Karachi, January 13, 2024 – The Federal Tax Ombudsman (FTO) has taken a significant step towards ensuring tax compliance within the private education sector by directing the Federal Board of Revenue (FBR) to conduct a thorough tax audit of Watim Medical College.
This medical institution, despite being a lucrative business, has been filing nil income tax returns since 2017.
The FTO, in an own motion investigation into the tax affairs of Watim Medical College, has urged the FBR to initiate a comprehensive audit of the college’s financial records. The institution, which has been consistently filing nil income tax returns for the past five years, is now under scrutiny for its apparent non-compliance with tax regulations.
The FTO’s investigation has shed light on the broader issue of private medical colleges in Pakistan not receiving adequate attention from tax authorities. With around 75 Pakistan Medical and Dental Council (PMDC) approved medical colleges and 43 dental colleges in the country, there has been a lack of focused oversight on the tax matters of these private educational institutions.
The FTO, in its findings, expressed concern over the irregularities and violations of tax laws reported in the national press and on various medical-related websites regarding private medical colleges in Pakistan. Despite being involved in a highly profitable business with substantial annual receipts, these institutions seem to have evaded the attention of the Corporate Tax Office (CTO) in Islamabad.
Watim Medical College, registered in August 2017, has been regularly filing withholding tax statements. However, discrepancies arise as the CTO confirmed that nil withholding statements have been filed. This failure to withhold taxes at source, a blatant attempt to evade chargeable tax, has gone unaddressed by the tax authorities.
Furthermore, the FTO pointed out the lack of withholding tax audits conducted by the department, allowing potential revenue-yielding cases to slip through the cracks. The college’s website provides a detailed breakdown of local receipts, fees received from overseas, and payments from foreign students. Still, no efforts have been made by tax authorities over the past five years to cross-check this information with the college’s foreign currency and PKR accounts.
The FTO also highlighted the apparent inaction and ineptitude of the CTO in Islamabad. Despite the college’s website showcasing a highly qualified faculty, the CTO remains oblivious to this aspect and has not ensured tax withholding under Section 149 of the Income Tax Ordinance, 2001.
In conclusion, the FTO’s directive to conduct a tax audit of Watim Medical College underscores the need for increased scrutiny and regulation within the private education sector. It is essential for tax authorities to proactively address potential tax evasion and ensure that private institutions contribute their fair share to the national revenue, fostering a culture of compliance within the business and educational community alike.
