by negotiating with the Government of Pakistan, the needful required resources and facilitations in any mode and manner, to further value add the future performance of the institution.

He said that the research and development wing of any institute is the key to its success and as well as the same will help in suggesting key reforms in taxation machinery, statutes and other associated matters, which the FTO institute should undertake.

The resources required out of the expenditure of the Federal Government should be provided to the office of FTO and the business community will voice for the same on the basis of a worked out strategy towards the objectives of needful research and development, analysis of tax statutes.

He said that the balancing of the rights between taxpayers and tax collectors is contributed by just and fair tax statutes. The office of FTO can out of its own experiences and decisions given can become an input for such a research of tax laws. He said that we must together work towards the same.

Dr. Shoaib Suddle, the Federal Tax Ombudsman gave a detailed briefing to the businessmen present in the luncheon meeting and apprised the performance of the FTO for the year 2011. 2011 has been an historic year in several respects for the Office of the Federal Tax Ombudsman (FTO) Pakistan..

In 2011, a sum of Rs 7.89 billion was got refunded to the taxpayers as compared to Rs 7.08 billion during 2010. In addition, under his suo moto jurisdiction, the FTO got settled 181,880 duty draw-back customs cases involving refunds of Rs 6.63 billion during 2011 as against 194,056 duty draw-back cases involving refunds of Rs 4.9 billion in 2010.

In early 2011 the FTO submitted the ‘Container Scam’ investigation report to the Hon’ble Supreme Court. The ongoing follow-up investigation has led to detection of at least 28,802 commercial containers and a further 3,542 containers imported in the name of ISAF/NATO that went ‘missing’ during the period January 2007 to October 2010. While the security-related aspects of the scam are yet to be quantified, the colossal loss of revenue, assuming that these containers carried the usual smuggling-prone items, has been estimated at over Rs 60 billion.

The impact of FTO investigation on local industry, which was dying due to flood of ‘duty-free’ smuggled items, has been phenomenal. Not only has the transit-related ‘smuggling’ registered a staggering drop of 60%, the investigation is yielding over Rs 1 billion per month in additional revenue due to diversion of smuggling-prove items to regular import channels.

While the FTO has emerged as a role model institution in improving good governance in Pakistan, the problem of maladministration is deep-rooted and needs concerted efforts on the part of both Government and FBR to effectively control it.

The businessmen interacted with FTO on the need to have independent tax judicial system separate from the executive collection machinery of FBR in conformity of the Constitution of Pakistan. The businessmen brought to the notice the matter related to the harsh treatment given by FBR with regard to the registration of cases in matters of reconciliation of sales tax deposits.

The businessmen were of the view that they would concur with FTO for creating awareness of the businessmen towards easy access to inexpensive administrative gestures with regard to taking cognizance of maladministration of tax functionaries and illegal orders passed by tax machinery.

FTO responding to various queries said that his office is willing to attend all the matters as and when they are brought to his notice for befitting and fair disposal as the history registered with his office would show that 80% of the cases filed before FTO against tax machinery are decided in favour of taxpayers.

Businessmen were of the view that as a matter of balancing rights of taxpayers and tax collectors appeals filed by tax collection machinery against the order of FTO to the President by FBR should not be hostage of indefinite stay, but in case no decision is given on the appeals filed by FBR within 6 months, the same relief and decision given by FTO should hold the field and be implemented.

They referred to the stay of recovery in matters of fiscal demands which has life of six months in the cases filed under Article 199, whereby the recovery is given effect after six months by FBR, even if decision is not made or given by the Court.

FTO responding to the same said that businessmen should develop knowledge based arguments for incorporation in the Budget during which statutes are changed and amended. The rationalization of a good paper always has fair chances of success. He advised the businessmen to give FBR focused suggestions to reform the system, which will reduce litigations as well as contain maladministration.

For more information, contact:
Syed Masood Alam Rizvi
Secretary General
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
B-1, Federation House, Main Clifton Road,
Karachi-75600, Pakistan
Tel: +9221 3587 3691
Fax: +9221 3587 4332
Email: info@fpcci.com.pk

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