TIP provides evidence against auditors: PM, FBR chairman urged to take action against corrupt tax officials

KARACHI: Transparency International Pakistan (TIP) has urged the prime minister to intervene into the affairs of the Federal Board of Revenue (FBR) where rampant corruption is eating billions of public money.
In a letter sent to Prime Minister Mian Muhammad Nawaz Sharif, Chairman FBR Tariq Bajwa, NAB Chairman, Federal Tax Ombudsman and Supreme Court of Pakistan registered a complaint of corruption in FBR resulting in Rs138 million refund of sales tax by auditors FBR, Inland Revenue, Regional Tax Office – II, Karachi.
It is worth mentioning here that TIP in the Suo Moto case regarding law and order situation in Karachi asked by the Chief Justice of Pakistan to provide a rough figure of annual leakage in collection/corruption in FBR revenue. The supreme court has been informed that public is paying taxes, but the businessmen are not fully depositing the FBR revenue in treasury and an annual tax evasion is of over Rs2,000 billion. A copy was also handed over to the FBR chairman by TIP adviser in the Supreme Court on the instruction of the chief justice for serious consideration.
The TIP highlighted one incident of illegal sales tax refund where allegation leveled by a complainant that:
Gulraiz Ahmed Raza has bad reputation of forming fake companies who involved in issuance of fake input tax invoices to registered response to reduce their sales tax payment. In a tax year billions of tax were adjusted against fake input tax invoices issued by companies constituted by Gulraiz Ahmed Raza Auditor.
The Federal Board of Revenue has online sales tax return e-filing system. If the management try to un-earth the fake companies they can trace out the e-intermediary involved in the e-filing of returns from IP address of internet network used.
Gulraiz Ahmed and Munir-ul-Haq Auditors were posted in Zone-I Regional Tax Office-II Karachi. Chemical related to five major export oriented sector were zero rated through SRO 549(I)/2007.
Both the auditors planned to create fake companies to claim fake refund against fake local zero rated supplies of chemical and they caused of fake zero rated sales tax refund against fake zero supplies of chemicals, paper and plastic sectors.
Both auditors created fake companies in RTO – II and RTO – III Karachi and caused a massive sales tax revenue loss.
The registered persons claimed refund against local zero rated supplies but were never involved in manufacturing and supplies of zero rated supplies. They were involved in paper transactions, all of their supplies and productions were fake. They do not even exist at their declared address.
Electricity is major element to determine their manufacturing activity and all of the refund claimants had nominal electricity consumption. Further all the supplies were made to un-registered persons and not a single invoice can be verified from anywhere. The buyers do not exist even on income tax database.
The TIP said that the allegations made by the complainant determines that the exchequer has been deprived of Rs138 million, due to GST fake refund, which can not happen without connivance of the FBR officers.
It has been observed by TIP that many fake GST refunds, adjustments, non deposit of the collected GST and WHT with FBR has been going on for years, “Had FBR been performing its duty, and punished those officers who were and are involved.” It also requested the NAB to take action under NAO, the deep rooted corruption in FBR would have stopped long ago.