Islamabad, August 25, 2024 – The Federal Board of Revenue (FBR) has issued a draft Statutory Regulatory Order (SRO) 1290(I)/2024 on August 24, 2024, aimed at resolving tax disputes involving state-owned enterprises (SEOs) through Alternate Dispute Resolution Committees (ADRCs).
According to the new directive, all SEOs must address their tax-related disputes with the FBR using ADRCs, regardless of the tax liability involved. This move is part of the FBR’s efforts to streamline the resolution process and reduce the backlog of pending cases. The issuance of SRO 1290(I)/2024 amends the existing Income Tax Rules, 2002, to accommodate the revised guidelines.
The SRO defines a “state-owned enterprise” in line with the State-Owned Enterprises (Governance and Operations) Act, 2023. Under the new rules, any SEO, irrespective of the amount of tax liability, can apply for a resolution of its disputes through the ADRC mechanism.
The FBR mandates that any SEO that feels aggrieved must submit a formal application to the Board for the appointment of an ADRC. This provision applies to all taxpayers, including individual entities and classes of persons seeking dispute resolution.
To facilitate this process, the FBR will establish a panel comprising retired officers of the Inland Revenue Service (IRS) in BS-21 and above, chartered accountants, cost and management accountants, advocates with at least ten years of experience in taxation, and reputable business professionals. These panel members will be selected based on criteria specified in Part II of the Schedule to the rule, and they will provide secretariat support to the ADRC.
Once appointed, the ADRC has the authority to review the case, gather additional information, request expert opinions, or conduct inquiries as necessary. The committee is required to reach a decision within 45 days of its formation, which can be extended by an additional 15 days if necessary, with reasons documented in writing.
The decision made by the ADRC is binding on the Commissioner, provided the applicant is satisfied with the outcome and withdraws any pending appeals before a court or appellate authority. This withdrawal must be communicated to the Commissioner in the prescribed form within 60 days of receiving the ADRC’s decision. If this communication is not made within the stipulated time frame, the ADRC’s decision will not be binding on the Commissioner.
Following the ADRC’s decision, the applicant must pay the taxes determined by the committee. All prior decisions and orders will be modified to reflect the committee’s ruling. Additionally, each member of the ADRC will receive a one-time remuneration of Rs 100,000 for their services. The FBR has committed to disbursing this payment within 15 days of receiving the committee’s decision from its budget allocation.
This initiative by the FBR aims to provide a more efficient and structured approach to resolving tax disputes, thereby enhancing compliance and fostering a more cooperative relationship between the tax authority and state-owned enterprises.
