Thursday, 23 March 2023

FBR revealed biggest tax fraud

The Federal Board of Revenue (FBR) has claimed that it has busted the first biggest tax fraud of billions of rupees by tampering with its electronically integrated Point of Sales (POS) system amid the company owner’s allegations of harassment of family members by the taxmen.

Initial details revealed during the committee proceedings and disclosed by the taxmen to The Express Tribune suggest that Metro Shoes could be a test case of the government’s ability to go after the wealthy and at the same time the trustworthiness of its POS system.

“On December 9, the FBR raided our business premises and confiscated computers and the record on allegations that we have manipulated the Point of Sales system,” brand owner Nadeem Younus told the committee. “The FBR did not give the company any notice of recovery but now it is demanding Rs500 million and that too without any formal tax demand.”

He said that the tax demand was equal to 72% of the inventory of the company. “After a lapse of one month, neither our computers have been returned nor have we been given the tax demand notice,” said Younus.

“It is a tax fraud case and the FBR will return the system only when the investigation is complete,” said FBR Chairman Dr Mohammad Ashfaq.

Metro Shoes has 45 branches across the country, said Jehanzeb Nadeem, co-owner of the retail chain. In five years, the company has paid Rs477 million in taxes, he added.

“Despite the legal requirement, the businesses are not integrating with the POS system and there is pressure on us from the government to take action,” said FBR Chairman Dr Mohammad Ashfaq.

Businesses that have integrated with the FBR have now found loopholes to avoid the system, he added.

A senior FBR official, who was involved in the case, told The Express Tribune that Metro Shoes’ owners were tampering with QR codes of sales receipts by reprinting the old codes.

He claimed that the company was under-declaring its sales by 80% and the FBR got proof of the fraud in the shape of electronic mails exchanged between the owners and the employees.

During the Covid-19 period, the company owners issued instructions to file nil tax returns, when they were actually making sales, said the FBR official.

The quantum of tax evasion was being computed but initial estimates suggested that it was around Rs1 billion, excluding the income tax evasion on under-declared sales, said the FBR official.

He said that the FBR followed the legal process before starting the search at home and took search warrants from a court judge.

The standing committee asked both the parties to settle the matter amicably and report back to the committee on Monday.

Source: Daily Express Tribune

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