Karachi, December 6, 2023 – The government of Pakistan has introduced a reward system for whistleblowers who provide credible information leading to the detection of sales tax evasion.
The initiative is part of the Federal Board of Revenue’s (FBR) efforts to enhance compliance with tax regulations and ensure the fair collection of taxes.
The FBR has updated the Sales Tax Act, 1990, for the tax year 2024, incorporating Section 72D that specifically addresses the reward system for whistleblowers. This section outlines the criteria, procedures, and conditions under which whistleblowers may be eligible for rewards.
Section 72D. Reward to Whistleblowers:
(1) Reward Authorization:
The FBR has been granted the authority to sanction rewards to whistleblowers in cases involving the concealment or evasion of tax, tax fraud, corruption, or misconduct. These rewards are contingent upon the provision of credible information that leads to the successful detection of tax evasion or fraud.
(2) Prescribed Procedures:
The Board is empowered to prescribe the procedures for the reward system through notifications in the official Gazette. Additionally, the apportionment of the rewards sanctioned under this section for whistleblowers will be specified through the same notifications. This measure ensures that the process is transparent and follows established guidelines.
(3) Conditions for Reward Claim:
The claim for a reward by a whistleblower will be subject to rejection if:
(a) The provided information is deemed of no value.
(b) The Board already possessed the information.
(c) The information was publicly available in records.
(d) No tax collection results from the information provided, preventing the Board from disbursing a reward.
(4) Definition of Whistleblower:
For the purposes of this section, a “whistleblower” is defined as an individual who reports concealment or evasion of sales tax, tax fraud, corruption, or misconduct. The report must lead to the detection or collection of taxes and expose fraud, corruption, misconduct, or involvement in tax evasion by a person or a sales tax authority.
This initiative underscores the government’s commitment to combating tax evasion and fostering a culture of accountability. By incentivizing individuals to come forward with credible information, the authorities hope to strengthen their ability to uncover instances of fraud and misconduct in the sales tax domain.
The move aligns with global best practices, where whistleblower protection and reward mechanisms have proven effective in promoting a more transparent and law-abiding business environment. Whistleblowers, as key stakeholders in this effort, are encouraged to provide accurate and timely information, ensuring the success of this novel approach to combating fiscal malpractices.
The implementation of such a reward system not only acts as a deterrent to potential tax evaders but also establishes a framework that encourages active citizen participation in ensuring fiscal integrity. The success of this initiative will be closely monitored as it unfolds, with stakeholders eagerly awaiting the outcomes and impact on tax compliance in Pakistan.
