FBR to strengthen IT system for combating fake tax invoices

KARACHI: The Federal Board of Revenue (FBR) has decided to further strengthen information technology system to combat issuance of bogus sales tax refunds, sources said on Tuesday.

The decision to strengthen IT system was taken at a meeting of tax managers with FBR Chairman Javed Ghani held on Monday at Large Taxpayers Office Karachi.

The meeting discussed one-point agenda: “Fake Invoices – Action taken so far and future strategy to combat it”. The chief commissioners of all tax offices located in Karachi attended the meeting.

The chief commissioners suggested the chairman to improve efficiency of the IT system to combat the menace. They said the system should ensure the issuance of invoices by the relevant sectors.

The meeting discussed the latest improvement in the IT system which discouraged fake and flying invoices for claiming refunds and input adjustment. However, more efforts are required to prevent revenue losses. The sources said the chairman agreed to the suggestions for strengthening the IT system and necessary directives would be issued in coming days.

The chairman directed the chief commissioners to send their proposals for budget 2021/22 focusing to create deterrence in sales tax evasion. The chairman said that some of the directives were required parliamentary approvals. The meeting also discussed possible measures for discouraging fake and flying sales tax invoices. The chief commissioners suggested to formulate a system under which income withholding tax statements should be available for cross verification of sales tax invoices.

The sources said issuance of bogus refunds had become a headache for the FBR as billions of rupee were drained in the past through fake and flying invoices.

Recently, the Federal Tax Ombudsman (FTO) had also taken serious notices on the issue and directed the FBR to take stern action against companies and tax officials involved in the sales tax bogus refunds.

To comply with the FTO orders the FBR had initiated launching FIR against corporate entities involved and also started disciplinary action against the delinquent tax officials.

The sources said around 80 officials have been nominated in the bogus sales tax refund issuance case by the Corporate Tax Office Karachi and the list of officials had been sent to FBR headquarter for disciplinary action.

At the meeting, the FBR chairman directed the chief commissioners to take prompt action in case of complaint regarding corruption by any of the officials within their jurisdiction. Further, the chief commissioners should also forward cases to the FBR where they found doubtful integrity of any official.