Islamabad, January 15, 2024 – The Federal Tax Ombudsman (FTO) has launched an investigation into allegations of bribery by officials of the Federal Board of Revenue (FBR) targeting fish exporters.
The FTO has taken suo-motu notice of the matter, initiating an Own Motion (OM) investigation based on claims of the unjust issuance of multiple notices and demands for bribes, causing harassment and negatively impacting the foreign exchange inflow from fish exports.
In an order released on Friday, the FTO expressed concern over the reported issuance of illegal notices related to income tax and sales tax. The allegations include unexplainable withdrawals in certain cases and the imposition of heavy taxes in identical cases by Commissioner Zone-l, Regional Tax Office (RTO)-I Karachi, and his team. According to the FTO, these actions have caused fear, mental distress, and harassment, indicating maladministration.
The FTO invoked its powers under Section 9(1) of the Federal Tax Ombudsman Ordinance, 2000 (FTO Ordinance), following a complaint lodged by the Pakistan Fisheries Exporters Association. The complaint highlighted the issuance of illegal notices related to income tax and sales tax, with allegations that these notices were settled through the acceptance of bribes by the Commissioner Zone-l, RTO-I Karachi, and his team, causing mental anguish and harassment to fish exporters.
The FTO’s order emphasized the importance of the fish export sector, which contributes significantly to foreign exchange earnings. The export of fish products, particularly to China, Thailand, and Middle Eastern countries, generates foreign exchange worth USD 450 million. To support exporters in reducing the trade deficit, the government has facilitated them by deducting only one percent of export proceeds at the source as income tax, constituting the final tax liability.
The FTO’s analysis revealed that show cause notices, threatening unexplained income and suppressed taxable supply, were withdrawn in questionable manners. Assessment orders, often comprising only one page, appeared to have been designed to extort money, with exporters facing unjust taxes in cases where they contested the notices. Higher appellate forums annulled or set aside these cases, exposing what the FTO described as perverse, arbitrary, unreasonable, unjust, biased, and oppressive administrative practices by the Commissioner, Zone 1, RTO-1 Karachi, and his team of officials.
In response to these findings, the FTO directed the FBR to initiate Fact Finding Inquiry proceedings to be conducted by the Directorate General I&I-IR, with a report to be furnished within 60 days. The FTO further instructed the FBR’s Management & HR wing to take appropriate proceedings against officers/officials found involved in maligning the FBR, obstructing an export-oriented sector, and jeopardizing the inflow of foreign exchange for the country, thus compromising national interests.
The investigation unfolds against a backdrop of concerns about corruption and malpractices within government institutions, underscoring the need for transparency and accountability to maintain the integrity of the taxation system and protect the interests of key economic sectors.
