Tax Amnesty Scheme (Assets Declaration Ordinance 2019): FTO’s ruling gives relief to 12,000 taxpayers who deposited Rs2.6 bn

ISLAMABAD: Federal Tax Ombudsman (FTO) has issued a judgment to give relief to 12,000 taxpayers who had deposited Rs2.6 billion tax under the Tax Amnesty Scheme (Assets Declaration Ordinance 2019) but unable to upload their declarations on the last date due to failure of the FBR's online system.

The FTO recommendation states that almost a year has elapsed but FBR has taken no measure to address grievances of the aggrieved taxpayers despite the fact that FBR has been well aware of the failure of the system, thus 12,000 taxpayers suffered because of the inadequate arrangements made by the FBR to address the expected load on its online system.

The FBR had contended in its reply to the FTO that filing of declaration of assets was a prerequisite for availing the scheme and not the payment of tax and FBR’s online system was fully functional, and the complainants never accessed the FBR website. However, FBR also contended that there was pressure on the system.

During the hearing, the president of Pakistan Tax Bar Association (PTBA) contended that FBR’s online system was non-responsive and choked and this fact has been confirmed by then FBchairman Shabber Zaidi statement on electronic media. PTBA contended that FBR’s contention and data regarding no fault in the system is not reliable as the declaration portal, being the first step to reach on the FBR’s website was denied due to load of the system. PTBA provided to FTO the screenshots of the unavailability of access to the online system, which they had also provided to FBR a day after the last date.

FTO observed that since the FBR has failed to ensure smooth functioning of its online system to facilitate the prospective declarants who asserted that depositing of tax on their part was their bona-fide act that they actually intended to avail the amnesty scheme, therefore, it amounts to incompetence and inefficiency, on part of the FBR officials. The purpose of Tax Amnesty Scheme was to create the culture of documented economy, economic revival and tax compliance but non-responsiveness of the FBR’s e-portal deprived the declarants to avail the scheme, FTO added.

FTO report states that FBR had realised its fault in handling the situation and surreptitiously allowed the extension in time for submitting declaration that was against the provisions of the ordinance and contention of the FBR that uploading of the declaration was a pre-requisite for availing of the scheme, does not carry weight particularly when Section 10 of the Ordinance, provided that deposit of such tax shall neither refundable nor adjustable. The FBR officials failed to appreciate the provisions of the ordinance.

The FTO has recommended the FBR to make arrangements and facilitate the filing of declarations in respect of all the aggrieved persons by invoking the provisions of Section 17 of the Income Tax Ordinance; update the IT system of the FBR which requires thorough review and efficient improvement and report compliance within 45 days. According to the findings of the FTO, inefficiency, negligence and incompetence of the Department officials in designing the system, making adequate arrangements and failure to give full effect to the provisions of the Ordinance does amount to maladministration.

This own motion investigation was initiated by Federal Tax Ombudsman on the complaint of delegation of office bearers of Pakistan Tax Bar Association (PTBA) to the FTO, alleging that thousands of taxpayers/persons who intended to avail the benefit of Amnesty Scheme, promulgated by the Govt of Pakistan, as Assets Declaration Ordinance, 2019 (the Ordinance) deposited billions of rupees of tax but were unable to upload the declaration of assets, on the last date i.e. 03.07.2019, due to failure of IT system of the FBR.